Ashok Leyland reduces work days

Move to reduce wage bill by 15%

In line with the industry trend, Ashok Leyland has decided to bring down number of working days, which inturn would bring down the manpower cost by 15%. The move was in response to the current slow down in the commercial vehicle industry, says industry experts.

Speaking to Analyst K Sridharan, chief financial officer, Ashok Leyland said that the initiative was started from the second half of December 2012 and it is doing well. “We will continue this in the fourth quarter. Across all the level from Chief Executive to lower level, 15% cut in wage cost, since number of working days was reduced to five from six in a week,” he said.

It may be noted, earlier Ashok Leyland's peer Tata Motors decided to halt production for three days at its Jamshedpur plant, with the industry going through a weak period, to avoid inventory pile up. The company in 2012 announced 15 days closure, according to reports.

Meanwhile, Ashok Leyland also decided to reduce to take other initiatives including bring down the travel expenses. The company hopes to bring knock off around Rs 1,000 crore, which includes Rs 550 crore of inventory, Rs 300 crore of receivables and Rs 150 crore of production inventory.

The various initiatives taken by the company would help the company to bring down the overall operating cost by around ten%, said Sridharan.

Ashok Leyland has reported a 19% drop in sales in December 2012 at 7,299 units as compared to 9,048 units, a year ago.

Driven by its LCV product Dost, Ashok Leyland's April to December 2012 sales rose to 79,990 units from 66,321 units, an increase of around 21%.While commercial vehicle sales dropped by 12%. LCV sales stood at 23,898 units as compared to 2,700 units.