It’s been more than a month but the economy and corporate India are yet to come to terms with demonetization which ensued a severe shortage of cash across the nation.
We all are well aware of the massive dips in sales that most online and offline marketplaces are witnessing currently and obviously the decline in sales has started to hit manufacturing industry also.
And the worst hit amongst all the sectors is the mobile phone industry where monthly sales have halved to Rs 175-200 crore post demonetization.
Failing to cope up with the after-effects of demonetization, Foxconn, the world’s largest contract manufacturer has asked 25 percent of its 8,000 workforces to go on a paid vacation for two weeks after the company's sales saw a sharp 50 percent fall post the cash ban, reports Economic Times.
Apparently, Foxconn isn’t the only one, others from the Indian mobile manufacturing industry like Intex, Lava and Karbonn too are facing the heat and could soon follow suit.
Foxconn - known as phone manufacturer for China’s Xiaomi, Oppo and Gionee, besides Apple and Nokia – along with Lava, Intex, Karbonn and Micromax account for around 50 percent of the handsets assembled in India
According to the report, while Lava is closing down its plant, which has 5,000 employees, for a week starting from today, Karbonn could lay off 1200 to 2000 of its staff from its factories in Noida and Bawal, Haryana as it doesn’t see any increase in demand for coming few months.
Citing a senior industry executive, the report says that “the four plants in Sri City (Andhra Pradesh) are operating at 1.2 million capacity a month, down from 2.5 million that it (Foxconn) has.” Notably, the benching may continue if production – directly related to consumer demand – does not come to the 2 million a month levels by January, the person added.
With Micromax too having slowed its production in Rudrapur and Telangana facilities, analysts don’t see phone manufacturing coming to normal capacity before 3-4 months.