‘Covid to have medium-term impact on auto industry’

Restarting Economy

JBM Group, a $2.2-billion Indian conglomerate having interests in buses and electric vehicles, EV charging infrastructure and renewable energy, sees medium-term impact of Covid on auto industry. Nishant Arya, Executive Director, in an interaction with Vijay C Roy, said once the production resumes, there are bound to be some delays due to realignment of processes but there will be new opportunities as well. Excerpts:

Please brief us about your flagship company and the sectors where your Group is present?

JBM Auto Ltd. is our flagship company which manufactures key auto systems, assemblies, tools, dies and buses. It has also ventured into electric vehicles and charging infrastructure. The Group has 60 manufacturing plants, including three in Haryana and five engineering and design centres in over 10 countries.

Do you see disruption in demand for the automotive sector in near future?

We could witness a medium-term impact of Covid on the auto industry. Once the production resumes, there are bound to be some delays as realignment of processes and supply chains will take some time to settle. But, there will be opportunities as well. India is poised to witness an advent of more global players shifting their base here.

Do you think Covid would impact India’s plans to switch to greener energy, especially electric vehicles?

Electric vehicle segment will continue to grow in India. Having gone through the lockdown phase, people are now more focused towards their health, safety and environment. Thus, focus will be more on new technologies such as electric vehicles. Various government schemes will stand beneficial to promote localisation by way of collaboration between various EV and EV ecosystem players, thereby reducing dependence on imports.

How do you foresee the demand for commercial vehicles, especially buses, post-Covid?

Public transportation will continue to be a backbone of public mobility in our country. There may be a short-term impact in the form of people avoiding public transport due to the Covid concerns but that will be over once the normalcy returns. Commercial vehicles, more importantly in public transportation, have been witnessing deployment of e-vehicles at a much-preferred pace.

According to you, what should the Central government do to revive the auto sector?

It is a given fact that the impact of Covid will have an adverse effect on all businesses globally, but with the apt support from the government, resumption of activities can be smoother. April and May would fetch no revenue for the original equipment manufacturers (OEMs). In such a scenario, workers’ salary may be paid through various funds such as ESIC for a brief period so as to ease burden on the OEMs to some extent. For goods and raw materials which have been already imported, eliminating demurrage charges for priority sector projects can be a viable step. Extension of moratorium on interest payment and easing borrowing norms and statutory payments can help us tide over the crisis. We also anticipate decrease in GST rates.

Do you have any capex plan for the current fiscal?

JBM Auto had announced an investment of Rs 500 crore in three years starting last year. As of today, Rs 200 crore has already been invested. As a result, there has been a new product — e9 ECOLIFE electric bus and EV charging business that took off last year.

What are lessons learnt from the pandemic?

Making an organisation agile for such testing times holds the key to sustain and sail through the current situation. At JBM, we are moving swiftly towards incorporating Artificial Intelligence and Machine Learning across our manufacturing facilities. This will not only help in smoother resumption of operations but also help in sustaining safe and healthy work environment for our staff.