TATA MOTORS DEFAULTS ON Rs 1200-CR VENDOR DUES

Search News

INDIA’S largest automobile company, Tata Motors, which is grappling with declining sales and the financial burden of acquiring British brands Jaguar and Land Rover, has run into payment problems with its vendors and suppliers.

The $8.8-billion company, which has operations in the UK, South Korea, Thailand and Spain, owes more than Rs 1,200 crore in unpaid dues to suppliers accumulated over the past few months, though there is no consensus on the exact amount.

“The situation was tense due to the uncertainty over the Nano project. It got worse when the company stopped making payments over the past few months. Now, we are in deeper trouble as orders from Tata Motors have virtually dried up in the past three months with vehicle sales nosediving,” said an executive with a Delhi-based supplier that sells electrical components to Tata Motors. “We are yet to receive our dues of over Rs 80 crore,” he said.

A senior official with the Delhi-based Automotive Component Manufacturers’ Association (ACMA), the apex body of auto components makers, said the total amount due to its members from Tata Motors is over Rs 450 crore.

A Tata Motors spokesman said the company is trying to cope with this extraordinary situation with some help from its vendors. “Tata Motors is working with vendors in these hard times. We cannot share any details since the terms between the vendors and Tata Motors are internal, but the company shall abide by the partnership approach with vendors and suppliers,” he said.

Vendors say they are negotiating for part-payment to meet working capital needs. A Tata Motors vendor from south India said payments in excess of Rs 100 crore are pending and no supplementary bills have been paid in the past two months. “We are facing a cash crunch due to falling demand and are finding it difficult to meet working capital needs,” he said.

While major vendors can carry on operations for some months, owners of smaller ancillary units say they are on the verge of defaulting on bank loans as their bulk payments are pending with Tata Motors.

Jamshedpur-based Adityapur Small Industries Association (ASIA), which supplies components to Tata’s truck and bus plant in the same city, claimed that Tata Motors owes over Rs 500 crore to its members. “It’s a scary situation,” said a top ASIA official.

Find Lawyer / Law Firm

New Tax Refund Scheme

In a stride towards stabilizing and boosting economy the Finance Minister Nirmala Sitharaman introduced a new strategy to refund duties and taxes on exports, simple export credit and extra fund More

Legal Consultation - Consult over phone, chat or send questions

Helplinelaw can set up your session with quality and experienced lawyers to discuss and resolve your legal matters. You can avail consultation in form of sending questions, phone call or webchat discussion  More