India - Crises in ancillary units hit major car makers

Reading time: min

Major business houses, including the Tatas and Mahindras, have been hit hard due to the crisis in their ancillary units, which are reeling under rising raw material and power costs. Small and medium industrial units here are supplying spare parts and various components to industrial majors like Tatas, Larsen and Toubro, Mahindra and Mahindra, Crompton Greaves, and the Kirloskars.

However, as these units here, mainly at the Gokulshirgaon industrial estate, are facing a crisis due to raw material costs, the big companies are compelled to modify their production schedule and rate structure. The ancillary units here say that while globalization has increased the scope for quality casting, the scarcity of raw material at affordable prices and lack of power supply on subsidised rates have hit them hard.

B S Parvate-Patil, president of the Gokulshiragaon Manufacturers Association (GMA), points out that "if small and medium industrial units in and around Kolhapur are to be encouraged in view of national and global market requirements, special provisions have to be made to provide raw material at reasonable rates. Also, a hike in power tariff should be duly checked."

"Coal from China for instance is available in better quality and at cheap rates. But the coal supplied by state-owned companies in the domestic market is not affordable and lacks quality. This situation has to be changed," he said.

He added that the demand for spare parts and quality castings in global market is on high mostly because developed countries are now concentrating more on checking pollution and hence are reluctant to encourage ancillaries in their countries.

"While developing countries should take advantage of this situation, both the government and the concerned organisations should come forward to sort out the crisis being faced by ancillaries in the small and medium sector," Parvate-Patil said.