covid-19 lockdown: Slowly, India Inc begins to fire up its engines

At least eight publicly listed companies have taken steps to restart operations with a limited workforce after obtaining permission from the authorities, show data compiled by the ETIG from stock exchange filings. Top executives of some of these companies told ET that while India Inc is working hard to restart […]

At least eight publicly listed companies have taken steps to restart operations with a limited workforce after obtaining permission from the authorities, show data compiled by the ETIG from stock exchange filings.

Top executives of some of these companies told ET that while India Inc is working hard to restart factories under the Covid-19 lockdown, restoration of the supply chain across the country will be critical for the economy to get moving again.

The list of companies includes Pidilite Industries, the country’s largest adhesive maker; Eveready Industries, the largest dry cell maker; Navin Fluorine, a market leader in fluorochemicals; Hikal, a manufacturer of active pharmaceutical ingredients; Prataap Snacks, a major manufacturer of extruded ring snacks; carbon steel pipe maker Man Industries; and Yasho Industries, which supplies intermediate oils to personal care companies. The stocks of these companies gained 1-10% Thursday on the BSE.

LIMITED RESUMPTION AFTER APRIL 20

However, smooth supply chain management and raw material procurement remain a challenge given that 170 districts are still identified as hotspots — areas with a higher concentration of Covid-19 infection.

“We have around 4,000 dealers across the country, but reaching out to them during the lockdown is challenging for us,” Eveready executive director Amritanshu Khaitan told ET. With five manufacturing plants in India, the company has over 50% share of the dry cell battery segment. It has now reopened one of its plants at Maddur in Karnataka after deep cleaning. The plant will function with 30-40% of the workforce to abide by the government’s social distancing directive.

India has extended a lockdown that began on March 25 to May 3 but several mainstream business activities will be allowed to resume after April 20 in areas relatively free of Covid-19 infection provided safeguards are observed.

Pidilite Industries told the stock exchanges that two units of the company have partially resumed operations. The company has three plants in Maharashtra, two in Himachal Pradesh and one each in Gujarat, Daman, Telangana and Assam, according to FY19 annual reports.

Indore-headquartered Prataap Snacks, which sells 11 million packs of snacks every day, has restarted production of its contract manufacturing plants at Kashipur, Raigad and Hisar. It has five inhouse plants and nine contract manufacturing units.

Amit Kumar Kumat, executive director at Prataap Snacks, told ET that product availability will improve in the next few days as the government has given permission for transport of finished goods from Indore and Guwahati. In the next few days, the Guwahati plant is likely to resume operations, thereby increasing capacity utilisation to nearly half. The company has more than 4,100 distributors and reaches over 1.7 million retail touch points.

SOME SUPPLY CHAIN ISSUES

Prataap Snacks faced supply chain issues owing to disruption in truck movement in some areas.

“The volume offtake from metros has been more impacted given a large number of hotspots, but it has been quite smooth in tier II and III cities,” said Kumat. The procurement of raw materials, particularly potatoes from farmers, has not yet been interrupted, he added.

Vapi-based Yasho Industries, a supplier of fatty esters and aroma oils to consumer goods companies, is hopeful that there will be a smooth restoration of raw material supply in the coming days.

“Our raw material stocks will be sufficient for the next 8-10 days. This should improve with more relaxation in industrial activity after April 20,” said Parag Jhaveri, CMD at Yasho Industries. With the labour-intensive nature of production, the company will be using at least 50% of the workforce. In a bid to maintain social distancing, the company has introduced an extended lunch break.

Source Article

Lois C. Ferrara

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