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Communal riots in Rudrapur (Uttarakhand) led to a curfew in the area. With the help of our local
sources, we tried to gauge the impact on the production of various players’ plants located in this
automobile hub as we expect these plants to contribute 30-40% of the total sales volumes of
these companies.
The riots started on 3 October due to communal violence leading to a curfew.
Tata Motors, Mahindra, Ashok Leyland and Bajaj has plants in the area which have stopped
functioning (either completely or almost completely) due to the curfew.
Our local sources indicate the current situation may prevail for two three days more. However,
with Vijayadashmi holiday on Thursday, the impact on production would be limited to three to
four days.
Tata Motors is producing c.1,000 vehicles/day (Ace and Ace variants), and plant inventory is
at about 2 days.
It is to be noted that Pantnagar is the only plant of Tata which produces its hugely popular
Ace and its variants vehicles, which we expect to contribute c32% to the total standalone
entity sales volumes in FY12.
For Ashok Leyland, the production rate at Pantnagar plant was at c.100trucks/day. We expect
the plant to contribute about 30% to the total volume in FY12. The company is producing high
value models in the plant (16-49tonnages) in order to maximise fiscal incentive benefits.
Ashok Leyland currently has a total inventory (at company level) of about 8,500-9,000
vehicles and we don’t think that plant shutdown would impact the sales volume by much.
Bajaj Auto's production rate at the plant was c.5,000/vehicles/day and it produces Platina,
Discover and Boxer 150cc models in the plant. We estimate that in FY12, the plant could
contribute about 35-40% to the total motorcycle sales of the company.
Bajaj has about three days inventory in the plant.
Mahindra's plant has been shut since October 3 (yesterday), but we are unable to get much
information on its production side.
Overall, as the situation is expected to come back to the normalcy soon, we believe that the
current disruption should not impact the sales volumes of the companies materially. However,
in case of prolonged disruptions, the sales of these companies could be impacted materially
with Tata (as Ace production is only from this plant) and Bajaj (volumes bikes are produced
here) to be most impacted.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Communal riots in Rudrapur (Uttarakhand) led to a curfew in the area. With the help of our local
sources, we tried to gauge the impact on the production of various players’ plants located in this
automobile hub as we expect these plants to contribute 30-40% of the total sales volumes of
these companies.
The riots started on 3 October due to communal violence leading to a curfew.
Tata Motors, Mahindra, Ashok Leyland and Bajaj has plants in the area which have stopped
functioning (either completely or almost completely) due to the curfew.
Our local sources indicate the current situation may prevail for two three days more. However,
with Vijayadashmi holiday on Thursday, the impact on production would be limited to three to
four days.
Tata Motors is producing c.1,000 vehicles/day (Ace and Ace variants), and plant inventory is
at about 2 days.
It is to be noted that Pantnagar is the only plant of Tata which produces its hugely popular
Ace and its variants vehicles, which we expect to contribute c32% to the total standalone
entity sales volumes in FY12.
For Ashok Leyland, the production rate at Pantnagar plant was at c.100trucks/day. We expect
the plant to contribute about 30% to the total volume in FY12. The company is producing high
value models in the plant (16-49tonnages) in order to maximise fiscal incentive benefits.
Ashok Leyland currently has a total inventory (at company level) of about 8,500-9,000
vehicles and we don’t think that plant shutdown would impact the sales volume by much.
Bajaj Auto's production rate at the plant was c.5,000/vehicles/day and it produces Platina,
Discover and Boxer 150cc models in the plant. We estimate that in FY12, the plant could
contribute about 35-40% to the total motorcycle sales of the company.
Bajaj has about three days inventory in the plant.
Mahindra's plant has been shut since October 3 (yesterday), but we are unable to get much
information on its production side.
Overall, as the situation is expected to come back to the normalcy soon, we believe that the
current disruption should not impact the sales volumes of the companies materially. However,
in case of prolonged disruptions, the sales of these companies could be impacted materially
with Tata (as Ace production is only from this plant) and Bajaj (volumes bikes are produced
here) to be most impacted.
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