The recovery of global financial market also reflected in the capacity use (CU) of the India Inc. Most of the major companies are restructuring their expansion plan. A FE study reveals that the average CU of the 101 large companies increased from 82.21% in 2008-09 to 85.93% in 2009-10. Out of the total sample, slightly more than 62% companies achieved higher CU in 2009-10 with 18 companies hitting over 100%.

Among the companies achieving over 100% CU, three belonged to engineering, three fertiliser companies, two oil & gas companies, two pharma companies, two tyre companies and one each in cement, steel, food products, cigarettes, personal care and automobiles. Companies in the automobiles and steel industries were the star performers in 2009-10. The average CU of 6 automobile companies increased from 63.63% in 2008-09 to 76.27% in 2009-10. Maruti Suzuki achieved the highest average CU among the automobile companies in 2009-10. According to Directors? report, the company raised the capacity of its next generation K-series engine plant to more than 500,000 units per annum.The company also started work on an additional plant of 2,50,000 cars per annum capacity at Manesar.

It is making all efforts to maximise capability through de-bottlenecking and productivity improvement to meet market demand before the new facility comes up. Following strong demand in the Manesar models,the company created facilities to co-produce the Swift in the Gurgaon plant. On the other hand, the average capacity use of 8 steel companies increased from 70.44% to 80.79% during the study period. Tata Steel achieved the highest CU during 2009-10. According to company?s report capacity of the company?s crude steel capacity from 6.8 million tonne per annum to 9.7 million tonne per annum at its Jamshedpur Works by 2011-12.

Simultaneously the company also has a few major ongoing capital projects which includes the capacity augmentation of Hot Strip Mill,Coke Dry Quenching at Coke Ovens Batteries 5,6 & 7 and setting up a new mill for producing Full Hard Cold Rolled coils at Jamshedpur. On the other hand, a significant decline in CU was seen in the case of pharma and tyre companies.

The average CU of four pharma companies decreased from 92.84% in 2008-09 to 92.42% in 2009-10. Significant decline in CU was seen in the case of Ranbaxy Lab and Dr Reddy’s Lab. Most of the pharma units in were affected due to various factors including non-availability of important raw materials, lower tender business in anti-retrovirals and unfavourable movements in foreign exchange rate. However positive signs had begun to emerge in many countries, signifying recovery from the general recession and economic crisis.

On the other hand the average CU of four major tyre companies decreased from 167.38% to 138.56% during the study period.