The year 2019 has been eventful for the Indian economy. From ‘beginning of the era of Modi 2.0’ to the economic slowdown, the country has witnessed quite a few ups and downs in this year. Speaking of the manufacturing sector, the year began with a great enthusiasm; however it was later hit by economic slowdown. Talking on the how the year was for Godrej & Boyce Mfg. Co., Anil Verma who is the executive director & president at the company says, “We are a diversified company having businesses in the B2C, B2B, projects and industrial space. While the growth trajectories across our businesses have varied, most of them grew in the first half of the year but almost all of them are experiencing slowdown in the second half.” The auto industry was hit by the slump badly disheartening the entire eco-system. Speaking about the famed downtrend in the auto sector, P Srinivasavaradhan, president, TVS Srichakra, says, “The slow growth witnessed by the industry has been a big barrier.” However, the auto components manufacturers are definitely not demoralised by the situation. In fact, as the sector is undergoing transitional phase, it is gearing up for the change. Prashanth Doreswamy, country head, Continental India and managing director, Continental Automotive, India elaborates, “The automotive industry across the globe is transitioning to the next stage, with increased interest in electric vehicles (EV), incorporation of more software content with holistic connectivity and advanced driver assistance systems to the car.” He further adds, “There has been a lot of movement in India in terms of policies for EVs, infrastructure development, emission and safety for 2-wheelers and passenger cars. While there are concerns about the current market situation, but we believe this is temporary.”
Narrating the year’s highlights for the company, Doreswamy notes, “We had an action-packed year. In January, we reached a milestone for manufacturing
one million instrument clusters at our Bangalore plant, in the same plant we announced line expansion for manufacturing Airbag Control Units (ACU),
and in Pune we announced a new greenfield project for Powertrain business. In August, we achieved another important milestone for manufacturing one million speed sensors at our Manesar plant. In the later part of the year, we had a privilege to host the German Federal Chancellor Dr. Angela Merkel, at our Brakes plant in Gurugram. And finally, our Bangalore plant reached yet another landmark for producing one million Electronic Control Units (ECU) for passenger car anti-lock brake system and electronic stability control. This year we also saw a continued growth of our inhouse R&D centre, Technical Centre India (TCI).”
Stating how the year was for TVS Srichakra, Srinivasavaradhan says, “Our new brand TVS EUROGRIP that was launched in August 2019 has been a great motivator. We have introduced many new products, rolled out an innovative advertising campaign and are now confident of offering our customers
an enriching riding experience.”
Touching upon the global scenario, one of the highlights of the year was the US-China trade war. This situation created challenges as well as opportunities for companies having footprint world over. Llamasoft, a company that helps manufacturing enterprises in improving their supply chains, experienced tremendous growth in this situation. Explaining how the adverse market conditions have helped the company grow, Dr. Madhav Durbha, group vice president industry strategy at Llamasoft describes, “Our business across the globe is experiencing solid growth, thanks to the significant challenges supply chains are experiencing in light of trade wars and shifting global trade flows, rise of the connected consumer, increasing SKU complexity, M&A activity, increased margin pressures, and many others. Organisations need to revisit their structural and flow decisions of supply chains and associated policies far more frequently. Just in the first half of this year our software subscription revenues grew by over 30% with 33 new customers added.”
Anil Verma, executive director & president, Godrej & Boyce Mfg. Co.
Similarly, Karam Industries, which is a personal protective equipment (PPE) manufacturing company, also experienced a profitable year. Speaking on it,
Sunita Sapra, COO of the company says, “Although the economic downturn has impacted all of the business including ours, being a significant industry
player, 2019 proved to be a fruitful year for us. Our company’s revenue in 2019 was among its highest ever. We successfully forged partnerships that gave
us access to overseas markets.” Giving an overview of the global market she says, “Globally, the PPE market was valued at approximately $48 billion last
year. It grew by 6.6% in 2019. The market expanded because of increased demand for PPE from the industry. Industries know equipping workers with PPE
keeps them safe and productive. This is creating demand. In India where safety standards trail those in developed markets, demand grew quickly. As the
leading manufacturer of PPE in the country, our company met a significant share of domestic demand.”
GOVERNMENT INITIATIVES
Emphasis on safety has increased. Even the government of India is spreading awareness on safety and environment. Highlighting these initiatives from the
automotive sector’s point of view, Doreswamy says, “This year the focus was on safety legislation and upcoming emission norms. Both safety legislation and BS VI norms are a welcome change.” he appreciates steps taken by the government.
