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Now, ancillaries of Maruti in trouble

autos Updated: Jul 27, 2012 00:27 IST
Debobrat Ghose
Maruti’s Manesar plant

The violence at Maruti’s Manesar plant followed by a lockout is causing panic among thousands of micro, small and medium enterprises (MSMEs) in the Industrial Model Township (IMT) near where the trouble started and the adjoining industrial areas of Gurgaon, Faridabad and Sonepat.

The MSMEs, which include more than 1,000 ancillary units of various sizes directly or indirectly supplying parts or services to Maruti, are considering the incident as a precursor to a deeper industrial unrest following what they see as the government’s inability to provide security to industries. The violence has also had a cascading effect on the businesses of vendors and sub-vendors supplying components for India's largest car maker. Sub-vendors supply components to the ancillaries that directly serve Maruti.

The lockout has compelled many MSMEs to completely shut down production. The micro units that supply to sub-vendors have been the worst hit.

"During normal dispatch functioning, an SME can have an inventory of two hours only, but due to the lockout, there’s 100 per cent shut down," said Ashwani Kumar of D Electronics, a sub-vendor to Maruti.

“With the demand for ball pins dropping drastically, I lost almost 40% business last week,” said Dinesh Yadav of DSC Auto Engineering.

The production in most ancillaries at Udyog Vihar (Gurgaon) has declined by 50-60%, with several units reporting losses due to piling up of inventories. This has affected the lives of nearly 250,000 workers directly or indirectly associated with MSIL.

Despite financial constraints, some are even considering relocating to states with better governance and law and order situation.

“If Maruti moves from Man-esar, more than 80% of auto ancillaries will go,” said Manoj Tyagi, general secretary, IMT Association. “Some MSMEs are already talking about it.”

Entrepreneurs whine about poor policies and lack of governance and industrial security and the indifference of the state industrial development corporation, besides infrastructure bottlenecks, among reasons that have hit MSMEs in these industrial areas.

“The policies are skewed and have proved detrimental for the MSMEs,” said Raj Singla of Pacfield India, Gurgaon. “There has been no redressal of our grievances for years.”

(With inputs from Deevakar Anand, Gurgaon).