Auto Industry Will Go Down by More Than 30 %: Sandhar MD Jayant Davar

The outbreak of COVID-19 has wreaked havoc on the automotive industry – OEMs and component suppliers have been bearing the brunt of this pandemic-induced country-wide lockdown that has brought production activities of automotive players to a standstill. Gurugram-headquartered Sandhar Technologies is looking to stay positive amidst all the gloom and doom triggered by the coronavirus that had orginated from China. Jayant Davar, Co-Chairman & Managing Director, Sandhar Technologies, said the year 2020 undoubtedly will be a tough year for the whole automotive industry. “This is an unprecedented situation for every automotive player be it an OEM or a component supplier or a dealer. The visibility is indeed challenging – the month of April has been a washout, while the month of May will be almost a washout and we expect some degree of production activity kickstarting only in June. The auto industry will go down by more than 30 % this year, factoring in the prevailing market environment. This is over and above the more than 15% drop in the year just gone by.”

Davar reckons the government must do everything possible to ensure the already battered auto industry does not collapse. “There is a lot of pressure on working capital as the government is asking the industry to pay salaries to all employees and not resort to job cuts, which is not easy for any company given the zero revenue, zero production scenario. The industry has invested significantly in switching to BS 6 within the stipulated timeline, and the onus is now on the government to offer some degree of support or subsidy so that the industry can cover the cost of switching from BS 4 to BS 6 as well as other new mandated norms. The government should ensure certain amount of socialistic help so that we are at least able to pay our salaries. We had also stopped production at our international plants in Europe and North America, but the governments there stepped in quickly and paid 80 % of our employees’ salaries during the lockdown period. Such an approach should be thought of in the Indian context as well,” he observed.

The Sandhar Technologies MD believes that there is a strong need for making vehicles more affordable for the consumer, and kickstart the industry to get back on its growth feet. “The government must do its bit – they must reduce the GST by at least 10 %, and also focus on putting money in the hands of consumers who are going to buy the vehicles. The move to BS 6 along with NBFC liquidity crunch and pre-year insurance costs has led to vehicle costs going up,” he pointed out.

Of course, the company stayed away from walking down the job cut road, but has carried out salary cuts to ensure operations are run unhindered. “We have resorted to salary cuts for our white-collar employees ranging from 5 % from the bottom level to up to 35 % for the senior management team. However, there are no salary cuts for permanent associates at our shopfloor – only the perks they used to draw have been reduced . We are talking with our unions who have even agreed to our request for deferring our pending renegotiations for an year. We will keep monitoring the situation on a quarterly basis and hope to bring the salaries to earlier levels as soon as the markets recover towards normalcy,” he noted.

The Sandhar Technologies founder feels that the strict adherence to post lockdown norms is welcome but added that there must be more clarity on the part of the government. “There is confusion over different norms being laid out. Relaxations are allowed in different measures in various states and regions of the country and continuing economic activity in this environment is a challenge. I can’t move staff from Delhi to Gurugram or staff from Bengaluru to Hosur (in Tamil Nadu) because the state borders are sealed. Similarly some of our Tier II and Tier III companies continue to be in lockdown zones, making supply lines inoperable. We appreciate the government’s efforts towards checking the spread of COVID-19, but we are of the opinion that the entire supply chain has to be work simultaneously as it’s extremely symbiotic,” he concluded.

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