Ashok Leyland Ltd., the flagship company of the Hinduja Group, said it is closing down its Pantnagar (Uttarakhand) plant for nine days due to weak demand and outlook.
The commercial vehicle (CV) manufacturer annually produces about 1.5 lakh trucks at its Pantnagar plant. The plant will remain shut from July 16 to July 24, the company said in a regulatory filing. This is the second time that the truck major is shutting down its Pantnagar plant to align its production with the sales requirement.
The previous shut down happened on June 24, 2019, lasting six days. A few days ago, ALL chairman Dheeraj Hinduja, in his message to shareholders, had detailed the performance of the medium and heavy commercial vehicles (M&HCV) segment and said that it witnessed higher than usual inventory levels, which could take a few months to correct.
During 2018-19, the 2.4% increase in ALL’s M&HCV sales came amid the uncertainty caused by NBFCs liquidity crisis and the revised axle norms in the second half of that fiscal.
However, the company witnessed contraction in its year-on-year M&HCV sales in June 2019 at 2% to 7,325 units and by 7% to 6,253 units in July.
A company official, requesting anonymity, said multiple reasons could be attributed to the decline in the company’s sales, including a slowdown in overall manufacturing output and delays in infrastructure projects.
“Moreover, consumers are postponing their purchases till the beginning of 2020 to buy BS-IV vehicles at discounted rates, while the industry itself is gearing up to halt production of BS-IV vehicles so that it does not build up a huge inventory,” he said.
On whether BS-VI vehicles would come with a high price tag, the official said: “There would be a increase in the price of BS-VI vehicles, but it cannot be quantified at this moment.”
