Declining profits to hit auto industry's investment plans

New Delhi, Sep 4 (UNI) Due to shrinking demand and increasing input cost, Society of Indian Automobile Manufacturers (SIAM) President Ravi Kant today said the industry has resorted to withdrawing or scaling down their planned capital investment in the country.

''These factors (shrinking demand and increasing input cost) are having a catastrophic impact on the bottomline of the Indian automobile industry and are resulting in withdrawal, scaling down or deferment of capital investment,'' Mr Kant said while addressing SIAM annual convention here.

In the past five years, the Indian automobile industry has grown at a healthy rate of 15-27 per cent.

This growth provided encouragement to various players and about Rs 75,000 crore of investment had been planned, he said, adding, out of which more than fifty per cent has already been committed.

''However, today the Indian automotive industry is facing unprecedented challenges,'' Mr Kant, who is also Managing Director of Tata Motors, said.

The industry is facing shrinking demand due to lack of available consumer finance, high interest rates and high cost of fuel, besides increase in cost of input material.

In the last two years, steel prices has increased by about 40 per cent, copper price are up by 45 per cent, while natural rubber has risen by 40 per cent.

UNI TEAM SY RAI2010