Rabi crop to decide fate of Rajkot auto units

The rabi season is likely to decide the fate of Rajkot’s auto components industry, which is operating at reduced capacity owing to weak demand from automobile makers. A good rabi crop season would spur demand for automobiles in the next calendar year, industry sources said.

Many auto components units in the region have scaled down operations to save on costs owing to the empty pipeline of new orders.

“We have reduced operations to five or six hours a day to cut maintenance costs, as we do not have new orders in the pipeline. Now, our only hope is the rabi season’s agriculture output, which will come in the market in the next three months. If that goes well, we can expect some good orders flowing in for the industry,” said Vishal Holani, director of Holani Bearings Private Limited, a tier-II supplier that mostly supplies to retail markets across India.

According to Holani, due to the overall slowdown and the negative performance of the auto industry, demand in the retail market has declined by 30-40 per cent in the past two months.

The Rajkot-based auto components industry, which has an annual turnover of around Rs 800-1,000 crore, is not very optimistic about growth in the New Year, mainly because of the lack of fresh orders owing to weak global economic conditions.

“The current calendar year has turned negative for us mainly after June. At this moment, there is already a loss of over 20 per cent in the total business,” said Suresh Santoki, managing director of Amul Industries.

Amul has a manufacturing unit in Sanand and supplies parts for the Tata Motors’ Nano car. The company is currently operating a single shift owing to the low level of orders for the Nano. The company supplies auto parts to companies like Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Ashok Leyland, John Deere and several others.

“Because of the slowdown in the infrastructure development-related industry, the demand for trucks and other heavy vehicles has also come down. On the other side, the weak monsoon has affected the agri industry, resulting in reduced auto demand from the rural areas. All these factors have affected the auto components industry in Rajkot,” said Santoki.

There are 500 auto components manufacturers located in Rajkot. Of these, some 50 are suppliers to original equipment manufacturers, while the rest are small players that supply to the retail market. The industry in Rajkot produces more than 300 types of parts for the automobile industry and employs about 10,000 people.