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FMCG, Pharma companies good paymasters; many head honchos made it to the 'Rs 5 crore club'

MUMBAI: VS Iyer and Manoj Chhabra don't usually rub shoulders with the likes of ITC Chairman YC Deveshwar and Hindustan Unilever CEO and MD Nitin Paranjpe - except in this club, of head honchos who took home a minimum of 5 crore in annual salary.

Iyer, CEO of Agila Specialities, a division of Strides Arcolab, and Chhabra, MD of the Rajan Raheja-owned Prism Cement since 2003, are also among those professionals who got the fattest increments last year over the previous one, according to data available with the ET Intelligence Group (ETIG).

 As many as 36 professional executive directors made it to the Rs 5-crore league, according to data culled by ETIG from 373 of the BSE 500 companies that had published annual reports till the time of writing. Of these, 19 are new entrants, like Iyer and Chhabra.

Carl-Peter Forster, the managing director of Tata Motors who resigned in September last year, topped the league with a salary of Rs 23.97 crore compared with Rs 12.60 crore a year ago. This includes a termination payment of Rs 14.09 crore.

Exclude Forster, and Hindalco MD Debu Bhattacharya takes the pole position with earnings of Rs 19.49 crore in fiscal year 2012. He was also India's highest-paid professional CEO a year earlier with a total salary of Rs 17.31 crore.

Iyer's salary vaulted 272% to Rs 8.37 crore in the year ended December 2011 over the previous year. Iyer, a pharma industry veteran with 33 years of experience in formulations, is no longer on the board of Strides Arcolab; he stepped down in May. Before joining Strides in 1999, he had worked with Ranbaxy, GlaxoSmithKline India and Searle India.

The salary of 61-year-old Chhabra, managing director of Rajan Raheja-owned Prism Cement, jumped 123% to Rs 6.54 crore in fiscal year 2012. Prism Cement's annual report says Chhabra's salary of Rs 6.54 crore includes leave encashment of Rs 3.30 crore.

A fellow member of the Institute of Chartered Accountants of India, Chhabra has 35 years' experience in the cement industry, 20 of them in Prism as part of the senior management team.

Emails sent to Chhabra did not elicit a response; a person in his office said he was not interested in discussing the matter. Most executives ET contacted were reluctant to talk about salaries, an indicator that it's extremely personal territory for professionals.

In the West, executive compensation is a source of vicarious pleasure with magazines going to town with such surveys.

FMCG Companies Good Paymasters

Of late, however, fat pay packages are being frowned upon in the West as focus turns to corporate greed. Strides Arcolab CFO TS Rangan says a part of Iyer's salary last year could be a one-time payment, although he adds that he does not have the exact number with him. Iyer's package of Rs 8.37 crore included a bonus of Rs 6.12 crore.

Of this, Rs 1.12 crore pertains to the previous year, says the company's latest annual report. Comparisons of salary hikes with company growth reveal a contrasting trend, at least in the cases of Strides Arcolab and Prism Cement.

The Bangalore-headquartered niche pharma firm posted a 46% rise in net sales and a 70% growth in profits in calendar year 2011. Prism Cement, however, suffered a net loss of Rs 18 crore in fiscal 2012 even though net sales increased 35% to Rs 4,922 crore.

 The Rs 5-crore club is dominated by professionals from the fast-moving consumer goods (FMCG) and pharma sectors. FMCG companies have the highest representation with eight members, followed by six people from pharma.

Anita Ramachandran, founder & CEO of Cerebrus Consultants, a Mumbai-based HR consultant, says FMCG companies have traditionally been good paymasters, next only to management consultants and foreign financial services companies. They emerge as the highest payers in the listed space as most of those who offer better salaries are unlisted.

"Pharma companies need high-calibre professionals to comply with a strict regulatory regime and to interact with discerning global investors," adds Shiv Agarwal, CEO of Delhi-based recruitment services firm ABC Consultants. Also, pharma and FMCG companies are relatively slowdown-proof, making it easier for them to hike salaries, adds Ramachandran.

In addition to Iyer and Chhabra, the professional executive directors who saw their salary zoom last fiscal include Praveen Gupta, a whole-time director at GSK Consumer Healthcare, who resigned in February 2012.

His salary went up by 336% to Rs 6.33 crore in calendar 2011 while the pay packet of A Mahendran, managing director of Godrej Consumer Products, witnessed a 276% rise, to Rs 6.29 crore in fiscal 2012. The salary of Reliance Industries Executive Director PMS Prasad grew by 110% to Rs 5 crore.