For any business, return to normalcy by the second quarter of this fiscal seems uncertain as a lot will depend on how quickly the consumers recover from the overall impact of the coronavirus outbreak and the lockdown, according to JK Organisation Director Harsh Pati Singhania.
While the recovery rate would vary from industry to industry, he said the service sector would take longer time to bounce back from the COVID-19 impact.
"It is quite clear that if you look at Q1 of FY21 there would certainly be an impact... Q2 may also be affected as some businesses would have a deeper or continued impact and some businesses may see a quicker recovery. But I do not know whether any business will be back to almost normal in Q2,” Singhania told PTI.
When asked if the entire first half of the fiscal would be affected, he said: "Yes, because there would be a gradual opening of the economy.
"It's not the matter of manufacturing units starting up or a company starting up. The entire ecosystem has to function at the same level as dealers, distributors and the demand by the consumers," he said.
The return to normalcy will also depend largely on how quickly the consumers also recover from the overall impact of the coronavirus outbreak and the lockdown.
“They (consumers) would have to buy at the same level before the shutdown happened," Singhania said, adding for that to happen there would have to be "flow of money and putting back of everything together then only all goods will be consumed”.
Commenting on the $4 billion JK Organisation, which has a wide range of interest including tyre, paper, cement, auto components, dairy and agro products, Singhania said “each one has its own issues”.
“Tyre (JK Tyre) is linked to the auto sector and therefore is dependent on how they bounce back. As of now we expect some demand in agriculture -- faster pickup in the farm sector like tractors.
"Export would continue. Replacement would happen when goods movement through truck fleets start. Also some auto manufacturers have pending orders for which we would supply their tyres as OEM,” he said.
In the auto components business, where the group operates through JK Fenner, Singhania said, "it again largely depends on the auto and heavy engineering sectors. Exports orders are there."
On agri segment, he said the group's hybrid seed business is running as planting seasons are on and "with support extended to the farm sector we expect things to pick up fast”.
Singhania said recovery of cement business of JK Lakshmi Cement will be dependent on how quickly construction activities pick up although the government has opened up the sector as availability of labour would be a deciding factor.
"Also issues of shipment and logistics in terms of goods movement will have to be looked into. Each part of the link has to come together,” he said.
In the papers segment, where the organisation is present through JK Papers, he said there will be demand as people are operating from home where there is a need for copier paper.
“In the education sector there are some states where there is a requirement for textbooks and notebooks for schools. Packaging boards which we make would be required for pharma and FMCG but making these available would depend on logistic and transportation services,” he added.
Its dairy business, Umang dairy, has been operational through the lockdown.
"So, currently the effect is varied on different businesses and things would stabilise once the entire ecosystem of production, demand, supply chain and consumption all function in sync," he added.
Singhania said currently road transportation is operating at only at 30 percent and ensuring movement of goods is a challenge.
"However, we have restarted our production in some of our plants or in some it will start soon but then transportation of goods need to happen so that it can reach consumers and cater to the demands,” he said.
Commenting on availability of manpower, Singhania said the company was in direct touch with workers and through their unions. "We are talking to the labourers directly and also with the unions," he added.
India is currently going through an extended lockdown till May 3 after Prime Minister Narendra Modi announced its imposition on March 25 to prevent spread of coronavirus.
Source:- moneycontrol.com