Commercial vehicle major Ashok Leyland has declared production holidays at its various plants for September due to continuing weak demand for its products. Meanwhile, the unions claimed that they were close to signing an agreement with the company’s management for payment of bonus of 5.42% of profit of ₹1,983 crore in FY19.
In a communique sent to stock exchanges on Monday, the company said there would be 16 non-working days at its Ennore plant and five non-working days at the Hosur plants.
There will be 18 non-working days at the Pantnagar plant and 10 days each at the Alwar and Bhandara plants during the month, the company said.
This is the second straight month the flagship company of the Hinduja Group is declaring production holidays at its plants. In August, it had declared holidays for 10 days at its Ennore plant.
Ashok Leyland reported a 70% decline in domestic sales of medium and heavy commercial vehicles to 3,336 units in August 2019, from 11,135 units in the comparable period last year.
Total vehicles sales — domestic and exports — were down 47% to 9,231 units this August, from 17,386 units in August 2018.
‘Weak freight rates’
“Medium and Heavy Commercial vehicles industry continued to remain under pressure due to weak freight rates, liquidity constraints and the economic downturn,” according to recent report by research firm Kotak Institutional Equities.
The company would be paying about ₹107 crore in bonuses, if the agreement comes through. The unions were demanding bonus payment of 10% and have now settled for 5.42%. “We have settled for 5.42%, due to the current slowdown. Otherwise, we would have gone up to 7%,” said a member of a union who did not wished to be named.
The bonus agreement will see the company’s 6,146 employees getting bonus totalling ₹1.75 lakh per employee.
“We have reached an agreement with the management, which will see each of Ashok Leyland’s 6,146 employees across the company’s eight plants getting a bonus totalling ₹1.75 lakh per employee,” said a union member. When contacted, a company spokesperson said that the agreement had not been signed yet.
