14 Maruti parts suppliers face downgrade threat

Mumbai:The domino effect of the ongoing lockout and production uncertainty at Maruti Suzuki's Manesar plant in Haryana is set to impact auto component manufacturers which have close supply relationships with the automobile major. On Tuesday, ICRA, the Indian arm of global ratings major Moody's, put the ratings of 14 of Maruti's auto component suppliers on watch list, usually the first step towards a downgrade. The companies include auto component majors like Subros, Lumax Industries and Jay Bharat Maruti, which are also listed on the bourses. 

    Several ICRA-rated auto ancillaries that have a high revenue dependence on Maruti's Manesar plant "may experience lower cash accruals" and in some cases possible "stress" on their liquidity position during the lockout, prompting the agency to place their ratings under "watch with developing implications". 
    "Given the present uncertainties, it is difficult as of now to quantify the extent of supply disruption and its eventual impact on individual companies' financial risk profile," ICRA said in a release here. 
    The ratings major has pointed out that between June and October of 2011, production at Maruti's two plants were affected for 72 days and as a result it produced about 40,000 less units during the 2011-12 fiscal. 
    Since July 18, the Subros scrip on the BSE has lost nearly 14% to Rs 29 on Tuesday, and Jay Bharat Maruti is down 11.3% to Rs 57, while Lumax has lost just 0.5% to Rs 395 now. Compared to these, since fresh troubles at the Manesar plant started, the Maruti stock has lost 7.5% to Rs 1,133 while its market capitalization is down by about Rs 2,600 crore (nearly $500 million) to nearly Rs 32,800 crore.