Mumbai: Hinduja Flagship company Ashok Leyland will follow a 3-day working week for the next two months as it cuts production of commercial vehicles amidst falling demand.

''Taking into account the inventory in pipeline and the suppressed market demand, Ashok Leyland has decided to moderate the production plan for the next two months,'' the company said in a statement.

Lshok Leyland said it would reduce the number of working days to three days a week till December this year, adding, ''The decision has been partially influenced by the problems encountered by the suppliers as a result of power shortage in some parts of the country.''

The company, meanwhile, reported a 50.23 per cent decline in vehicle sales in October at 3,397 units, compared with 6,825 units in the same month last year.

Domestic sales for the month stood at 2,976 units as compared with 6,280 units in the corresponding month last year, down 52.61 per cent, it said.

Exports, during the month also declined by 22.75 per cent at 421 units as compared with 545 units in the same period last year.

The market for medium and heavy duty commercial vehicles has been facing problems of inadequate finance and high interest rates resulting in a reduction in demand.

''We could secure price increases despite demand contraction in the market which helped us partially offset material cost increases. A further price increase of about 2 per cent has also been effected in October '08. However, the major factor that affected the financial results of the half year was the significant impact from the adverse movement of forex rates'', R Seshasayee, managing director had said while announcing the company's quarterly results on 21 October.

Pricing actions taken to partially offset material cost increases have helped improve the sales turnover, he had then said.

Ashok Leyland, however, registered a sale revenue of Rs1,866.40 crore in July-September'08, up 6.9 per cent over Rs1,745.89 crore in the second quarter of the last fiscal.

Net profit for the quarter was down 16.4 per cent at Rs67.24 crore (Rs80.34 crore) as expenses grew to Rs24.58 crore (Rs12.63 crore) and unrealised loss on restatement of foreign currency assets and liabilities amounted to Rs14.35 crore as against a gain of Rs4.62 crore last year.