'No production days' in December a normal practice: M&M

From a demand perspective, we have seen some postponement of buying in the month of December.

However, going forward he expects industry to bounce back once normalcy returns.Below is the verbatim transcript of Pravin Shah’s interview to Ronojoy Banerjee on CNBC-TV18. Q: What would the impact of demonetisation be on the auto industry? A: The auto industry has inherent strength to grow based on the lower rate of motorisation and I am sure the industry will bounce back once we see the normalcy. Q: We will talk about the benefits in the medium to long term but short term pain is very evident. Even today importantly Mahindra and Mahindra (M&M) you have announced a production shut down. Talk to me a little bit about it because the press statement did not say much? A: I don’t think demonetisation is the only reason, I think this is a normal practice which we as an organisation follow. We mainly operate on a pull basis and not push basis and what I mean here is based on the demand we tailor-make our operations so as to meet the required demands. In this, also there are couple of plants which has their annual maintenance shut downs so this is what is also included. Don’t forget the fact that actually December is a month which is model year change month. You need to ensure that your demand and supplies are properly met so as to ensure that you have a robust network operation. So, this decision has not only caused because of the demonetisation, but as a normal practice actually we as a organisation always operate on as I mentioned on a pull basis and this is the tweaking of your manufacturing activities in-line with the demand surely having said that apart from the December month, as we have said, there is a postponement of buying as what we see it and based on which actually the demand is also less. Considering the overall situation what one goes through in the month of December, the decision has been taken to align our manufacturing activities in-line with the demand. Q: Even though you do this and December is sort of a low volume month and that is why car makers also give a lot of discounts because customers want to wait for one month and get a newer model but then in your statement to the stock exchanges you have also said that you will take call again for more such production shut downs? So, how long do we see this, can you give us a timeline of how many days this production shut down will be for and really how much of it is because of demand being hit due to demonetisation? A: Let me clarify that, I don’t think we have gone on record to say that this is what is going to be a phenomena month after month. What has been communicated that we as an organisation operate on a pull basis and right calls would be taken depending on, as I mentioned we start seeing or the industry starts seeing normalcy, the current traumatic situation, what the public at large is going through has really pushed various white goods including the automobile purchasing on hold. So, what we have mentioned about that we will always make our activities or carry out the activities in such a way so as to meet the demand.