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At the stand-alone level, Tata Motors posted a net loss in the December quarter, a first since December 2008, owing to loss in demand for trucks and passenger cars amid stiff competition and slowdown.
“Three-four years ago, when we painted a vision for ourselves, we believed we could double our volumes in four-five years. But in a year like this, it needs a recalibration,” said Ravindra Pisharody, executive director (commercial vehicle business unit), Tata Motors. “So, a lot of the expansion we were doing, both in terms of infrastructure and people, will take a back seat.”
Slackening demand has led to cut-backs in production, especially at the Jamshedpur plant in Jharkhand. The Mumbai-based company has shut down production at this plant that primarily makes medium and heavy trucks four times this year. Its overall sales fell 29 per cent during the first 10 months of the current financial year.
Tata Motors has 62 per cent market share in the commercial vehicle segment. Closure of mining activities in key parts of the country, coupled with a slowdown in general economic activities and costly loans, has led to a stiff fall in heavy truck sales.
“The slowdown we are in right now is more comparable to the slowdown of 1999-2000, when it took a couple of years for the economy to bottom out. This has to do more with the (domestic) economy, the reforms are not picking up and overall sentiments are low,” added Pisharody.
The company rolled out its two-millionth vehicle today from the 68 year-old Jamshedpur plant even as it continues to operate the facility at almost half the capacity. The total production capacity of the Jamshedpur plant is 144,000 units per annum.
Low production has led to a cut in the temporary workforce at the Jamshedpur plant. About 2,000 workers have been laid off this month at this plant, which employs about 10,500.
The company says it has an agreement with the workers’ union to exercise a shutdown and prune workforce if market situation demands so. Also, workers have been put on a rotational basis, which leads to lesser man hours per worker.
Despite the drop in sales and production, there are no plans to cut back on investments.
Tata Motors has lined up Rs 3,000 crore investment, which would be mostly used for new product development. The company states it has commercial vehicle capacity good enough to last for three-five years and so no new investments towards new capacity will be made up immediately.
