Some Indian cos shut Egypt plants

Mumbai/Chennai/Kolkata: The uprising in Egypt has forced some Indian companies to temporarily shut down their manufacturing units as a precautionary step, while some are still studying the possible impact. FMCG companies like Dabur India and Marico have already temporarily shut down their units in Egypt, while others like Asian Paints are believed to be considering to follow suit if the unrest continues.

While most Indian companies with business interests in Egypt, except travel companies , may not feel the impact of the crisis immediately, but economists and analysts feel if the trouble persists, demand for goods, either exported from India or manufactured and sold by an Indian company in Egypt, could fall. On the supply side, however, there might not be much impact, but the contagion effect in other parts of the world could lead to higher prices of crude oil and gold, market players said.

“We are still watching the developments in Egypt. If the unrest is resolved over the next few days and weeks, we would not see much of any impact on business.

However, if the unrest continues for a longer period of time, there might be some impact,” said Sunil Duggal , CEO, Dabur India . Egypt accounts for about 2.5% of Dabur’s consolidated turnover, which was around Rs 3,400 crore in 2009-10. Egypt and other parts of NorthAfrica andMiddleE ast (MENA) have over past week saw civil disturbances along with mass demonstrations and disruption of public life. Egypt has become Marico’s hub for MENA.

Prolonged closure of production facilities in Egypt would, therefore , cause a progressive drying up of the supply pipeline for the MENA region. “We have initiated , as a back up measure, plans to supplement the MENA supply chain with supplies from India ,” Marico said in a filing to the stock exchanges.

The MENA region comprises between 7-8 % of Marico’s sales revenue. Marico’s group turnover is about Rs 3,000 crore. “The ‘mass’ nature of the unrest does not enable any prediction as to how long it will last. We hope that there will be an early resolution and business will return to normal. If our hopes are belied, we will redraw our strategies and keep all posted,” Marico said. Prashant Goenka, director, Emami, said only units near Cairo were facing problems.

Similarly, auto major Maruti Suzuki, which is one of the biggest exporters to Egypt, is in a “wait and watch” mode.