Maruti shares slip on diesel engine output cut

Shares of Maruti Suzuki dropped 1.65 percent in initial trade Tuesday after the country's largest passenger car maker decided to shut down third shift at its diesel engine plant in Manesar on severe shortfall in demand, reports CNBC-TV18 quoting sources.

It is learnt that the company has asked 200 contract workers to go on indefinite leave. This is the first large scale downsizing by Maruti since violence and strike at its Manesar plant last year.

Suzuki Powertrain India (SPIL), a wholly owned subsidiary of Maruti runs the diesel engine plant at Manesar. The total capacity of this plant is 3,00,000 diesel engine per annum. According to sources overall production at SPIL is down over 30 percent from last two months.

Sources from Maruti further informed that market sentiments are very low and the company has no option, but to ask workers to go on leave to align production with demand. The company may not even manage to meet its 5 percent growth target due to challenging economy environment.

At 09:50 hours IST, the stock was quoting at Rs 1,527.45, down 1.56 percent on the Bombay Stock Exchange.