Slowdown forces Leyland to put new lay-off plan into action

An agreement to this effect was concluded before the Labour Commissioner and would be effective till March, 1999. The workers will take only 50 per cent of their salary for the lay off period.

The option to work on Sundays has not been exercised for the past several months, with the workers accepting 50 per cent of wages as per an earlier agreement.

Speaking to The Financial Express

, ALL managing director R Seshasayee said there was a need to bring down the level of inventory held by the company and hence the necessity to cut production. The companypresently has a stock of about 5400 vehicles as against the normal level of 2500.

ALL has just completed its earlier lay-off programme of 16 days spread over three months. Production was cut for eight days in June and four days each in July and August (on Saturdays). However, the workers got the benefit of full pay as per the agreement entered into between the company and the union. The eight days of production lost would be compensated by the workers in 1999-2000 by which time the company hopes the situation in the commercial vehicle sector would improve.

The sector is in the grips of its worst ever recession with industry leaders registering further sharp fall in their sale figures. For the period April to July, Telco sold 34,907 vehicles, a whopping 33.3 per cent fall compared to the corresponding period of the previous year. In the same period, ALL sold only 7014 vehicles, a fall of 15.2 per cent.

Both ALL and Telco are in the midst of cost cutting. ALL was able to post a significant improvement inthe second half of the last fiscal consequent to controlled production and better inventory utilisation. For the first quarter of 1998-99, ALL posted a loss of Rs 33.20 crore on a turnover of Rs 367.83 crore.

A comprehensive revival package which the central government is talking about is still far from reality. There were reports that the government would place orders for 10,000 vehicles and also offer fiscal incentives in the form of reduction in the excise duty structure. The industry on its part had sought 100 per cent depreciation benefit for the commercial vehicle in a bid to revive demand.

Analysts are not optimistic about the scenario in the commercial vehicle sector nor or they enthusiastic about the likely impact of the revival package being put up by the government. The over-supply situation is such that about 15 per cent of the trucks on the road are presently idle.

This over-supply has to be first mopped up before any significant increase in demand can be expected. They point out that theactions of the industry majors reflect that the revival is far off. Telco has reportedly cancelled the increase in supply schedule communicated to suppliers earlier in anticipation of pick up in sales.

ALL, on its part, is commencing yet another lay-off programme that too in September when the commercial vehicles sales peak as operators can take advantage of full depreciation benefits. But Seshasayee says this September is turning out to be very subdued probably because the corporate reports were nothing to write home about. Consequently, companies aren’t exactly desperate to for depreciation cover.