UMBAI: Auto and two-wheeler makers like Bajaj Auto, TVS, Ashok Leyland and Tata Motors are finding it difficult to scale up their global
manufacturing plans given that most of them are currently loss-making. Recessionary trends and a fluctuating currency have hurt the cost structures of these plants, making them highly unprofitable.
TVS and Bajaj Auto, which set up two-wheeler operations in Indonesia, incurred losses of Rs 88 crore and Rs 48 crore, respectively, in 2008-09. Tata Motors, which has a pick-up plant in Thailand, posted a loss of Rs 89 crore for FY09, while Ashok Leyland, which has a bus-making unit at Ras Al Khaimah and a truck-making plant in Czechoslovakia called Avia, are apparently incurring losses.
There are well-entrenched global players in these markets and it is difficult to compete with them with a limited product portfolio, said M Sabarad, senior analyst at Centrum, a Mumbai-based broking firm. After October 2008, the retail financing companies suffered a liquidity crisis and tightened credit norms. Interest rates were increased and it affected the automobile sales. This was a major hindrance affecting the scalability of most overseas plants, said a senior official from Bajaj Auto.
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