The downturn has bypassed tractor demand; ancillaries run near capacity.
Auto ancillaries in Chandigarh have been able to avoid the worst effects of the current slump. The 200-odd small and medium units in the region are running at near-capacity. A dip in steel prices and the fact that their mother units, the tractor manufacturing firms, have been able to weather the slowdown have helped these businesses stay afloat.
Dinesh Arora, president, HMT Ancillaries Association, said that the 44-odd members of the association were struggling for survival six months earlier when steel prices were Rs 40 per kg. Now, when steel was available at Rs 26 per kg, most units were finding it a lot easier to sustain, he added. He also said that the slide in demand due to recession has not affected these units in any substantial manner.
Naresh Kansal, propertier, Kansal Engineering, Chandigarh, said there was little or no downswing in demand and he expected to meet production targets for the year. Kansal also said the dip in steel prices was a huge positive and added that no jobs had been cut as a cost-cutting measure in the region’s ancillaries.
“There has been a demand slowdown in the commercial vehicles segment, but passenger vehicles are doing fine,” said Kansal.
Most ancillaries in the region draw orders from tractor manufacturers (HMT tractors, Punjab Tractors and Sonalika Tractors), Swaraj Mazda, Mahindra & Mahindra and Maruti.
Of these mother units, the performance of most is heartening for auto ancillaries. Punjab Tractors Ltd has been able to meet its annual target of 32,000 tractors for this year. Its target for next year is 40,000, which is great news for ancillaries. HMT Tractors’ performance has been a little suspect, with annual production of about 5,000 tractors. However, auto ancillaries have also been battling lack of credit. Bankers, increasingly risk-averse, are hesitant to lend.