A day after it reported a net loss of Rs 25 crore for the quarter ended September 30, 2013, commercial vehicle major Ashok Leyland today announced a voluntary retirement scheme (VRS).
The scheme is conceived as a response to the continuing slowdown, and aims to reduce manpower costs and align fixed costs to reduce activity levels.
"While the company maintained market share in the last quarter, volume pressures continue and we need to take some definite steps to manage the slowdown. The VRS package will be fair and would provide adequate compensation to any employee who opts for it," said Vinod K Dasari, managing director, Ashok Leyland.
A company spokesperson said they had about 12,000 employees and the VRS scheme was applicable to all categories of executives.
On how much manpower cost the company would save with this scheme, the spokesperson said it was difficult to estimate right now and depended on the number of people who opt for it. The company was targeting a reduction of Rs 1,000 crore in debt by the end of the current fiscal.
"We are working toward reducing working capital, improving operating efficiencies and divesting some of the non-core investments," he added.
According to the financial results announced on Thursday, the company has reported a net loss of Rs 167 crore for the first half of fiscal 2014 as against net profit of Rs 210 crore in the year ago period. However, the net loss has reduced from Rs 142 crore in the first quarter to Rs 25 crore iin second quarter. Sale of long term investments generated Rs 48 crore during the quarter ended September 30, 2013.
The company, while expecting some improvement in the fourth quarter, do not expect any significant change and as an organisation it has used the time to re-structure and will remain focused on creating better value for customers through new products, improving operating efficiency and divesting some of the non-core investments, said Dasari while announcing the result.
The market remains contract, with the total industry volume in medium and heavy commercial vehicle (M&HCV) domestic industry posted a drop by 25%. Ashok Leyland clocked total M&HCV volumes of 30,820 units (41,411 units a year ago) and LCV volumes of 14,021 units (15,913 units a year ago).
However, the company said that it is confident that the new products would help build volume and lead to greater customer satisfaction.