M&M to defer investment plans

S Ronendra Singh New Delhi | Updated on September 05, 2019 Published on September 05, 2019

Pawan Goenka, MD, M&M

May shut plants again in October if weak demand persists during festival season

Utility vehicles and tractors maker Mahindra & Mahindra (M&M) on Thursday said the company is cutting down on its investments by around 5 per cent to ₹800-1,000 crore from its overall investment plan of ₹18,000 crore till 2022 due to slowdown in the industry.

Speaking to mediapersons on the sidelines of the 59 Annual Convention of SIAM, Pawan Goenka, Managing Director, M&M, said: “At Mahindra & Mahindra, we probably will end up deferring about 10 per cent capex for auto and tractor (together)... it would come to around ₹800-1,000 crore.”

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In May, the company had announced that it plans to invest ₹18,000 crore over the next three years, including ₹12,000 crore on capex. “There is a concern in the auto industry because if auto sales fall, many others fall. If the industry does not turn back to positive growth for the remaining part of the months of the fiscal year, we may see more layoffs,” he said.

He said while M&M has not slowed down on investments on new products, it has deferred investments on other activities such as capacity enhancement and discretionary capex like repair and maintenance.

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“The capacity that we expected to need in two or three years from now is less as compared to the year ago, therefore there will be a slowdown in capacity investment as we would not like to invest... probably for a year,” Goenka said, adding that the auto industry is currently going through a challenging slump which has already resulted in massive job losses.

No room for discounts

Asked about expectations from the festival season, Goenka said the company is expecting minimum inventories during the season, but there will be no discounts on offer. “There are no rooms for discounts at this point in time,” he said, adding that if demand remains unhealthy during the festival season, the company may take another call of a shutdown in October.”

The company underwent a plant shutdown in August to adjust production. “Probably in September, we will produce full capacity; and in October, we may adjust if sales in Navratra don’t go as per expectations,” Goenka added.



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Published on September 05, 2019
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