Jamna Auto To Cut Production Amid Sales Slowdown

Jamna Auto Industries Ltd., a maker of springs used in vehicle suspension, will cut production at its plants in August as India’s worst sales slowdown in a decade affected suppliers of paints and tyres to lighting equipment.

“The plants will run in accordance with production schedule in August. However, due to cut in production, on some working days plants may not require to be run or may run partially,” the nation’s second-largest maker of multi-leaf and parabolic springs for commercial vehicles said in an exchange filing.

The annual production capacity of Jamna Auto, which has about 70 percent market share in domestic original equipment manufacturing space, is 250,000 million tonnes per annum across nine cities in India. Its customers include Ashok Leyland Ltd., General Motors Company Ltd., Mahindra & Mahindra Ltd. and Tata Motors Ltd., among others.

Demand for two-wheelers and cars to utility vehicles in Asia’s third-largest economy have been falling since Diwali festival last year—another indicator of a consumption slowdown in the economy. That forced auto and auto parts makers to cut production, lay off contract workers and shut showrooms across India.

And Jamna Auto is not alone. Commercial vehicle maker Ashok Leyland decided to cut production to ease stress of dealers as inventory piled up. The truckmaker also shut its Pantnagar facility for nine days as demand fell. Cars to utility vehicle maker Tata Motors Ltd., too, closed its plant at Pantnagar for two days in July.

Two-wheeler maker TVS Motor Company Ltd., in a post-earnings conference call with analysts, said elevated channel inventories are headwinds for the company and industry. And Maruti Suzuki India Ltd. sent nearly 10 percent of its contract workers on a leave amid slowdown.

German automaker Bosch also extended production shutdown at its plants in August. That’s despite closing four units for 12 days in the past fortnight. Production will be halted for five days at Bosch’s Gangaikondan, Tamil Nadu, plant this month, while it will be suspended for eight days at its Nashik unit.

Shares of Jamna Auto fell as much as 1 percent in early trade today, compared to a 0.5 percent gain in the benchmark NSE Nifty 50 Index.