Crisis Hits Coimbatore
The production cuts announced by CV manufacturers Ashok Leyland and Tata Motors and enginemaker Tata Cummins, have left the Coimbatorebased small-scale component suppliers high and dry. They are also being forced to reduce output and trim working days. The 40-odd regular vendors of Ashok Leyland and Tata Cummins are stranded with shrinking orders and struggling to break even. They were already facing high production costs and reduced export demand. Meanwhile, leading auto component firm, LG Balakrishnan & Brothers has informed BSE on Monday it hs laid off workers at its plant at Banglalore due to adverse market conditions.Sources say business of auto component units at Coimbatore would be down by at least Rs 50 crore a month due to the current slowdown in commercial vehicle segment. “These manufacturers get nearly 50% of their business a month from Ashok Leyland (ALL). With ALL deciding to keep its plant working for only three days a week during November and December, their offtake will decline,” said RSM Autocast MD and Coimbatore District Small Industries Association (Codissia) president K Ilango. His firm has had to cut back production by 20%.
One of the direct suppliers to ALL, RSM Autocast was doing a business of Rs 1.5 crore a month earlier. It exports 50% of its production, and due to the global meltdown, even that has slowed down. “Still we are looking at exports to offset the loss in the domestic market,” Mr Ilango said. “In order to cater to big customers like ALL, we had expanded capacity and suddenly the slowdown has come as a shock to us”, he said. Foundry firms like Sandfits Foundries have suspended one production shift and are operating at lower capacities.
“Against our actual capacity of 1,100 tonnes per month and now we are doing only 600 tonnes per month,” Sandfits MD R Saravanan told ET. “We are operating only two shifts against the normal three shifts and have stopped extra hours and announced weekly one day holiday,” he added. Mr Saravanan also said his company would consider giving lay offs to workers, when the migrant workers from Bihar returned from their Diwali holiday. “The orders have come down but we are maintaining the same overheads and hence struggling to meet financial commitments,” Mr Saravanan said. His company supplies auto components to ALL, Hyundai Motors, TAFE and Tata Cummins.
