Ashok Leyland takes VRS dose for slowdown bite

With a view to cutting manpower costs in the wake of continued slowdown.commercial vehicle maker and Hinduja flagship Ashok Leyland on Friday announced VRS (voluntary retirement scheme) for its employees.

With a view to cutting manpower costs in the wake of continued slowdown.commercial vehicle maker and Hinduja flagship Ashok Leyland on Friday announced VRS (voluntary retirement scheme) for its employees.

The company said that this was done in the wake of economic slowdown. Experts believe that the stalling of major infrastructure projects in the country will have an adverse impact on the CV segment.

According to a report by the India Foundation of Transport Research and Training (IFTRT), lower factory output for the 6th consecutive quarter has affected sales since April 2013. Truck (5-49 ton category) sales plummeted by 41.2 per cent.

“While the company maintained a decent market share in the last quarter, volume pressures continue and we need to take some definite steps to manage the slowdown. The VRS package will be fair and would provide adequate compensation to any employee who opts for it,” Ashok Leyland Managing Director Vinod K Dasari said in a statement.

The company, however, did not specify the terms and conditions and the timeline of the VRS.

The company had reported 15 per cent decline in sales at 6,803 units for October 2013 as compared to 7,997 units in same month last year.

Agencies quoted Dasari as saying that the VRS scheme ‘aims to reduce manpower costs and align fixed costs to reduced activity levels”.

SP Singh, senior fellow and coordinator at IFTRT earlier said that  the worst economic activity and global meltdown during year 2008-09 led to more than 50 per cent drop in truck sales (5- 49 ton capacity). This coupled with loan defaults — as banks/NBFCs refusing to reschedule the auto loans and Reserve Bank avoiding to intervene — added to the slowdown in purchases.

Stating that haulage trucks have a straight line correlation with GDP, A Ramasubramanian, President of truck maker AMW Motors said that ban on mining and halt of road projects were pushing CV makers into declining sales. Trucks have witnessed a drop for the last 18 months.

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