HCCB announces 7-8% increments; no salary reduction or lay-offs

NEW DELHI: Beverage maker Coca-Cola’s company-owned bottling partner HCCB (Hindustan Coca-Cola Beverages) has announced 7-8% increment in salaries to its 7,000 direct employees effective April 1, bucking the general trend of companies across various sectors reducing salaries and enforcing lay-offs amidst the Coronavirus pandemic.

“The merit increase (annual increment) is for all employees of HCCB and a function of several factors including employee performance in the preceding year,” a spokesperson for HCCB said in an email revert.

With 15 factories in India, the asset-heavy HCCB which makes Coke, Sprite and Thums Up aerated drinks, and Minute Maid and Maaza juice, will follow the usual payroll cycle this year as well. “We have followed the same compensation norms as in 2019,” the spokesperson said. The spokesperson added there will be no lay-offs, salary reductions and job losses at HCCB on account of the disruption caused to businesses across sectors following the outbreak of the Coronavirus pandemic.

However, in the current year, the impact of the pandemic is expected to be severe on the company as stated in a call with investors last week. In a post earnings investors call, Coca-Cola chief executive James Quincey said in some markets like India, the severity of social distancing measures negatively impacted consumption due to the significant reduction in shopping trips. The Atlanta-headquartered company said Coca-Cola’s unit case volume declined 5% driven by India across its bottling investment group (or company’s owned bottling operations) across world markets for the January-March 2020 quarter. “Given that away-from-home channels represent approximately half of the company’s revenues, the company expects the net effect of these consumer purchase patterns to have a significant impact on second quarter results,” Coca-Cola said in the earnings statement.

Last month, Coca-Cola had temporarily suspended production at its company-owned and franchise-operated bottling plants with the exception of essentials such as water. However, production at over half the plants has restarted.

With a retail reach across 3 million outlets, HCCB reported revenues of Rs 9,455 crore and profit of Rs 322 crore for financial year 2018-19. While HCCB is Coca-Cola India’s largest company-owned bottler, the beverage maker also operates through over a dozen independent franchisee bottlers.Coca-Cola India’s operations are much smaller.

The Indian government had announced a lockdown starting March 25 to contain the spread of COVID-19.