Production pangs back, may hit supply ahead | Economic Times

Covid-19 cases spreading in manufacturing units, poor availability of components and raw materials — suppliers’ facilities being virus-hit, too — and a total ban on industrial use of oxygen are impacting production of both essentials and non-essentials. Companies said supplies will be affected next month. It may get worse if the second wave of infections doesn’t wane, said executives.Parle Products senior category head Krishnarao Buddha said production is down by around 30% in the factories around Delhi-NCR and about 15-20% in Maharashtra. The figures are from Parle’s own plants as well as contract manufacturers. “We have been following government protocols, taking added precautions but the situation is so grim that some workers, factory managers and directors are still getting infected. This leads to production disruption. We are trying to make good from plants in other regions,” Buddha said. “There are local disruptions but I think safety of people is first priority,” said Saugata Gupta, managing director, Marico. 82250363LG India, the country’s largest white goods manufacturer, had shut down its plant in NCR from Friday to Sunday and will resume production from Monday with around 60% capacity, two senior industry executives said. The company has also cut production in its Pune plant to 60% level.More Companies Closing FactoriesPanasonic India is shutting down its plant in Haryana for seven days from Monday. Company CEO Manish Sharma said with the health infrastructure overburdened, focus is on keeping people safe during this critical time. He said there is adequate inventory with demand down due to market closures in several states. Industry executives said other companies like Samsung, Vivo and Dixon too are cutting down on production due to these challenges. Medical device manufacturer BPL has shut its plants in Kerala due to several infections at its site. Companies said supply challenges will show up next month. “Production is impacted in multiple states and unless the infection is controlled, there would be acute shortages once the infection rate dips and markets open up,” said Godrej Appliances business head Kamal Nandi.Dabur India executive director (operations) Shahrukh Khan said the movement and supply of essential goods like ayurvedic medicines and food products are beginning to get impacted. Regular supplies of raw and packing material are also likely to come under pressure in the days to come, he said.Nirmal Minda, CMD of Minda Industries, an auto component supplier to top car and two-wheeler makers, said in the first half of April production was negatively impacted in Maharashtra, where production schedules were gradually getting normal. Now, the national capital region is more severely affected, he said.Rising Absenteeism a Concern“Rising absenteeism is likely to hit production for both April and May by a minimum of 15-20%. Major vehicle and parts makers are managing the situation better... however it is very tough for tier II suppliers and below. As cases continue to rise, output may be hurt more severely. While it’s very difficult to comment on volumes in these unprecedented times, as of today we expect the overall volumes in Q1 of FY22 to be around 15% lower over Q4 of FY21,” added Minda.Hero MotoCorp — the country’s largest two-wheeler maker — has already shut down its factory in NCR due to rising number of cases in the region.Companies like ITC, M&M, Adani Wilmar, Parle and Ceat have tightened their Covid safety protocols, increased social distancing among workers in lines, made arrangements for their stay on factory premises, created medical teams and have also been vaccinating them. Some companies have also mandated work from home for plant managers and senior staff till the second wave subsides.