INSUBCONTINENT EXCLUSIVE:
NEW DELHI: India Inc seems to have started seeing the impact of trade disruption following the coronavirus outbreak
In their latest updates, companies from across sectors are sounding concerned about possible supply chain disruptions.
Chennai-based TVS
Motor this past Monday said the outbreak impacted the supply of certain components, thereby hurting 10 per cent of its planned February
The BSE Auto index has plunged over 10 per cent amid the ongoing selloff, while Bajaj Auto has declined 5 per cent during the same
period.
Other auto majors like Hero MotoCorp, M-M, Maruti Suzuki and Tata Motors have dipped 5-9 per cent in last six sessions.
Dun -
Bradstreet’s Economy Observer report said manufacturing companies could face production disruptions if this outbreak gets prolonged and
their supply chains are not restored to normalcy.
Tata Group hospitality chain The Indian Hotels Company (IHCL) said there was an impact
from the coronavirus spread on business but it was difficult to quantify as yet
“It (impact) could be less this quarter, and more going ahead
People are travelling less
People are worried,” Puneet Chhatwal, Managing Director and CEO, Indian Hotels, told reporters.
Many domestic players have of late cleared
the air on their dependence on China
Somany Ceramics said its exposure to China was limited to machines and spare parts.
Gabriel India last week said the company was not
impacted much by the virus outbreak, even though there has been some impact on the industry
Production, it said, has already started in China as told by the company’s suppliers.
Majority of auto ancillary players saw erosion in
investor wealth since February 19
Shares of Setco Automotive have declined the most at 15 per cent, while Rico Auto, Rane (Madras), Motherson Sumi and Gabriel India have
plunged between 4-14 per cent.
China accounts for 7 per cent of revenue for Motherson Sumi
The company in its earnings conference call said shortage of components sourced from China could impact production.
“The ideal time for a
shipment to move from the Chinese factory to the Indian factory is 36 days
Hence any supply chain disruption would be in effect after the estimated time slack,” Centrum Broking said.
The brokerage said current
inventories for most domestic players remain at sufficient levels
However any elongation of the shutdown is most likely to impact Indian players.
“Our study shows core import components such as
electronics, chemicals, drugs, machinery, metal products and auto components that comprise over 70 per cent of total imports from China,
remain highly vulnerable to the ongoing disruption in Chinese activity,” Centrum said.
Paint major Berger Paints said it does not expect a
significant impact on its business
The company’s share price has declined 2 per cent in last six sessions, while BSE benchmark Sensex has declined nearly 7 per cent.
In its
conference call on February 12, VIP Industries said the luggage industry globally is dependent on China for luggage - bag-packs.
“If
production doesn’t restart in one to two weeks, it will impact supply chain of the luggage industry globally,” Narnolia Financial
Advisors noted it as saying.
Shares of VIP Industries dipped 9 per cent to trade at Rs 416 on February 28 against Rs 457.30 on February
19.
Container Corporation of India said its volumes are negatively impacted by coronavirus while Allcargo Logistics said its management was
not yet clear on the impact on its business “as some of the businesses has started and some closed,” Narnolia noted.
IT firm Hexaware
said coronavirus might have a negative impact on its business
The travel vertical accounts for 10.3 per cent of its revenue
Share price of the company declined over 3 per cent to Rs 357.60 on February 27 from Rs 369.90 on February 19.
Coronavirus epidemic is fast
turning into a pandemic, with cases outside China, especially in South Korea, Italy and Iran on a rise
This has raised concerns over across several industries such as auto component and pharmaceuticals.
Coronavirus death toll in mainland China
has increased to 2,663 with 77,658 confirmed cases
South Korea now has 893 cases in all
Japan (850), Italy (229), Singapore (89) and Hong Kong (81) also have reported substantial rise in virus cases.
About 72 per cent of Indian
companies in China have presence in cities like Shanghai and Beijing and in provinces of Guangdong, Jiangsu and Shandong
Further, their business partners are located across China
These companies operate across sectors such as industrial manufacturing, manufacturing services, IT - BPO, logistics, chemicals, airlines
and tourism, CII said last week.