Atlas Cycles has shut its last manufacturing unit in Sahibabad, just outside the national capital, citing lacks of funds to run the factory. As per estimates Atlas cycle owes over Rs.120 crore to around 80 vendors in Ludhiana, many whom they had been its suppliers for decades. The company’s manufacturing unit had shut down on June 3, 2020, which ironically happened out to be World Bicycle Day.
The CEO of Atlas Cycles Mr. N.P. Singh Rana however said that the shutdown of the factory is temporary and the company’s factory will resume operations as soon as the company can raise funds around Rs.50 crore by selling surplus lands. The shutdown of the manufacturing unit had laid off 431 remaining employees, though Rana insisted that they will continue to be on the roll of the company and the employees will be paid “lay- off wages” following their daily attendance. Lay- off wages typically equals 50 percent of the basic salary and dearness allowance. Hence, the workforce of the Sahibabad unit of the company will be laid off with effect from June 3, 2020, till adequate arrangements are being made, as said by the Atlas Cycles in a regulatory filing reported by The Times Of India.
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The company started making its losses in 2014 and the last one and a half years its condition turned from bad to worse and now the COVID- 19 nationwide lockdowns just compounded it. In December 2014, the plant in Malanpur was closed. The losses continued to grow and its next plant in Sonepat, Haryana was shut down in February 2018. On Wednesday (June 3, 2020) a notice was posted on the gate of the factory. The notice reads, “The Company had been passing through a financial crisis for several years and had exhausted all its funds to keep the factory afloat. But now, there are no funds left. We are facing difficulty in arranging funds for our day-to-day operations. We are also unable to buy raw materials. In these conditions, the management is not in a position to operate the factory.”
The Coronavirus Pandemic was an another Blow
Explaining the current situation Rana said, “All the employees are on the rolls of the company. Laying off doesn’t mean that people have been terminated or their employees have been discontinued. Laying off is a provision in the law where people are required to come once in a day to sign their attendance. So currently they are on the rolls of the company and they will continue to get their employment. They will get the lay- off wages for this period.” He also said, “We have already put up an application to the NCLT seeking permission to sell our surplus land. Once we get the permission, we will sell off our surplus land and the surplus land money will be much higher to pay back all the dues of the suppliers and our people and we will resume production”
“We have not been able to sustain and we are not able to gather funds to continue our day-to-day operations. So we put the operations in Sahibabad in suspension for a very temporary period.” Rana said, adding to the fact that the coronavirus pandemic was another blow for them. Rana in the end insisted on the fact that “Demand is not a problem, the market is very good.” Atlas Cycles have a strong dealer and supplier base. They are a 70- year- old brand and very well accepted in and around the market. Atlas Cycles will bounce back in the market.
How Atlas Started
The company, the largest and the biggest in the country started its journey in 1989. It was the last operational plant of the Atlas Cycle with a monthly production of over 2 lakhs bicycle. The Sonepat plant in Haryana was the first unit established in 1951 by Jankidas Kapoor. Starting from a tin shed plant in Sonepat Atlas Cycle Industries Ltd slowly grew into a 25- acre factory complex in just 12 months. It soon became India’s largest bicycle manufacturer and was the official supplier of bicycles to the 1982 Asian Games held in the national capital. Started in 1951 in Sonepat, Atlas Cycle grew to emerge as India’s largest cycle manufacturer in 1965.it even ventured overseas and became one of the top bicycle producing companies in the world with a capacity to produce 40 lakh bicycles per year. However as the mode of mobility changed with the invention of new different automobiles, Atlas Cycles began to face difficulties, which recently came as a headwind to them. Their financial problem started in 2014 closing their plant one by one in the last few years and recently in 2020 closing their last unit in Sahibabad.