Hello Sneha Rajesh,
Hope you are tracking the responses of the members for your Posting.
The reason you mentioned for this step by the Management is 'due to a downfall in business'.
What has THIS got to do with any change of Designation in the first place? Revision of Salary--Yes, but what's the Company achieving by changing the designations? And why should they?
Like AS Bhat mentioned, designation is more viewed as a punishment vis-a-vis performance than any other issue.
The moment you touch the Designations, you are giving scope to the employees [Levels DON'T matter here] to think that there's something ELSE here & begin to look out rather than lend a helping hand to the management--UNLESS THAT'S the prime Motive of the management.
And, like other members pointed-out, take the employees into confidence on the WHY of the decision EVEN FOR salary cuts. But be also CLEAR on the duration....at least approxly......before you begin this exercise.
In such situations, IF you take a 'take-it/leave-it' stand, then don't be surprised IF the employees take their own decisions based on THEIR understanding of what's being done by the management. And the very same management will then begin to say 'the employees ditched the company'--have seen such situations earlier.
Rgds,
TS