Co cancels supplies to Manesar plant for two weeks
Anandita Singh Mankotia
With production at its Manesar plant coming to a halt, Maruti Suzuki has ordered cancellation of supplies to the plant for the next two weeks. As a result, the company?s vendors stand to lose around R940 crore and have, therefore, accordingly downsized their production.
?Currently, we have received directions to reduce supplies for only two weeks,? Nishant Arya, managing director of Jay Bharat Maruti (JBM) told FE. The story is no different for other component suppliers. With over 40% of the passenger car market share, Maruti is the largest volume buyer in the passenger car segment of the country?s R1.6-lakh-crore auto component market.
Set up as the largest JV with Maruti, JBM supplies sheet metal components, welded assemblies and exhaust systems among others to the automaker?s Gurgaon and Manesar plants. It clocked an annual revenue of R1,100 during 2011-12 through sales to its JV partner.
Even though the communication to cut supplies was instructed for just one production cycle lasting two weeks, company officials with the production side anticipate that suspension would last for at least one more cycle if not more. ?Officially we will review the decision only next week and inform our suppliers accordingly however from the look of it, it is highly unlikely that production will be halted for just a fortnight,? an official said.
However, once the investigation concludes, the company will take more time to bring workers and officials back to the plant which witnessed rioting and arson on July 18.
?It is a tough time for the vendors. We think the plant would be shut for at least three weeks but even if production resumes at the earliest, the company will go slow, it would step up production over a period of time only,? Deepesh Rathore of IHS automotive said. Rathore anticipates a production loss of close to 50,000 units because of the lockout.