Manesar unit may stay closed till mid-August

Maruti Suzuki’s Manesar plant is likely to remain closed till mid-August, with the company asking its component vendors to discontinue supplies for two more weeks.

Senior company officials told Business Line that at a production planning meeting held last Wednesday, it was decided not to start operations at Manesar for at least two more weeks.

“For the next fortnight, we have not accounted for any production from Manesar. We have a production meeting every two weeks, after which we communicate to suppliers, so that they have a tentative idea and inventories don’t stack up,” the official said.

At present, officials from parent firm Suzuki Motor Corp, Japan, are completing their assessment of the damages and are running a final check on the machines in the production line.

Production schedule

Production is likely to commence only when arrests of all those involved in the clash have been made and security of officials is ensured.

Most external repairs have nearly been completed at the offices and the entrance gate number 2 of the factory, both of which were gutted by fire post the violence on July 18 that claimed a life of an official and injured 96 .

In all, the carmaker is expected to lose about Rs 2,700 crore in the month-long closure on non-production of key models such as the Swift and Dzire. The Manesar-made vehicles accounted for 40 per cent of Maruti’s sales between April and June this year.

Vendors’ Losses

Component makers, who are losing about Rs 43 crore daily on non-supply to Manesar, could lose in all Rs 1,070 crore over a month-long closure (25 working days approx) of the plant.

According to a company official, vendors’ accumulated losses till now are estimated to have touched about Rs 600 crore.

This is based on a calculation that 1,900 cars were last made daily at Manesar and 75 per cent of the vehicles’ production cost is earned by the vendors (average of Rs 3 lakh for the Swift, Dzire, A-Star and SX4)

Credit rating agency ICRA has also placed 14 auto component makers on watch. These companies, which include Jay Bharat Maruti, Lumax Industries, Kalyani Thermal Systems and Subros, all have a high business dependence on Maruti.

(This article was published on August 3, 2012)
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