Kolkata auto part units search for green shoots

The economy might be recovering, but the small and medium (SME) auto parts industry in Kolkata is still looking for the green shoots that would end their struggle to keep their businesses afloat.

Auto industry the world over was among the worst hit in the recent economic meltdown, with the impact trickling down to SME auto vendors and ancillaries in a big way.

Not many see a turnaround before March-April 2010, when hopes are pinned on the annual budget with the expectation that the government will announce comprehensive measures to help the industry.

Naveen Jaiswal, proprietor of Shakti Industries and Ashoka Repair Works — a company with annual sales exceeding Rs 1 crore — said, “Business went down almost 50 per cent in the last fiscal due to the economic meltdown. We bore a large brunt of the problems owing to our small structures.”

Much of the Kolkata industry’s fortunes are however linked to those of local car manufacturers and the local auto market. Problems have compounded for those who set up shop and expanded in the hope of gaining contracts from the Tata Nano factory in Singur.

Even though the recession is ebbing, Jaiswal complains, “It might be correct to assume that recession is now over, but factories were shut for almost a month prior to Durga Puja. Sales have improved this year compared to last year, but the losses we have incurred will be tough to recover.”

With mother companies in difficulties, ancillary industries are struggling as well. Pankaj Jaiswal, a partner in Industrial Steel Center, who supplies bright bars (basic raw material) to auto part manufacturers, said, “Survival for those who supply to just the auto industry has become a struggle due to a fall in demand.”

So while the government might think that the worst appears to be over after two years of financial turmoil, the ground realities for the SME auto parts industry are a lot different.