The efforts of the government and various other forces to improve CV utilisation are bearing fruits.
Story by Bhushan Mhapralkar
Ajit (name changed to protect identity) has begun a new routine of attending work after almost two months of rest. He is among the workers at the Ceat Tyres factory at Ambernath on the outskirts of Mumbai that have been told to report to work as the company begun its operations a few days ago by implementing the social distance norms among others to ensure safety and well-being. Said to manufacture speciality tyres and off-the-road tyres, the Ambernath plant of the company is the oldest after Bhandup (now shut). It is one of the six plants that Ceat Tyres operates all over India, the newest being the plant at Chennai that was inaugurated early this year. Indicative of the CV industry shifting gears, the Ceat Tyres plant at Ambernath is among the many CV industry plants that has resumed operations as the State and Central Government ease norms for manufacturing and trade to resume.
One of the first auto makers to announce that it has got a nod from the Government to start operations in early April, Maruti Suzuki started operations at its Manesar plants in mid-April. Doing so on a single shift basis with the number of employees capped at 4696, the company, which makes the Super Carry mini-truck (albeit at the Gurgaon facility, which is yet to start operations as it falls under the municipal limits), is strictly implementing social distancing and other hygiene norms to ensure smooth and sustained operations. The leading auto maker has also rolled out a set of detailed Standard Operating Procedures (SOPs) for its vast network of over 3800 service centers across 1914 cities. These include adherence to all the advisories and guidelines stipulated by the State and Central Governments, training of workshop staff, health monitoring of workshop staff, on-line service interactions, workshop preparedness and being relevant to customers.
Amid the cry for auto sector being left out of ‘Atma Nirbhar Bharat’, Rs.20 lakh crore economic (stimulus) package announced by the Indian Government, CV leader Tata Motors has announced the opening of its Sanand and Pantnagar plants. The other plants – Lucknow, Dharwad, Jamshedpur, and Pune (only for Ambulance Vehicle manufacturing) are said to be in final stage of readiness and expected to begin production over the next few days. With all mandated safety norms being complied with, the company has started operations at over 400 sales outlets and 885 workshops for CVs (with a new set of Standard Operating Procedures (SOPs) in place, which include minimal interactions and maintaining of prudent social distance when interacting with customers). Using the lockdown period to design new ways of working, Tata Motors is employing digital tools for communication between the staff as well as the customers. It is collecting documents for vehicle insurance and registration via mail or specially installed drop boxes. Customer vehicles arriving at workshops for repairs and servicing are completely sanitised.
Starting lean operations at 25 to 40 per cent levels in its plants at Pithampur, Dewas, Baggad and Thane post receiving required permissions, VE Commercial Vehicles (VECV) Ltd. has been stressing upon strict adherence to the guidelines and advisories laid down by the Central and respective state governments as well as the local authorities. Starting operations post sanitisation and putting in place of design measures in-line with the need for safety, hygiene and social distancing, the CV major, like its fellow players, prioritised the provision of essential support and service during the lockdown, including the dispatch of parts to various service centres, dispatch of BSVI vehicles and quick repair and service of vehicles engaged in the transportation of essential goods. If the VE PowerTrain plant at Pithampur (a joint venture between Eicher and Volvo) has also resumed manufacturing and exports of engines for Volvo Group requirements, the Eicher Engineering Components (EEC) plants at Dewas and Thane have resumed lean operations to meet requirements of export customers engaged in agricultural tractors, harvesters, essential mining and construction segments.
Resuming operations in a phased manner at its Chennai plant in early May by ensuring safety of its employees, Daimler India Commercial Vehicles Pvt Ltd (DICV) is looking at ramping-up production in anticipation of return in demand. Focusing on ensuring that its clients ferrying essential goods were catered to through dealerships, the CV major has begun supporting its dealer network to resume normal operations by adhering to the guidelines set by the government and authorities.
Expressed Satyakam Arya, Managing Director and Chief Executive Officer, DICV, that they were able to anticipate the implications of Covid-19 to an extent as part of the Daimler’s global network. “We immediately initiated a crisis management team to steer us safely through this difficult situation,” he added. Averred Vipin Sondhi, Managing Director & CEO, Ashok Leyland Limited, that the necessary health and safety protocols are being followed in response to a query regarding the restarting of operations. Ashok Leyland, after obtaining necessary approvals from relevant authorities, has started operations at its plants. It is hoping to ramp-up the production gradually.
