The government needs to ensure timely harvesting of the rabi crop and kharif crop sowing, ensure funding for automobile dealers and vendors, and lay down guidelines for companies to reopen their plants, said Pawan Goenka, Chairman, CII Manufacturing Council and Managing Director, Mahindra & Mahindra. He was participating in a Confederation of Indian Industry (CII) panel discussion on CNBC-TV18.
“A lot of measures have been announced, but we fear that this may not be enough if the shutdown or the lockdown lasts longer because the kind of working capital that goes into a large ticket size industries is humongous,” Goenka said.
Edited excerpts from Goenka’s comments during the panel discussion:
This is a very critical time for the farm sector, we have harvesting of rabi crop that is happening and very soon we will be getting into sowing of the kharif. The farmers are struggling right now in terms of being able to harvest because of not having equipment, labour.
If they lose their season of harvesting and if they don’t get proper revenue for their output they will have difficult time going into the kharif crop and similarly for kharif crop they have to have equipment available.
Right now there is no selling that is happening of say tractors, or farm implements so that has to open up otherwise they will not be able to sow their crops, they will not be able to prepare their land and that would then have an impact on kharif crop.
One of the thing that the government has to look at very carefully in how do we ensure that the rabi crop harvesting happens properly and the kharif crop sowing, soil preparations happens properly for which we need to look at the equipment such as tractors, implements, harvesters they have to be easily available and both on rental as well as for buying.
As for the automobile sector, in all of this as we have been talking for last several days amongst CII members with the government authorities, liquidity is coming out as the biggest concern that the industry will have.
Liquidity not just for OEMs (Original Equipment Makers) but for suppliers, dealers and for the whole chain. A lot of measures have been announced, but we fear that this may not be enough if the shutdown or the lockdown lasts longer because the kind of working capital that goes into a large ticket size industries is humongous.
While you are preparing right now for shutdown till the end of April but what happens if it continues till middle of May or end of May? Do we have enough liquidity in the system and that has to be number one priority.
Second is migrant workers and how do we get them back to work at suppliers, OEMs and dealer end that becomes very important. So cash flow, the migrant workers and then finally when we open up the plant how do we open up the plant.
Where will the workers come, will they know what to do, what not to do, how do we intend social distancing specially in automotive plant where workers are working?
Shutting down is very easy, but opening up will require lot of planning and lot of help from the government in terms of protocol for opening up what should we not do to create a situation of having a safe workplace for factory workers and all the transporters and everyone which is something very important.
