Is Tata Motors Having Payment Problems?

Is Tata Motors Having Payment Problems? New Tata Nano
author image Rishi
Saturday 07 February 2009, 00:00 AM

It was earlier reported in the media that Tata Motors may be have run into payment problems with its vendors and suppliers. However, the new reports from the company suggest otherwise. According to the company official, Tata Motors has managed to pay three –quarters of its purchases from its vendors through an arrangement with the banks.

According to the Managing Director, Ravi Kant, the company has a tripartite agreement with the banks which is the Bill Marketing Scheme. As per the new scheme, the banks pay the vendors and the suppliers for their deliveries and the company pays back to the bank after some time.

However, this arrangement has been done for at least 75 percent of the vendors and suppliers. For the remaining 25 percent, there can be certain delays in the payments. “There could be delay in payments. It is a difficult situation. The whole industry is facing problems,” Mr Kant said at a media briefing in Mumbai.

Tata Motors had been grappling with worse situations like declining sales, financial burden of its recent expensive acquisitions like JLR, Tata Nano projects delays, etc. However, the company remains optimistic about the whole auto scenario in India. We have seen improvement in sales in January. It is expected that February will be better than January and first indications are that March will be even better. As sales begin to increase, vendor purchases will also improve and a positive cycle will once again get created. Our credit period for vendors is between 30 and 60 days,” Mr Kant said.

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