Chennai: Animation major Pentamedia Graphics Ltd has made effective a 10-per cent cut in the salaries of its employees, despite having a cash reserve of Rs 151 crore and a book order of $110 million that can take care of its operations for the next year.

According to its employees, the salary-cuts, averaging 10 per cent, have been made effective from 1 August 2001. Says Pentamedia chief operations officer G V Babu: '' We have restructured the compensation package benchmarked with performance.''

The new pay structure consists of two parts. The first consists of the usual components like basic salary and dearness allowance, while the second and the new part contains performance incentives.

"If targets are achieved, then the compensation may exceed what an employee was drawing earlier," says Babu. He denies that the company is taking punitive action alone. "Groups that performed well were rewarded with incentives. Overall, the pay-cut will not be more than 1 per cent of the company's annual wage bill.''

The employees allege the company was delaying payment of the salaries. But a company spokesperson says only part of the salary is withheld when a business development manager falls short of his monthly target.

As part of the cost-cutting initiatives, the company is now looking at outsourcing the work currently being done by its computer-based tutorials (CBT) department. The division has 99 employees and none of them have left the company, says the spokesperson.

Restrictions on overseas travels, judicious use of the office space and utilisation of manpower for multi-task are some of the other cost-cutting measures introduced by the company.

Pentamedia Graphics employees have accepted the pay-cut without much resistance.

The resignation by company directors T K Seshadri and K Srinivasan recently has led to widespread rumours of an impending downsizing of the staff strength.

In the meantime, the company's wholly owned subsidiary, Intelivision Ltd, has begun testing its children satellite television channel Splash. The free-to-air channel currently airs animation programmes from Chennai. Its formal launch is expected soon.