Tata Motors says some vendor payments delayed

Tata Motors says some vendor payments delayed

(Reuters) - Tata Motors Ltd, India's top bus and truck maker, has been late in making some vendor payments, its managing director said, but did not disclose the outstanding dues or say when the payments would be made.

The Economic Times newspaper had earlier reported on Thursday that Tata Motors owed more than 12 billion rupees ($245 million) in delayed payments to vendors.

"That is not a correct number," managing director Ravi Kant told reporters at a news conference.

"Yes, there is a delay... there would be a delay. I'm telling you we are in a difficult situation... the whole industry is," he said, but declined to say what amount of payments were delayed.

"There is a liquidity problem, banks are not lending."

Last week, Tata Motors reported a December quarter loss and data earlier this week showed its vehicle sales fell 33 percent in January from a year earlier, with commercial vehicle sales falling 43 percent.

"All problems with vendors are being discussed and all mutual solutions are being worked out," Kant said.

About three-quarters of vendor purchases were paid immediately under a funding arrangement the company had with banks, he said The company has rationalised its vendor base from thousands to a few hundred, and Kant said it was trying to get financial stronger vendors with greater access to technology.

While cuts in official interest rates and two stimulus packages from the government were slowly beginning to make an impact, Tata Motors was also taking steps, Kant said.

"Our plan is to generate as much sales as possible. We're coming out with new products... we have a pipeline of new products throughout this year. We are giving full support on vehicle financing, we are putting money behind that. We are giving all kinds of incentives," Kant said.

The company's finance arm, Tata Motors Finance, was providing loans for almost 40 percent of sales at present, Kant said.

Shares in Tata Motors ended down 2.8 percent at a two-month closing low of 131.50 rupees, after having fallen as much as 5.3 percent during the day, in a Mumbai market that fell 1.2 percent.

($1=48.8 rupees)

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