The disruption in supplies from South Korean steel maker Posco manufacturing facility in Maharashtra has started affecting production in the local automotive industry and stands to derail the recovery being scripted in the segment since the easing of the covid-induced lockdown.

Three people in know of the development told ET there have “hardly” been any supplies from the units since March 4, 2021, and may result in affecting production at several vehicle makers, if the issue is not resolved shortly.

A local politician has been holding protests on Kolad highway in Raigad district since March 2, 2021 and has blocked employees and goods from going in and out of the facility. The protesters have demanded that Posco give employment preference to local workers, raise wages of temporary workers among others.

Several automakers including

, Hyundai Motor India, Tata Motors, Mahindra & Mahindra and Kia Motors India source steel from the facility.

“Disruptions in supplies from POSCO Maharashtra Steel has resulted in non-availability of steel for some of the major auto OEMs. There have been no despatches of steel since 4th March except for one day, wherein some trucks loaded with steel held up outside the factory premises, were allowed to leave for their destinations”, confirmed Rajesh Menon, Director General, Society of Indian Automobile Manufacturers (SIAM).

He added at least one auto manufacturer’s production has already got impacted. “If the situation does not improve, it is understood that more OEMs will be constrained to suspend manufacturing in some of their lines, very soon”, Menon said.

A person in the know explained, “Every OEM has multiple suppliers. But for some models and components, the unit may be the single source. Any disruption in supplies end up affecting production.” To be true, automakers maintain inventory for 1-2 weeks. However, amid high demand in the market and with the impasse yet to get resolved, stakeholders fear production may get impacted.

Passenger vehicle wholesale have recovered on a fast clip and grew for the seventh straight month this February. Cumulative sales in the first eleven months of the fiscal have, however, declined by 10.35% to 2.34 million units due to the impact of the covid-induced lockdown at the start of the year.

Last week, SIAM had written to Maharashtra Chief Minister Uddhav Balasaheb Thackeray requesting his intervention in helping normalise operations at Posco Maharashtra Steel as “these disruptions will hamper the continuity of manufacturing vehicles in the country and be a major setback for the economy.”

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