Sunday, November 23, 2008

Tata Motors shuts down its Jamshedpur plant

Tata Motors Limited (BOM: 500570), which previously made headlines for its high profile acquisitions, just become another victim of global credit crunch. Recently, the company declared to shutdown its Jamshedpur plant for five days starting from November 25, 2008. This is the second shutdown in this month in order to adjust the production with declining sales orders. Earlier, it was shut down for three days from November 6 to November 8, 2008. However, it was an unofficial five day shut down. Tata Motors even reduced its production targets in October and put 3,000 temporary workers on leave. More than 70% of the companies that are dependent on Tata were affected from this shutdown. Already, its Pune and Lucknow plants are shutdown starting from November 22 to November 27, 2008. The company forced its workers to take leave without pay. Bachcha Singh, spokesperson of Telco Workers Union said:

"We are with the company. We have suggested to the company management that they adopt measures to cut costs to meet the challenge of global meltdown,"

On November 6, 2008, Ratan Tata, head of the 62.5 billion Tata Group conglomerate, forwarded an e-mail to the heads of all the 98 companies. In the email, he advised to stop all kinds of merger and take over procedures and adopt strict cost cutting measures to keep the companies operational. Tata borrowed heavily from investors and banks to fund its take over plans and now it is under huge debt. Last year, the company produced 1,25,000 vehicles which has come down to 50,000 due to world wide economic crisis.

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