 "Slowdown begins to costs jobs in auto sector")
Last week the company announced production holidays ranging from 1 to 8 days during the remaining period of this month at its plants to avoid pile up of inventory and keep production in line with retail demand.
The Mumbai-based company has also signalled that the Rs 5,000 crore capital expenditure lined up for this year and next two years may get postponed by 1-2 years as existing capacities will take more time to reach peak levels. The company is however yet to take a concrete call on this.
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“We have reduced 500 temporary workers from across our plants due to the prevailing situation within the auto industry. We have not yet taken any call on delaying investments but if the current situation prevails we may have to”, a mail from the spokesperson at Mahindra stated.
About Rs 2,500 crore from the Rs 5,000 crore capital expenditure plan would be routed to investments in group companies. There may however be not cut in investments on new product development by the company.
Additional excise duty of 3%age points slapped on SUVs during the last budget has impacted sales of the company. From 27% earlier the tax increased to 30% impacting models such as XUV500, Scorpio, Xylo and Bolero leading to demand slump.
The company makes personal vehicles and commercial vehicles at Chakan, Kandivali and Nashik in Maharashtra, Haridwar in Uttarakhand and Zaheerabad in Andhra Pradesh. Besides, it also has an engine making plant in Igatpuri, Maharashtra.
Last month Maruti Suzuki, India's largest car maker, cut production by around 25% as demand across car models slowed down. This month the company asked about 200 people from the Suzuki Powertrain India unit to go on an indefinite leave in an effort to align production of diesel engines in line with market demand.