'Slowdown to make auto industry leaner'

Chennai: The impact of global meltdown on the Indian industries is going to make the auto industry leaner, feel industry experts. Speaking at a conference on Impact of Global Meltdown on Indian Economy, organised by the Confederation of Indian Industry, industry experts observed that the meltdown would cause the software industry to innovate more.

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Harish Lakshman, Managing Director, Rane TRW Steering Systems, said that the gloom is there but the domestic market is going to come back. With the outlook for the next year also not being positive, companies would need to keep their cash flows positive, he said.

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Exports are worrisome and may take three years to revive. However, this down turn will make organisations leaner, he added.

On how the Rane Group was managing the situation, Lakshman said, “We’ve put on hold all capital expenditure and focussed on inventory and debtor management.” The group has also cut wage costs by reducing work force from 7,000 in September to 5,500 now, and with a 5-10 per cent wage cut for the rest of the employees. Some perks were cut and leave encashment was put on hold.

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Talking about software, Lakshmi Narayanan, Vice-Chairman, Cognizant Technology Solutions India, said that deceleration of software industry could be compared with the recession of Japan. If the industry does not do anything and if the deceleration continues “we would be in deep trouble”. Impact on the economy, unemployment will not be significant not in absolute numbers but in terms of purchasing power, he added.

Manickam Ramaswami, Chairman and Managing Director, Loyal Textile Mills, observed that the Indian textile industry was shrinking while the industry in other countries, “even Bangladesh and Taiwan”, are gaining. “We have lost 25 lakh jobs when we should have created 25 lakh jobs,” he said.

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Ramaswami said that the Government is supporting domestic sales “which we don’t need”. He called for reimbursement of taxes and duties paid on textiles exported.

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Venkatesh Rajagopal, Chairman and Managing Director, Celebrity Fashions, said that his company faced no dearth of demand in the domestic market, but “margins have taken a severe beating”.

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