Ashok Leyland offers VRS to reduce manpower

09 Nov 2013

Commercial vehicles major Ashok Leyland on Friday announced a voluntary retirement scheme (VRS) for executive-level staff in a bid to reduce costs and align fixed costs to reduced activity levels amidst the continuing slowdown in the automobile industry.

The move comes after the company reported a loss of Rs26 crore in the second quarter of the financial year and a 15.3 per cent fall in truck sales in the first half of the financial year.

First half revenues of the company fell 22 per cent to Rs4,900 crore, resulting in a net loss of Rs167 crore (against a net profit of Rs210 crore).

Despite heavy discounts offered by manufacturers, Ashok Leyland's medium and heavy commercial vehicle (MHCV) sales fell 25 per cent to 30,820 units in the first six months of the fiscal year.

The company is reported to have cut down on production and has worked 15-17 days a month in the last couple of months.

In a statement issued on Friday, the Chennai-based company said the VRS was conceived as a response to the continuing slowdown in the market.

"While the company maintained 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," the statement quoted Vinod K Dasari, managing director, as saying in a press release.

''The VRS package will be fair and would provide adequate compensation to any employee who opts for it,'' the MD said without divulging compensation details.

''The proposed scheme is applicable to all categories of executives and will be valid only for a week,'' a company spokesperson said.

Early this year, Ashok Leyland had cut production days to five from six and had laid off 1,300 temporary workers, in addition to enforcing a five per cent salary cut for the executives during the first quarter, which resulted in savings of Rs10 crore.

The Hinduja group company employs around 12,000, including 5,000 executives.

Factory-level workers are being paid in full and wage negotiations have been completed in its units at Hosur. Talks are on for the Ennore unit near Chennai.