Auto component major, Mico, a Robert Bosch group company, will close down its factory in Bangalore for five days from June 18 due to poor business and high inventory build-up.
"Adverse business situation and curtailment of orders by customers have necessitated this step by the company," a statement from Mico (Motor Industries Company Ltd) said. Mico's Nashik unit was also closed for nearly a week in May.
The statement said the company has decided to continue with its 5-day working week at the Bangalore plant, which was introduced from April 28, 2001.
Mico manufactures spark plugs, diesel fuel injection pumps, Blaupunkt car audio systems at its factories in Bangalore, Jaipur, Naganathapura and Nashik. It has a 80 per cent market share in diesel fuel injection pumps.
During the last one year, demand for auto-ancillaries has reduced owing to poor automobile demand. Most auto-ancillary companies have reported a decline in profits and margins in the current financial year, as demand has been low resulting in a pressure on their margins.
Mico recently went in for a buy back of its shares from its shareholders. In the first leg, in May, 2000, it went in for a buy back of 2 lakh shares at a price not exceeding Rs 4,200 per share. In the next leg in January, 2001, it went in for an additional buyback of a further 2 lakh shares for a price not exceeding Rs 4,000 per share.
After the two buybacks, Robert Bosch's stake increased to 56.99 per cent from 51 per cent. Financial institutions, banks and insurance companies have 27.43 per cent, foreign institutional investors 2.97 per cent and others have 12.61 per cent.
Mico's sales grew by 6 per cent year-on-year during the first quarter of fiscal 2001-02 to Rs 436.3 crore. Its operating expenditure grew by 6.2 per cent year-on-year during the period, while the company's operating margins decreased to 15.5 per cent in the first quarter this fiscal.
On June 13, Mico's share price closed at Rs 2,380, compared with Rs 2387.15 as of June 12.
