ALL asks vendors to renegotiate prices

Written by Corporate Bureau | chennai | Updated: Dec 30 2008, 07:03am hrs
Hit hard by slowdown and inventory pile-up, truck major Ashok Leyland Limited (ALL) has approached its vendors for price renegotiation. While admitting to the funds crunch, the company, however, said that it has no overdue payments to micro, small and medium enterprises (MSME) who supply to it except in those cases where quality and schedules were not met.

When contacted, a spokesperson of the company in a mail to FE said: We have met our vendors recently to explain the market situation, to involve them in getting over the difficult phase and seeking their suggestions. It is true that we have sought price renegotiations, reflecting the commodity price softening and the price expectations of a market in recession. We are not linking price renegotiation with payments as was reported in some section of the press.

It may be recalled that some vendors were reported to have been asked for 20-25% of less payment by the company. When asked to comment on the Tamil Nadu Small & Tiny Industries Associations petition to the Prime Minister on the discount/delayed payments by large scale corporates, including Ashok Leyland, the spokesperson said: There is no question of any acceptance on the part of the micro, small & medium enterprises (MSMEs) of any proposal from the company, regarding their payments. In line with the companys tradition of fulfilling payment commitments to these suppliers i.e MSME, the company at present, does not have any overdue payments except in certain rare cases where there could be issues of quality, schedules or quantity reconciliation.

In any case, payment commitments to these enterprises are statutorily covered, he said adding It is natural that given the situation like the current one, it is common across the industry to seek renegotiation on the prices of raw materials with the vendors. We in ALL are only talking to those vendors who are big in nature .