Persisting weak demand has forced Tata Motors take a three-day block closure at its heavy and medium commercial vehicles plant here between January 14 and 16, making it the fifth plant closure this fiscal. The plant has so far already seen a total of 16 days’ block closures in the current year, the last one for six days from December 25 to 31.
In a notice put up at the company's plant here, Tata Motors said that it will go for a block closure for three days starting January 14. The plant will resume production on January 17.
It is believed that the shutdown is being done to ensure that supply of trucks matches demand and the company wants to make sure that inventories remain at current levels. “We are doing the shutdown at Jamshedpur and it is to ensure that the production is made to align with the demand. Our inventory is under control and these steps are taken to make sure that it remains under control,” said a Tata Motors spokesperson.
Telco Workers’ Union (TWU) sources said the unit, which had produced around 3,900 HCV/MCV chassis in December 2012 is targeting a production of around 4,000 chassis in January, which is way down from the average monthly production figure of around 9,000 in favourable times.
In April-December 2012, Tata Motors' commercial vehicles sales fell 3% to 3.26 lakh units, according to the Society of Indian Automobile Manufacturers. The slowdown in industrial activity, especially in the mining sector, led to a 26% fall in Tata Motors' M&HCV segment. In this segment, Tata Motors sold 1.09 lakh units in April-December 2012 as against 1.47 lakh units sold during the same period last year.
“We expect the M&HCV segment to remain under pressure until certain policy measures relating to mining and infrastructure are announced by the government in the coming budget,” said Sudarshan Shreenivas, associate director – corporate, India Ratings. “We expect the trend of shutdowns to continue for now on both cars as well as M&HCVs,” he added.
“The market situation isn’t okay as yet; we are still in recession; we are producing chassis strictly as per market demand as raising inventory levels would only block funds,” said Chandrabhan Singh, general secretary, TWU, adding that an Army order the management was expecting hadn’t materialised so far.
Singh said though the government had announced some measures to kick-start the economy, there wasn’t enough mining activity taking place yet