Chennai based auto component manufacturer Rane Group has deferred half of its Rs 250 crore capacity expansion plans citing sluggish demand.
“The demand situation was manageable till September last year but from October it became alarming” ,L Ganesh, Chairman, Rane Group said. “Our exports to the US have been hit by 30-50 per cent and on the domestic front we are hit by the slump in demand for commercial vehicles.”
The company has deferred all expansion projects since October and does not expect demand to pick anytime soon.
“We are bracing ourselves for a very tough 2009. If there is any improvement, it would be a pleasant surprise,” Ganesh said. “The slowdown started with a lack of finance but now lack of demand from the consumer side is also harming us. Though liquidity has improved considerably there has to be a major infrastructure project for things to turnaround.”
The group which lost Rs 2 crore while setting up its plant near the now defunct Tata Motors' Singur factory, has eight companies under its fold with a cumulative turnover of $ 351 million.
“We are trying to conserve as much cash as possible. Though there are no defaults from original equipment suppliers yet, almost everybody has delayed payments,” he added.
The company has 24 plants around the country and produces a host of components from engine vales,steering and suspension systems, brake pads and linings to steering columns.