M&M resorts to plant shut down to clear tractors' inventory

After Maruti Suzuki India Ltd (MSIL) and Tata Motors, Mahindra & Mahindra (M&M) has announced production cut at its tractor plants as well as inventory has started piling up with the economic slowdown taking its toll.

M&M on Tuesday said that it has decided to shut down its tractor plants at Jaipur and Rudrapur for a few days to clear up the inventory pile-up. The planned shutdown will take place between March 24 and March 31.

"As part of aligning its production with sales requirements, the company will be observing noproduction days at its tractor plants at Jaipur for five days and Rudrapur for two days," the company said in a statement. "The management does not envisage any adverse impact on availability of tractors in the market as there is adequate stock to serve market requirements."

M&M had reported a 2.97-per cent contraction in its total tractor sales in February this fiscal at 14,861 units down from 15,316 units in the same month last year. MSIL had stopped production at its Gurgaon plant on Saturday and has now decided to follow a five-day production schedule until excess stock is cleared.

"To manage the stock, we have decided to suspend production of cars at Gurgaon and Manesar plants for a day. In future too, according to market demand, we may hold up production," the company spokesperson had said on Friday. "Instead of slowing down production, we decided to go with full production during working days, and to give our employees an extra holiday."

Even Tata Motors has almost halved production of commercial vehicles at its Jamshedpur plant. The company has also asked some of its employees at the Jamshedpur plant to work every alternate month. Tata Motors sales in the medium and heavy vehicle segment contracted 29 per cent to 117,682 units in February.

The company has also scaled down production of Nano. The auto sector has posted its lowest growth in a decade and passenger vehicles sales in 2012-13 are expected to be worse than 2008-009. The worst hit are commercial vehicle sales, which have fallen by almost one-third due to weak economic sentiment and lower growth.

"This is the worst phase for the auto sector in last decade. It is even worse than 2008. All segments barring utility vehicles are hit but the worst hit is the commercial vehicle segment. Almost all commercial vehicle manufacturers are bleeding. Demand will only go up when there is an increase in the business activity," said S. Sandilya, president, Society of Indian Automobile Manufacturers and chairman of Eicher Motors Ltd, told Mail Today. "The commercial vehicle segment is the first to get hit and the last to recover. If there is no positive policy measure or turning around of the economy, we expect the spillover effect to continue in the next financial year as well.

Courtesy: Mail Today