Auto components industry body (ACMA) said that, it is taking a hit of around Rs 1,200 crore per day due to the lockdown owing to coronavirus pandemic. The industry is urged the government to come up with a financial package, including relaxation in borrowing norms, in order to survive the current situation.
Terming the current situation as unprecedented, the Automotive Component Manufacturers Association (ACMA) said its member companies despite facing challenging times are taking all possible steps to safeguard the interests of their respective workforce.
“The auto component industry stands by the government in this hour of challenge. However, with complete stoppage of production in the vehicle industry and scarcity of working capital, the situation in the component manufacturing units, including the tier-2s and tier-3s has become quite acute, threatening their survival,” said Deepak Jain, president, ACMA.
He further said, “We have requested the government for helping us with immediate relaxation of borrowing norms and statutory payments, extension of moratorium on payment of principal and interest of loans for a year, among others.” ACMA is seeking support for working capital like relaxation of borrowing norms and statutory payments and easing of NPA recognition norms by extending moratorium on payment of principal and interest by at least one year.
It further sought relaxation in fixed electricity charge and in levy of demurrage charges for at least seven days for import cargo clearance. With a three-week lockdown, production has come to a standstill in the automotive industry across the country, Jain said.
Auto component manufacturers, especially the tier-2 and tier-3, are facing severe hardship on cash flow front, which if not immediately addressed will lead to insolvency of several companies, he added.
“There is no clarity on how the market will pan out in the ensuing months, thus further eroding the industry’s confidence. It is estimated that the component sector is facing production loss of Rs 1,000–1,200 crore per day,” Jain said.
He added that despite the financial crunch, over 100 companies have decided not to cut payments of employees, including the temporary ones. Jain said ACMA has created a taskforce which is evaluating the possibility of manufacturing facemasks, hand sanitisers 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,” he added.
The auto component industry contributes 2.3 per cent to country’s GDP, 25 per cent to national manufacturing GDP, and employs over 50 lakh people. In 2018-19, the turnover of the industry stood at US $ 57 billion with US $ 15 billion in exports. PTI