The auto component industry is staring at production loss of Rs 1000-1200 crore per day due to the nationwide lockdown imposed by the government to check the spread of the coronavirus pandemic. Industry body Automotive Component Manufacturers' Association (ACMA) said with a three-week lockdown announced by the government, production has come to a stand-still in the automotive industry across the country. “Auto Component manufacturers, especially the Tier-2s and Tier-3s are facing severe hardship in front of cash flow, which if not immediately addressed will lead to insolvency of several companies, especially the Tier-IIs and Tier-IIIs. Further, there is no clarity on how the market will pan out in the ensuing months”, the industry body said in a statement.
ACMA urged the government to extend support for working capital through the relaxation of borrowing norms & statutory payments to help the industry tide through the crisis. The industry body also recommended norms for NPA recognition to be eased by extending the moratorium on payment of principal and interest by at least 1 year. ACMA also sought relaxation in fixed electricity charges and in levy of demurrage charges for at least 7 days for import cargo clearance.
Deepak Jain, President ACMA, said, “These are indeed unprecedented times with complete stoppage of production in the vehicle industry and scarcity of working capital, the situation in the component manufacturing units, including the tier-IIs and tier-IIIs has become quite acute, threatening their survival. We have requested the government for helping us with immediate relaxation of borrowing norms & statutory payments, an extension of the moratorium on payment of principal and interest of loans for a year, among others. We are also seeking the support of SIAM and the OEMs to ensure minimal disruption of the supply chain.”
ACMA said the auto component industry is trying to mobilize all assets to help the government and the front line workers fight the pandemic. The industry body has created a task force which is evaluating the possibility of manufacture of facemasks, hand-sanitizers by its members. Several of the component companies have shown keen interest to manufacture these items.
Specifically, for ventilators, members are evaluating the option to import them through their CSR funds. The industry is seeking guidance from the government on the standards for such equipment and the quantity needed. ACMA has issued an advisory to all its members to maintain the safety & security of all permanent and contractual employees, ensuring no layoffs and timely salary for the month of March. In fact, over 1 lakh contractual employees have already been paid their salary for the month of March.
Several of the component manufacturers have promised to extend full medical aid to their employees, including contractual, in the eventuality of them or their family members contracting the Novel coronavirus. Many auto component companies are also running community kitchens, with all necessary norms of social distancing, to ensure their contractual employees get regular food.
News Source: The Economic Times: URL: https://bit.ly/33UGziA