Harsh Goenka, president of $ 3.8 billion RPG Group, says it is ready for a longer lockdown and expects a mild economic recession due to coronavirus disease (Covid-19). However, he hopes the government will help the industry, beyond lower interest rates. In an interview with Surajeet Das Gupta, Goenka talks about the impact of Covid-19 on businesses. Edited extracts:
In terms of its impact on the industry, do you think the foreclosure should continue beyond April 14?
I have a contrary vision of most of my industrial friends. I think the lockout should continue for another 15 days and be removed gradually after this step. In the first phase, you could allow 30% of the workforce to come and see how it goes. I think the government made a very sensible decision to lock it out completely. It has to be a good balance.
What do you think will be the impact on the industry?
The first quarter will be a complete wash for our tire business, although we will continue to bear fixed costs. While margins may not be affected due to lower oil prices, there will be a demand problem. Then there will be bottlenecks in exports. We expect it to improve in the second quarter. The economy is expected to experience a mild recession.
What type of support do you expect from the government?
We are considering tax breaks and increases to the working capital limit. Only lower interest rates will not be enough. The government must generate demand.
The good thing is that the banks have become proactive – the State Bank of India has offered us a 10% increase in the working capital cap, for example. Others are calling to ask us what help we want.
What about your other businesses, how did they fare?
In the information technology sector, they managed to work from home. But since most of our clients are in the United States and have their own pressures, we expect cancellations and renegotiations of conditions.
Transmission business is good, order books are solid as they come mainly from the government. The only thing is that we have a shortened nine-month deadline to deliver the orders. I am not worried here even if international projects are underway. The pharmaceutical sector, which is an essential product, is progressing, but there is a serious shortage of labor.
What will the business world look like after Covid-19?
It will be a huge change in many ways, like the world before Christ (BC) and after. It will also be before Corona and after Corona.