Several manufacturers TOI spoke to across sectors said their operations are running below 100% capacity. While those operating in essential services, such as pharmaceuticals and fast-moving consumer goods (FMCG), are better off but still not utilising full capacity, others in consumer durables, auto, auto components, tyres, jute and textiles find their factories stunted way below 100% capacity levels. Manpower shortage and demand-related issues continue to plague companies.
Among the worst hit is auto sector. Naveen Soni, senior VP (sales and service) at Toyota Kirloskar, which is currently operating at 15-20% of the installed capacity in the factory, said an increase in production will depend on the demand in the market. “We are not building unnecessary inventory, and thus keeping our production levels under check,” said Soni.
Maruti, too, is in the early stages of capacity utilisation as work has begun at its Gurugram facility (in Haryana) only recently, and its parent Suzuki’s factory in Gujarat started production on May 25. Maruti chairman R C Bhargava said that strict conditions around social distancing and also on movement of workers will result in reduction of overall output. The company has also reduced the number of shift hours from 8 to around 6.5 hours.
Industries dependent on auto, too, will have to wait for demand growth before ramping up capacities. Ceat’s plants are working at 50% capacity. Factories of MM Forgings, a leading supplier of auto parts to vehicle makers, said its factories are working at 25% of rated capacity as demand from its original equipment manufacturer (OEM) consumers hasn’t increased. “It will happen in stages and increase when they (OEM consumers) build up their production in a staggered manner,” said MM Forgings MD Vidyashankar Krishnan. MM Forgings has five factories across India, from Panagudi to Pantnagar.
Other than consumer demand, a key reason for under-utilisation of capacities is the unavailability of skilled workers. “The exodus of migrant workers from key industrial belts has posed a huge challenge to manufacturers. It’s also difficult to replace migrant workers with the local workforce owing to the lack of required skills,” said Voltas MD & CEO Pradeep Bakshi. All of Voltas’ four factories, spread across Waghodia, Pantnagar and Sanand, are currently operational, although not at full capacity. “We are operating based on the requirement of the market. We will increase production as and when the market fully opens up,” said Bakshi, while adding the company is facing hurdles more at the back-end than the front-end.
On the other hand, from a virtual standstill when the first lockdown started, Hindustan Unilever (HUL) has increased production to 80-90% of optimum levels. However, there are certain challenges. “In some of our factories located at state borders, getting people from another state to come to work is an issue. We also continue to encounter significant capacity constraints in the main sea and air freight ports of the country. This is putting at risk ingredient supply for which, local production is not available. We are hopeful that these issues will be addressed soon,” said an HUL spokesperson.
For ITC, the concern is retail demand. Sources said capacity utilisation in various lines may vary from 30-35% to 60-70%.
The jute industry in West Bengal that produces almost 90% of the of the food grain packaging material of the country, is operating at 45-50% capacity. Till May 31, the jute industry was allowed to deploy 50% of workforce. Ghanshyam Sarda, a leading jute mill owner, said that following a new directive it can operate with 100% workforce. However, here as well, the major problem would be availability of workers. Thus reaching full capacity utilistion would take time.
The two factories of Thiagarajar Mills, which have a capacity to make 1 lakh spindles of cotton yarn, are operating at 70% of rated capacity as the company awaits export orders and better credit situation in the market, said Hari Thiagarajan, a director of the company.
On the other hand, the pharma industry is coming back to normal probably faster than others as it’s part of essential services and was functioning mostly during the Covid-induced lockdown. The industry is now working 65-70% capacity, and even problem areas like Baddi (Himachal Pradesh) are in a better shape. However, congestion at Nhava Sheva port, still remains a bottleneck, and the onset of monsoons could further complicate the issue. Another challenge that remains is the supply from the packaging and ancillary industry, said Sudarshan Jain, secretary general of Indian Pharmaceutical Alliance.
“Overall, the situation on the manufacturing front has improved significantly particularly on the packaging material suppliers front which earlier was a challenge. We continue to operate our Nashik factory at 100% capacity and our contract manufacturing factories are also steadily increasing operations from their current 60-65% of capacity (up from 30-35% capacity) a couple of weeks ago,” a GSK official said.
Biscuits leader Parle Products is operating its manufacturing at 70% capacity. Parle Products category head Mayank Shah said that the company will continue to operate at these levels till the government allows increasing workforce in factories beyond 50%. Shah, however, said the situation across the spectrum has improved considerably. “Raw material supply has streamlined considerably and slowly distributors who were not servicing the markets have started taking orders from retailers ensuring products are on the shelves,” he said. All of Parle’s 130 manufacturing units are operational.
Unibic said it is in a relatively better position because of a single factory in Bengaluru. “In terms of capacity, we are close to 100%, but we have rationalised our stock-keeping units and are producing limited line of products that require less manpower to compensate for the labour problem,” said Unibic CEO Sreenivasulu Vudayagiri.
(Contributions by Rajesh Chandramouli, Rupali Mukherjee, Reeba Zachariah, Avik Das, Pankaj Doval, Udit Prasanna Mukherji & Namrata Singh)