CHENNAI: While not directly citing the drop in demand post demonetisation, home-grown auto major Mahindra and Mahindra stated on Friday that it was stopping production in a few of its plants for certain days in December, besides the normally scheduled annual maintenance shut down, to adjust inventory.
Just a day ago, on Thursday, Nissan had announced that it would be reducing the number of shifts at its plant near Chennai as part of its optimisation drive with no loss of jobs for employees on its rolls.
While, neither company stated that the demand drop following demonetisation played a part in the decisions, experts say that inventories and production have to be re-adjusted following demonetisation. “Demand has fallen precipitously and companies will have to readjust production. It is something that everyone will have to do, since no one expects demand to pick up for a few months,” said an auto analyst who did not want to be named.
Mahindra put out its announcement as a BSE filing on Friday, stating, “The company will be undertaking scheduled maintenance shutdown at some of its automotive and tractor plants in December 2016,” adding that it will also “observe on need basis a few days as ‘No production days’ at some of its automotive and tractor plants,” including the Chakan plant of its wholly-owned subsidiary Mahindra Vehicle Manufacturers as part of its efforts to optimise inventories during December year-end.
“The management does not envisage any adverse impact on the availability of products in the market due to adequacy of stocks to serve the market requirements,” the company said. Demonetisaion hit automobile sales in November, especially in rural areas.
The company had reported 21.85 per cent decline in its total sales in November.