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As demand continues to be subdued, automotive component makers in Rajkot have put their expansion plans on hold for the time being. The Rajkot-based industry claims that demand, and, in turn, production is down by 30 per cent this year.
Suresh Santoki, managing director of Amul Industries, makers of connecting rods and crankshafts said, "We were planning to put up a plant near Chennai for making connecting rods and crankshafts, to serve the auto industry in that region. The investment would have been to the tune of Rs 30-40 crore. However, now we have decided to put the plan on hold as there is no clear outlook on when the market will recover."
Amul Industries currently has plants in Rajkot and Sanand in Gujarat, apart from Pune in Maharashtra, Hyderabad in Andhra Pradesh, Jamshedpur in Jharkhand, Rudrapur in Uttarakhand, and Ranipet in Tamil Nadu. Santoki added that around 30 per cent of the production capacity is now lying idle.
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Moreover, with leading passenger carmaker Maruti Suzuki announcing to delay the commissioning of its proposed plant in Gujarat due to the current slowdown of demand in the market, component makers are being more cautious when going ahead with their expansion plans. As Santoki said, "For Maruti, we do not plan to set up a manufacturing base in Hansalpur area which will require further investments. We can supply the company from our existing locations in Gujarat."
However, around a year and a half back, several auto-component units in Rajkot were in an expansion mode. The entry of auto-giants like Tata Motors, Ford, Maruti into Gujarat, catapulting the state into the league of auto hubs had made the component-makers optimistic about future demand.
Himanshu Nandasana, managing director of Bhavani Industries, which makes transmission components, pointed out that the market sentiments are extremely low. "Our production is down significantly. We were making 1,000 units per month, now it is down to 600 units per month. Around 40 per cent of the capacity is lying idle. In such a situation, all expansion plans, whether small or big are put on hold. We have already invested around Rs 75-80 crore on the plant and machinery here."
The Rajkot-based industry feels that a demand upsurge is unlikely soon. "People are waiting for the Lok Sabha elections, and if there is any major spending on infrastructure projects announced, it could revive some demand in the original equipment manufacturer segment. That would eventually result in rise in orders for us. But as of now, no one sure as to when demand will revive," Nandasana said.
Some of the manufacturers have seen a drop in demand to the extent of 50 per cent. Rajkot-based Kadvani Forge Ltd, which manufactures closed die steel forged products and caters to the tractor and farm equipment sector, apart from petrochemicals, eatrhmoving equipment etc had plans to implement automation at its plant to improve quality. "Around Rs 30-40 lakh was the planned investment. We were also looking at scaling up capacity. However, in recent times we have seen around 50 per cent drop in demand. This has forced us to put all expansion plans on hold for the time being," said Himanshu Dhaduk, managing director of Kadvani Forge.
