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Ashok Leyland brings in 5-day week, eyes 15% wage bill cut

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Ashok Leyland Ltd, India’s second largest commercial vehicles manufacturer, has brought down the number of working days from six to five a week in a bid to reduce manpower cost by 15 per cent, amid a slowdown in the industry.

The initiative was started from the second half of December and is doing well,

K Sridharan, chief financial officer, told analysts. “We will continue this in the fourth quarter (January-March). Across all levels, from the chief executive to lower levels, (we target) a 15 per cent cut in wage cost, since the number of working days was reduced to five from six a week.”

In November, Ashok Leyland's peer, Tata Motors Ltd, had decided to halt production for three days at its Jamshedpur plant in Jharkhand to avoid inventory pile-up, as the industry was going through a weak period. In 2012, the company suspended production for 15 days, according to reports. The country’s largest vehicle maker’s commercial vehicle sales were down 3.4 per cent in December at 52,043 units, from 53,854 units in the corresponding month in 2011.

Leyland has also decided to take other initiatives such as bringing down travel expenses as part of its cost-cutting. The Hinduja Group company hopes to knock off inventories worth Rs 500 crore. With these, the company hopes to bring down overall operating cost by around 10 per cent, said Sridharan.

Ashok Leyland has reported a 19 per cent drop in sales in December at 7,299 units, compared to 9,048 units a year ago.

Driven by its light commercial vehicle product Dost, Ashok Leyland's April to December sales rose to 79,990 units from 66,321 units, an increase of around 21 per cent.While commercial vehicle sales dropped 12 per cent during the period, the company’s LCV sales stood at 23,898 units against 2,700 units in the year-ago period.