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In a sign of deepening troubles for the automotive sector, Mahindra & Mahindra (M&M) has terminated the services of 500 temporary staff employed at its Chakan plant near Pune.
The company has declined to renew the employees’ contract. The termination is not from the shop floor, as M&M does not employ contract labour on the shop floor, a source close to the development told Business Line.
The temporary workers were employed mainly at the company’s logistics and support division, another source said. The sources declined to be identified due to the sensitivity of the issue.
When contacted, an M&M spokesperson confirmed the development.
Investment delays
“We have reduced 500 temporary workers from across our plants due to the prevailing situation within the auto industry. We have not yet taken any call on delaying investments but if the current situation prevails we may have to,” an M&M spokesperson said.
M&M manufactures its XUV500 and Rexton (sports utility vehicles) and commercial vehicles from this plant. Apart from Chakan, the company’s other plants are located in Nashik and Haridwar.
M&M, which also makes two-wheelers and farm equipment, posted a 7.04 per cent decline in domestic sales in June to 36,207 vehicles (38,951 units in June 2012).
On July 11, the company announced that it would stop production at its plants for up to eight days this month to reduce inventory, joining the bandwagon of automakers to have stopped production to minimise inventory pile-up.
Automobile manufacturers have been hit by persisting weak demand and the falling rupee, leading to an increase in manufacturing costs. On Monday, M&M shares closed at Rs 927.90 on the BSE, up 2.46 per cent, while the main index closed up 0.38 per cent.
rajesh.kurup@thehindu.co.in
alka.kshirsagar@thehindu.co.in
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