Following the necessary health and safety protocols, Ashok Leyland is planning to ramp-up production by considering the Work in Progress (WIP) that were on hold at the time the lock-down was announced. It is thus evaluating supply chain readiness and is reviewing the preparedness of its ancillary units for supply of critical components to ensure sustained performance. One of the big challenges faced by CV makers is to re-build their supply chains to support smooth and sustainable operations. The availability of raw material and parts is still a problem down the line, mentioned an industry analyst. He also drew attention to challenges like plants of suppliers and vehicle manufacturers falling under ‘red zone’, making it difficult to secure permission to start operations. Despite the announcement by the Government to resume operations post April 20, many suppliers have been battling acute shortage of workforce and availability of many blue collar workers since they reside in ‘red zones’, informed the analyst. Pointing at some CV manufacturers and dealers having been left with BSIV inventory due to the lockdown (the Supreme Court order to sell 10 per cent BSIV vehicles in the first ten days of April helped little), an industry source mentioned that pressure on SME units in the auto industry has been mounting as they struggle to resume operations. With SME faltering, the implications of it could cause a ripple effect, expressed the industry source.
Supply chain woes
Large in number as compared to the CV makers, CV suppliers are spread all across the country. They have facilities within the city limits and outside of it, making them especially vulnerable to the demarcation of ‘green zones’, ‘orange zones’, and ‘red zones’. Apart from the hassle of obtaining permission to operate their facilities, especially those that lie in the industrial zones within municipal limits like Satpur MIDC at Nashik or Bhosari MIDC at Pune, suppliers have been facing shortage of manpower due to mass migration of labour over the last one month and the lack of operating capital. The lockdown has seen to it that many micro and small units have seen an erosion of capital to be able to build inventory and pay the workforce that is available. Staring at rising costs at the workforce level as well as the material level, many suppliers are looking at running their operations at 20 to 30 per cent of the capacity at least initially. Stating that he is disappointed by the exclusion of auto sector in the stimulus package, a Pune-based supplier over phone expressed that revamping the operations in the absence of enough operating capital and workforce is turning out to be a herculean task even as they look at dispatching finished components for orders received prior to the lockdown and in-parallel try to get the machines in order in anticipation of new orders.
With Deepak Jain, Managing Director, Lumax Industries known to have said that the automotive sector has started with zero revenue this financial year, the challenges that lie ahead of automotive suppliers are quite complex and steep. Mentioned an auto supplier from Pune with plants at Bhosari MIDC and Ranjangaon MIDC, that he is facing a very unique situation where one of his plants has been given the permission to start operations and the other is yet to get permission because it falls in the municipal limits. Since the raw parts for what is produced at the plant, which has received permission to operate, comes from the plant, which is yet to receive permission, we have been unable to effectively start production, he rued. What we are currently able to do is simply dispatch the components that were produced against orders before the lockdown, he added. Stated yet another vendor who also has a presence in the aftermarket, that they are being very cautious about starting operations since they are not sure when and how much demand is going to be generated.
Drawing attention to a statement by Rajesh Menon, Director-General of the Society of Indian Automobile Manufacturers (SIAM), that the auto sector lost over Rs 90,000 crore in revenue due to the lockdown, an industry expert averred that government intervention is necessary, and beyond the stimulus package that has been announced. Big challenges in front of the suppliers, he said, are to lure the workforce back (and at a higher cost than before), set right the supply chain (many have been dependent of import of critical raw material or components from China), and ensure health and safety measures are adhered to in terms of smooth operations and sustenance. With many suppliers, servicing the existing debt is an additional challenge, he added.
The road ahead
The road ahead for the auto industry on the whole doesn’t look very smooth. With auto sales unlikely to pick up anytime soon, and transport associations like AITWA advising their members to not buy a single new vehicle against the Government’s lack of attention to offer a stimulus in the wake of sharp drop in business (and a subsequent drop in vehicle utilisation levels), the road ahead is clearly not looking smooth. Mentioned Mahendra Arya, National President, AITWA, that once some kind of normalcy prevails, we fear, the excess available capacity of vehicles will become too high due to factors like fall in production, export and trade levels. “There are over 90 lakh trucks that operate in the country. Most of them have not been used in the last two months approximately. This has amounted to direct loss to the owners. They have paid or will pay road tax, insurance, permit fees, etc., for the whole year but will have less time to operate,” he explained. 
In a video interview to Faye D’souza, Bal Malkit Singh, President – All India Motor Transport Congress, and Partner, Bal Roadlines, mentioned that the total neglect for the trucking sector by the Government is going to lead to its stoppage. He averred that pressure on transporters would rise once the EMI moratorium period is over. In view of poor demand for the next eight to 10 months, Singh demanded that EMI be differed till September and interest waived off. Announcing that transporters have gone bankrupt in the absence of any business for the last two months, and are thus unable to pay salaries to their staff and drivers, Singh informed that there’s been no response to their demand for deferment of insurance as trucks haven’t been able to ply for the last two months. He emphasised on no response has been received as far as the insurance of driver who has been taking the risk of plying the truck laden with essential goods. Despite taking huge risk to ensure that the essential goods supply chain does not breakdown, the Government has not done anything to ensure our sustenance, he concluded.