Adding to it, Verma notes that the Government has also taken initiatives to help the industry in these difficult times of slowdown. “The Government has taken many steps to reverse the slowdown and bump up the GDP growth rates. Steps to increase liquidity in the system, ensure transmission of rate cuts, reduction in corporate tax rate are all welcome measures.
To us the biggest message that the government has communicated is that wealth creators and employment generators should be viewed with regard and
appreciation,” he mentions.
Sapra also thinks that lowering corporate tax was appreciable step by the government. “It is one of the worth mentioning highlight of 2019. This initiative
was taken to stimulate the economy. It may have succeeded in doing so. Now the government must manage the by-product of the cut; an increase in inflation. Capital that otherwise would have been paid as tax will enter the economy,” she expresses her expectations explicitly.
2020 IS HERE
Forecasting on the supply chain and logistics front, Dr. Durbha says that 2020 will see some of the distinctive trends in this sector. According to him,
“Growth in the organised retail and m-commerce (mobile commerce) is expected. Investment in larger warehouse space and automation will accelerate. In conjunction with growth in organised trade and mcommerce, there will be increased need for larger warehouse space. Given that finding space is a perennial problem in this densely populated country, vertical stacking will increase. This will lead to increased investment in warehouse automation. Also,
cold chain will see big growth in India.”
He further adds that there is a big opportunity to capitalise on the US-China trade war. Elaborating on opportunities and challenges that can be seen on the
horizon, he says, “Given the warm camaraderie between US President Donald Trump and Prime Minister Narendra Modi, there exists an opportunity for India to capitalise on becoming a preferred supplier to the US. However, infrastructure challenges and traffic congestion challenges remain in India which results in supply chain risks that can limit India’s potential in the near term. While ‘Smart Cities Mission’ by Government of India offers promise, there remains a huge gap in terms of basic infrastructure. Also, Trump’s nationalistic agenda and America First policy can be an impediment as well at least through end of 2020.”
Srinivasavaradhan is also optimistic about the coming year. “We feel that the industry has seen a rough phase in 2019 but there are better times
ahead. We are confident about the growth of twowheeler tyre segment, both motorcycles and scooters in the year 2020.” Answering the question on
how does the coming year be for his company, Srinivasavaradhan replies, “Our new range of tyres under TVS EUROGRIP has been receiving positive reviews from our customers and we feel this will catalyse our growth and pivot us as the most preferred brand in the coming years.”
Doreswamy is confident about the coming year. He says, “We are keen to see the market scenario getting better and we are optimistic of 2020.” Revealing
the company’s plans for the year, he adds, “We are working towards new market trends and upcoming technologies, which puts us in a good position to partner with OEMs to deliver mobility of the future. R&D is our strength, in the next couple of years we have ambitious plans to strengthen and
expand our engineering capabilities and scope of work in India. Our Technical Centre India is on the right track, establishing centre of competence for
various businesses, shaping the required transformation of our industry and preparing ourselves for future market demands. In addition, our localisation
efforts are propelling our business growth in India. As I mentioned earlier, we had quite a few significant localisation milestones in 2019. We will continue to capitalise on these accomplishments and further our localisation initiatives at our various plants.”
Sapra also has high hopes from the coming year and anticipates increased demand for personal protective equipment. “We expect demand from in
2020 to outstrip this years’ demand. The economy will grow in 2020 and industrial production will expand. More workers will use PPE next year than
ever. We foresee the industry expanding by close to 7% in 2020.”
Besides the automotive, infrastructure creators seem confident and are hoping for the best from 2020. Expressing his views, Vijay Sharma, Director,
Jindal Stainless says, “The emphasis on creating infrastructure and projects of modernising existing infrastructure is creating growth opportunities for
us. On this backdrop we recently signed MoU with Braithwaite & Co. to develop stainless steel footover-bridges (FOBs), road-over-bridges (ROBs) etc.
and look forward for supplying required material to the company.”
India’s emphasis on infrastructure is driving the growth for of Escorts’ railways division as well. Elaborating on it, Dipankar Ghosh, CEO, Escorts Railway
Equipment Division says, “The massive transformation in Indian Railways in the past few years is phenomenal and progressing at an advanced stage.
We at Escorts is all set to act as a catalyst in the modernisation and indigenisation drive of Indian Railways. We are proactively exploring joint ventures
with foreign players for high end technological collaborations under Make In India initiative of the government besides building a deep in-house R&D to
develop cutting edge technologies for a safer and comfortable rail transport.”
To sum up, Verma says, “India’s long term story is intact. So we are very positive on 2020. When asked about the company’s plan for the next year, he concludes by saying, “As a responsible corporate citizen, we will continue to work on our chosen areas of CSR such as employability training, community development besides continuing to work on our Good and Green portfolio and sustainability initiatives.”