Corporate crunch shows the wounds beneath GDP numbers
The GDP numbers only indicate what corporate India has been battling for almost the last six months. Every sector from automobiles, steel, consumer durables, textiles, real estate to cement has been hit by the slowdown. The response by India Inc has been predictable, laying off workers, pruning salaries and putting expansion on hold.
After a six-year bull run, automobile sales are negative this fiscal. So far there has been roughly a 1 percentage point drop in sale of cars while commercial vehicle sales have dipped by 20 per cent. Since October, Tata Motors and Ashok Leyland have shut plants on numerous occasions while Renault-Niisan upcoming project in Chennai is on hold. The list is long and growing.
"Honda's Greater Noida facility has a production capacity of one lakh unit, but this fiscal we expect to sell only about 55,000 units. Hence, we have deferred our second plant at Rajasthan indefinitely till the time capacity at Greater Noida is utlised to the full," said Masahiro Takedagawa, President and CEO, Honda Siel Cars India (HSCI).
The worst-affected is the textile industry, suffering from sluggish export demand and capital shortage.
"It is a difficult market and we have frozen all expansion plans. The need of the hour is to consolidate and not diversify," said Shekhar Aggarwal, vice chairman, LNJ Bhilwara Group.