World's largest two-wheeler manufacturer Hero MotoCorp on Friday said its manufacturing facilities would be closed for four days from August 15 due to the "prevailing market demand scenario". The company said the production planning was a matter of advance monitoring of the market dynamics and prudent demand forecasting. "While this has been part of the annual holiday calendar on account of Independence Day, Raksha Bandhan and the weekend, it also partly reflects the prevailing market demand scenario," the company said in a statement to stock exchanges. Hero MotoCorp had reported 38.28 per cent year-on-year growth in its net profit at Rs 1,257 crore for the first quarter ended June 30, 2019.
Due to the ongoing slowdown and widening losses in the auto sector, several auto and allied businesses are partially shutting down operations. Jamna Auto Industries Ltd, a maker of springs used in vehicle suspensions, said last week that it might shut all its plants in August due to weak demand. Listed auto manufacturer Bosch Ltd on Tuesday said it had begun restructuring parts of its business in light of a deepening slowdown in the country's automotive industry. The German car parts supplier posted a drop in June-quarter profit. Bosch, the latest firm to flag weak conditions in the Indian auto market, said its automotive sales dived 17.5 per cent in the June quarter.
The auto industry, which accounts for 7.1 per cent of India's GDP, has been in the throes of crisis for almost one year now as the sales are falling month after month, forcing manufacturers to temporarily shut factories as well as showrooms and lay off workers. In the face of accelerating showroom shutdowns and job cuts, the industry's clamour for reducing the Goods and Services Tax (GST) rate from 28 per cent to 18 per cent to accommodate the downturn is getting louder of late. M&M Group Chairman Anand Mahindra, during the company's 73rd AGM last week, pitched for short-term measures to catalyse consumption. "The most obvious and welcome first aid would be some temporary relief on the GST front, either by modifying the slabs, or, if that is not possible, by removing the cess," said Mahindra.
As per auto industry body SIAM (Society of Indian Automobile Manufacturers), almost 15,000 jobs, mostly temporary and casual workers, have lost jobs in the automobile manufacturing companies over the last two to three months. The body said the entire auto sector is reeling under a prolonged slump, affecting vehicle sales across all segments. Following the past nine-month trend, the July auto sales fell by over 18.71 per cent over the corresponding month last year.
Manoj Sharma with agency inputs