Tata Motors to extend support to vendors during demand slump
Amid declining sales of its vehicles across all categories, Tata Motors is supporting its component suppliers to deal with the slowdown in automotive market.
New Delhi: Amid declining sales of its vehicles across all categories, Tata Motors is supporting its component suppliers to deal with the slowdown in automotive market.
Although the company has not yet offered any financial package to its vendors, it is planning to help them reduce their operational costs through various measures.
"When the whole market is down and everybody is under pressure, if there is any specific support or help required at the vendor level, we will definitely extend that," Tata Motors President and Chief Financial Officer C Ramakrishnan told analyst during a recent conference call.
He, however, hastened to add that "it does not necessarily mean that a financial package is being put together...".
Elaborating the company's steps to help its suppliers, he said: "In many cases we work with the vendors to help them to reduce cost or help them improve quality or help them improve their operating efficiencies, and such help and collaborative working with the vendors will always be there."
He, however, did not specify any particular step that the company is undertaking to help the suppliers in dealing with the ongoing slowdown.
"It may take different shapes on a case-to-case basis, there is no major announcement I have to make, it will depend on a case-to-case basis," Ramakrishnan said.
Tata Motors' medium and heavy commercial vehicle business is currently affected due to demand slump, while the passenger car segment is seeing low volume sales along with relatively low levels of capacity utilisation for most of the manufacturers, he added.
"Naturally in terms of the backward process, the supply chain is affected... In India, our vendor base has been there with us for sometime, many of them are completely reliant or significantly reliant on us for their business.
"It is a relationship that has remained strong over a period of time. In ups and downs in the business, we have worked together," Ramakrishnan said.
Earlier this month, Tata Motors had reported 52.2 percent fall in consolidated net profit for the October-December quarter at Rs 1,636.01 crore, the first decline in five quarters, due to poor sales in domestic market and a margin squeeze at its British subsidiary Jaguar Land Rover.
On standalone basis, the company had plunged into a net loss of Rs 458.49 crore as against a standalone net profit of Rs 173.67 crore in the same period last fiscal.
During the third quarter this fiscal, Tata Motors sold a total of 2,05,291 vehicles as against 2,31,328 units in the same period in 2011-12, down 11.26 percent.