Labor Issues: In ‘danger zone’ due to Maruti strike, says Sona Koyo

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The labour unrest at Maruti is taking a serious toll on auto component manufacturers. The problem is not restricted to Maruti alone anymore. All those companies that supply to Maruti are facing the effect. And one such company is Sona Koyo .

In an exclusive interview to CNBC-TV18, chairman Surinder Kapur says that things are in a ‘danger zone right now.’

“Maruti’s production is currently limited only to Gurgaon. That also is almost 50% or 1/3rd of what they normally produce. So I would say we are in a danger zone,” he explains. He further adds that due to the strike at Manesar, Sona Koyo has shut operations for tomorrow.

Below is an edited transcript of his interview with Shereen Bhan.

Q: This is not just Maruti’s problem anymore, is it? It is a problem that impacts all of you, Maruti’s vendors and of course the auto component industry at large. ACMA says that almost Rs 300 crore worth of production losses have now been borne by the auto component manufacturers. Would you agree with that figure?

A: What I have read is that Rs 350 crore worth of excise duty has been missed in this area. If you take an average of 10%, it would probably turn out to be that their production loss or sales loss is close to Rs 3000 some odd crore.

If you see, almost 70% of what Maruti sells is really bought out. This of course includes steel, tyres, batteries etc. So the loss is probably somewhere close to Rs 300-500 crore in sales. So yes, that’s a correct figure.

Q: The Maruti chairman, Mr. Bhargava just spoke with us and he said that if the situation doesn’t begin to improve and production continues to be stalled at Manesar as well as its Gurgaon plant, vendors will be forced to shut down. Do you believe you are at that point where vendors are going to have to shut shop?

A: I think we are very close to that point. For example, we are shut tomorrow, which normally we would not be. We have decided to close tomorrow and day after, so we are taking a long weekend this week.

I am talking specifically of our plants which cater only to Maruti. The others of course are running because the other customers we have are incidentally doing very well right now. Their schedules are going up day by day and Maruti’s schedules as you all know are way down because their production is limited only to Gurgaon. That also is almost 50% or 1/3rd of what they normally produce. So yes, we are in a danger zone.

(Article Url: http://www.moneycontrol.com/news/business/in-danger-zone-due-to-maruti-strike-says-sona-koyo_598975.html)

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