Economic slowdown impact: Mahindra and Mahindra defers Rs 1,000-cr capex

plan by year

 The company that recently underwent a plant shut-down exercise to adjust

production also said that if sales do not pick up in the festive season, it may have
to undertake the exercise again in October

 At Mahindra & Mahindra (M&M), we probably will end up deferring about 10

percent capex for auto and tractor (together)... it would come to around Rs 800-
Rs 1,000 crore, MD Pawan Goenka said

 He said the auto industry is currently going through a challenging slump which
has already resulted in mass job losses

New Delhi: Owing to the slowdown in the automobile industry, Mahindra &
Mahindra has deferred its planned capex of around Rs 1,000 crore by a year,
which, if not reversed within this fiscal, would lead to more job losses in the
sector, the company's MD Pawan Goenka said on Thursday.
The company that recently underwent a plant shut-down exercise to adjust
production also said that if sales do not pick up in the festive season, it may have
to undertake the exercise again in October.

"At Mahindra & Mahindra (M&M), we probably will end up deferring about 10
percent capex for auto and tractor (together)... it would come to around Rs 800-
Rs 1,000 crore," Goenka told reporters here on the sideline of SIAM annual
convention.

He was responding to a query on whether the current slowdown in the auto

industry has forced the company to postpone investments.& Mahindra
managing director. Reuters image.

While the company has not slowed down on investments on new products, it
has deferred investments on other activities such as capacity enhancement and
discretionary capex like repair and maintenance, Goenka said.
"The capacity that we expected to need in two or three years from now is less
as compared to the year-ago, therefore there will be a slowdown in capacity
investment as we would not like to invest... probably for a year," Goenka said.

He said the auto industry is currently going through a challenging slump which
has already resulted in mass job losses.

"...If the industry does not turn back on to positive growth for the remaining part
of the months of the fiscal year, we may see more layoffs," he said.

According to the Society of Indian Automobile Manufacturers (SIAM) vehicle

manufacturers have laid off around 15,000 temporary workers while dealers
have witnessed around 2.8 lakh job losses.

Goenka further said, "Employment levels that we have today amongst original
equipment manufacturers and suppliers is probably more than what the current
level of production will justify."

Referring the lay off of 1,500 temporary workers out of a total of 30,000 at
M&M, he said, "That is like 5 percent reduction when the volume is down by 20
percent. We are not removing (employees) just because volumes are down, but
if it continues beyond a certain point then the industry would be unable to carry
the extra (workforce)".

Goenka said there is a need for support from the government to help the auto
industry come out of the current slowdown in the form of GST cut. He stated
that in the past, when slowdowns happened, reduction in excise duties had
helped in picking up demand immediately.

M&M, which underwent plant shut down in August to adjust production may
have to undertake similar exercise again in October if demand remains subdued,
Goenka said.

"Probably in the month of September, we will produce full capacity; and in

October, we may adjust if the sale in Navratra don't go as per expectations," he
said.
Steel to cut capex to Rs 8,000 crore in FY20 amid slowdown
Tata Steel is likely to revise planned capital expenditure for 2019-20 to Rs 8,000
cr from Rs 12,000 cr.

KOLKATA: Facing headwinds amid a slowdown in the economy, Tata Steel

LtdNSE -0.67 % on Saturday said it is likely to revise the planned capital
expenditure for the 2019-20 fiscal to Rs 8,000 crore from Rs 12,000 crore.

The steel sector is expected to see a pick up in the second half of the year, a top
company official said.

We have given a guidance that the capex will be 20-25 per cent lower than the
original plan between Europe and India (operations)... our original estimate was
Rs 12,000 crore for the Tata Steel Group... it will now be around Rs 8,000 crore,"
Tata Steel CEO and MD T V Narendran said.

Of the Rs 12,000 crore, the steel major had initially planned to spend around Rs
8,000 crore on India operations.

..
Both sides (India and Europe) will take a cut," Narendran told reporters here
after the launch of the company's steel retail store -- 'steeljunction'.

He said the capex for India will largely be deployed on its Kalinganagar plant in
Odisha

"We do believe that things should improve in the second half of the year,"
Narendran said.

The top Tata Steel official said in order to insulate the steel industry from its
cyclical nature, the company is focusing on strengthening the branded consumer
business & downstream product portfolio.

"Today the B2C business is about 15 per cent of our revenue. We have set a
target that the B2C, services and solutions business should contribute 30 per
cent (in the next five years)," ..

On the South-East Asia business, he said the company has signed an MoU with
the Synergy Group, which is "interested in our Thailand assets".

"We should come to a conclusion in the next two-three months," Narendran

said.

Following the termination of the definitive agreement with the HBIS Group to
divest 70 per cent stake in its South- East Asia business, Tata Steel had executed
a Memorandum of Understanding to offload the stake in Tata Steel Thailand to
Synergy Metals and Mining ..
"We have a lot of subsidiaries in Europe and many of them were created over a
period of time. At one point of time, we had 200-300 legal entities and
subsidiaries of Tata Steel Europe.

"We have reduced them significantly and are paring another 100-120 this year...
In India, it is all about bringing operating subsidiaries together," Narendran said.