The company has finalised a fresh lay-off programme, effective September 4. From this date, ALL's plants will work only for three days a week. Apart from the weekly holiday of Monday and the optional holiday of Sunday, the company will stop production on both Friday and Saturday.

An agreement to this effect was concluded before the Labour Commissioner and would be effective till March, 1999. The workers will take only 50 per cent of their salary during the lay-off period.

The option to work on Sundays has not been exercised for the past several months, with the workers accepting 50 per cent of their wages as per an earlier agreement.

Speaking to The Financial Express, ALL managing director R Seshasayee said there was a need to bring down the level of inventory held by the company and hence the necessity to cut production. The companycurrently has a stock of about 5,400 vehicles as against a level of 2,500 in normal times.

ALL has just completed its earlier lay-off programme of 16 days spread over three months. Production was cut for eight days in June and four days each in July and August (on Saturdays). However, the workers got the benefit of full pay as per the agreement entered into between the company and the union. The eight days of production lost would be compensated by the workers in 1999-2000, by which time the company hopes the situation in the commercial vehicle sector would improve.

The sector is in the grips of its worst-ever recession with industry leaders registering a sharp fall in their sale figures. For the period April to July, Telco sold 34,907 vehicles, a whopping 33.3 per cent fall compared with the previous corresponding period. During the same period, ALL sold only 7,014 vehicles, a fall of 15.2 per cent.

Both ALL and Telco are in the midst of cost cutting. ALL was able to post a significant improvement inthe second half of the last fiscal consequent to controlled production and better inventory utilisation. For the first quarter of 1998-99, ALL posted a loss of Rs 33.20 crore on a turnover of Rs 367.83 crore.

A comprehensive revival package which the central government is talking about is still far from reality. There were reports that the government would place orders for 10,000 vehicles and also offer fiscal incentives in the form of reduction in the excise duty structure. The industry, on its part, had sought 100 per cent depreciation benefit for commercial vehicles in a bid to revive demand.

Analysts are not optimistic about the scenario in the commercial vehicle sector nor are they enthusiastic about the likely impact of the revival package being put up by the government. The oversupply situation is such that about 15 per cent of the trucks on the road are presently idle.

This oversupply has to first be mopped up before any significant increase in demand can be expected. They point out that theactions of the industry majors reflect that the revival is far off. Telco has reportedly cancelled the increase in supply schedule communicated to suppliers earlier in anticipation of a pick up in sales.

ALL, on its part, is commencing with yet another lay-off programme in September when the commercial vehicle sales peak as operators can take advantage of full depreciation benefits. But Seshasayee says September is turning out to be very subdued, probably because the corporate reports were nothing to write home about. Consequently, companies are not exactly desperate to go in for depreciation cover.