The Hindu Business Line : Continental to take a hit on lower supplies to Nano

Slowdown effect
Continental was to supply fuel supply units, usually known as heart of the engine, for the Nano
Tata Motors has asked the company to reduce the number of those units

K. Giriprakash

Bangalore, Nov. 26 Continental Automotive, a leading global auto component maker, has said that the revenue growth of its Indian operations will be hit because of the slowdown even as its key customer Tata Motors has asked it to scale down supply of certain parts for the Nano small car project. The company has been contracted to supply fuel supply units for the Nano.

Continental also said that its Indian operations face a couple of “hard” years because of the economic slowdown and hence in a few of its locations, it may ask its employees to go on vacation.

“In light of significantly reduced customer per-committed volumes, in a few of our locations there are possibilities of declaring planned vacation, where employees may avail themselves of their accumulated leave,” Continental Automotive’s Managing Director for Indian operations, Dr Markus Distelhoff, told Business Line.

He, however, pointed out that no employee has been asked to leave the company so far. Continental has about 2,300 employees in its Indian operations.

Nano pressure

Dr Distelhoff said Tata Motors had asked the company to reduce the supply of a key part for the Nano project. “The volume indications given by Tata (Motors) for the rest of 2008 and 2009 are lower than what was projected at the time of awarding the contract. This would have an impact on us in terms of reduced sales for Tata Nano,” he said.

Giving details of the project, Continental Automotive’s Executive Vice-President for key accounts management for India, Mr Viswanath Nagaraj, said his company had been contracted to supply fuel supply units, usually known as heart of the engine, for the Nano . But Tata Motors later asked the company to reduce the number of those units as the “projected volumes had been changed.” He did not give details of the revised volume target.

Big challenge

Dr Distelhoff said the auto parts major faces one or two hard years ahead with major challenges.

“But as always, each big challenge presents significant opportunities. With the introduction of new products we are setting up new lines, but the speed of implementation is slow paced,” he said.

He pointed out that the company is being extremely careful as far as costs are concerned.

“Every step of the supply process is clearly scanned, from incoming material to finished goods and inventory is being closely monitored to eliminate unnecessary costs in the system,” he said as the company tried to overcome the current crisis.

However, there have been no changes in its joint venture with Ricco Automotive and is proceeding according to plan.

Dr Distelhoff said the company’s investment plans are linked to the investments made by its OEMs and more directly to their new product launches rather than production volumes.

“As of today, no OEM has notified us of significant postponement in new product launches which would translate into postponement of our investment plans,” he said.

Related Stories:
Continental opens electronic facility in Bangalore
Continental to make customised products for SMEs

More Stories on : Outlook | Automobile Components

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page