Sporadic lockdowns in automobile hubs such as Aurangabad, Pune and Bangalore in July have severely disrupted production of tractors, one of the few sectors that have seen a spike in demand post the coronavirus pandemic, senior industry executives said.
The farm equipment segment saw capacity utilization recover swiftly to about 90-95% in June after the nationwide lockdown was lifted as an above-normal monsoon and higher crop acreage generated demand, but much of the gains have been lost in July as intermittent lockdowns in the hubs to contain the virus have thrown production into disarray.
For instance, more than 75 covid cases were reported at German automotive supplier Bosch’s Bangalore plant earlier this month as a result of which production of critical parts and supplies were disrupted. Similarly, several parts suppliers based in Aurangabad had to shut their facilities after local authorities ordered a lockdown during the second week of July.
“The localized lockdowns enforced in certain cities are hampering the ramp-up of the supply chain and, thus, affecting production at OEMs (original equipment manufacturers)," said Hemant Sikka, president, farm equipment sector at Mahindra and Mahindra Ltd, which has a 42% share of the domestic tractor market.
“Many suppliers were either in the containment zone or were forced to shut plants under new regional lockdowns during July. Plant capacity utilization, which was 90% in June, dropped to 50-65% in July as tractor production came to a halt due to a shortage of key parts," Bharat Madan, group chief financial officer, Escorts Ltd, said in a phone interview.
Hoshiarpur-based Sonalika Group, which recorded its highest-ever retail billing of 15,200 tractors, including exports in June, saw its July production drop sharply month-on-month.
The company, which commands roughly 15% market share in the tractor market, did not disclose its adjusted production volumes during July.
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