Tata Motors' HCV unit to go for six-day block closure in January

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Jamshedpur: The Tata Motors' heavy commercial vehicle (HCV) unit here announced on Wednesday that it would go for a six-day block closure, from January 12 to 17, in view of the slowdown it was witnessing in offtake.

This will be the fifth block closure by the auto major here. The first was taken last year between November 6 and November 8 and the last one between December 28 and December 31.

Tata Motors, in a statement on Thursday, said that "continuous unavailability of finance coupled with high interest rates across the industry was forcing customers to postpone purchases," though the Centre had only recently announced incentives for borrowers going for purchase of commercial vehicles.

Adityapur Small Industries Association (ASIA) general secretary Gurudas Roy told FE here on Thursday that the auto major was facing one of the worst demand situations in recent years, with orders for January so far pegged at around 1,300 units only.

The slowdown at Tata Motors/Telcon here has severely hit the around 800 small and medium ancillary units of the auto major here. Most of the units have already gone for a 40% pay cut of staff on the rolls.

Roy said the ancillary units, which have so far shed around 8,000 workers, would have to resort to laying off another 14,000 by the end of January if things didn't improve fast.

Around 72,000 workers are directly/indirectly employed in the ancillary units here during normal times.

ASIA has meanwhile written to the banks, the Adityapur Industrial Area Development Authority (AIADA) and the state government demanding various concessions for the units' survival.

Roy said though some banks have, at ASIA's request, been rescheduling term loans taken by the ancillary units, they, however, were not rescheduling the interest liability accruing on any sort of loan, be it a term loan or interest on overdraft/cash credit.

"If the interest factor is not rescheduled immediately, how will the units' owners pay it if their units were not running," said Roy. He said that ASIA has requested banks that they either waive interest payment or defer it for some months.

The general secretary said that if such a step was not taken immediately by the banks, most of the loans would become 'non-performing assets' (NPAs), as any repayment not made for three consecutive months was liable to be declared an NPA by the bank under current banking rules.

Roy said the RBI needed to intervene immediately to relax NPA rules by increasing the non-payment limit of principal/interest from three to say six months or more.