M&M axes 500 temporary staff

Sports utility vehicle market leader Mahindra & Mahindra has laid off 500 temporary workers as production at its plants falls. Last week, the company announced production holidays of one to eight days to avoid inventory pile-up and align production with retail demand.

The company has also indicated the Rs 5,000-crore capital expenditure lined up for this year, as well as the next two years, could be postponed by one to two years, as the current capacity would take time to reach peak levels.

"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," read a mail from a company spokesperson.

Of the estimated Rs 5,000-crore capex, about Rs 2,500 crore would be investments in group companies. The company's investments on product development might not be cut.

In the Union Budget 2013-14, an additional excise duty of three percentage points was announced for sports utility vehicles. This hit the sales of the company's models such as XUV500, Scorpio, Xylo and Bolero.