Hit by demand slump, Dunlop stops production in Sahaganj unit

Citing lack of demand due to the global recession, tyre makers Dunlop Monday stopped production at its Sahaganj unit in West Bengal's Hooghly district.

'Production has been stopped for the time being. The workers have been asked not to come to the factory,' a spokesman of the Pawan Kumar Ruia-owned company told IANS.

The company's decision met with an angry response from its workers, who staged a demonstration at the factory gate.

The spokesman said with automobile companies feeling the heet of economic downturn worldwide, the demand for tyres has gone down sharply.

'The crisis has had a heavy impact on the tyre sector. We have a huge shortage of capital. So we called the union leaders Saturday for a bi-partite and told them since there is almost no demand, the company would be incurring heavy losses if production continued. And they agreed,' he said.

The company would pay a monthly subsistence allowance of Rs.2,000 to each of its 1,202 workers till the time the situation normalised and production resumed.

'This was the best option before us. Otherwise, we may have had to go for lock-out,' he said, assuring there would be no lay-off.

The company would now look for sufficient capital fund, but the spokesman could not give a time-frame for production to restart. 'We may get the funds in 15 days, or it may be three months even. We don't know. But we are hopeful that we will be able to solve the problem fast'.

Asked to quantify the drop in demand, he said: 'Globally, there has been a 74 percent fall in demand for tyres. Our company is on a revival course. We are producing only 45-50 tonnes per day'.

Commercial production at the ailing tyre major's Sahaganj factory had resumed Jan 14 last year, after a five-year closure.

Dunlop was bought over by Kolkata-based businessman Ruia from Manohar Rajaram Chhabria's family in late 2005.

The company has a full capacity of 130 tonnes a day.