In an interview with ET, Neeraj Kanwar (MD, Apollo Tyres) stated that the government has a big role to play in extending a stimulus package to prevent Indian corporates from going bankrupt. His statement comes at the backdrop of a complete lock down being witnessed in the country and a continued fall in demand due to the consequences of the pandemic.
Mr. Kanwar remarked that the business environment is “very difficult” currently.
For Apollo tyres, Europe accounts for a significant 32% and 16% of consolidated revenue and profit respectively. Europe still remains one of the worst effected areas due to the pandemic, and with the auto industry, tyre production as well as tyre demand coming to a standstill, Apollo’s revenue and sales in Europe are bound to take a big hit, at least in the near term.
“In India, no one really knows what is going to happen. It is a dynamic situation, something new which the whole world is facing. The government will play a big role in ensuring that corporates don’t go bankrupt,” Kanwar said.
As companies change their approach to diversify and safeguard their supply chains post the COVID-19 outbreak, Mr. Kanwar suggests that India has much to gain if the government takes the right measures and develops the country as a global automobile manufacturing hub.
Also See: Apollo, CEAT Suspend Manufacturing Operations In India
“China exported auto components valued at $35 billion in 2018. Given the issues in China, it is an open opportunity (for India) in the manufacturing segment. All MNCs are looking at India from that perspective (for developing alternative bases),” he said.
Mr. Kanwar revealed that the company has for now decided not to cut down capital expenditure planned for the upcoming financial year, adding that there will not be any layoffs across the company’s operations in India.
Just a few days back, the company's leadership team had announced a voluntary salary reduction with the Chairman and Vice-chairman taking a 25% pay cut followed by a 15% pay cut for the rest of the senior management.
Mr. Kanwar further added that he is looking forward to the announcement of the much-awaited scrappage policy as he believes that the policy can not only help in reviving demand for tyres but commercial vehicles as well.
It is also crucial that the government takes measures to provide finance to consumers for mortgages. “Banks have stopped loaning to transporters since the IL&FS scare. The PSBs (public sector banks) can give money to the NBFCs (non-banking finance companies), which can offer finance to transporters. Then we will see movement and purchase of vehicles,” said Kanwar.
Source: ET Auto
