The stocks of companies which have significant exposure to markets like Europe and the UK like yourself have been reacting quite sharply ever since the fears around the new strain of Covid-19 have emerged in the UK. Are these concerns justified?
I cannot talk about everybody but we have been monitoring the issue since Sunday when this particular news flow came and I am pleased to report that all our plants are doing very well. Some of our plants are closed down but they were supposed to because it is Christmas Holidays, New Year and so they will open up somewhere around the first week of January. Other than that, all our plants which are supposed to be open are open, doing fine. There are no issues at all. At least for us, there is no panic!
There are no fears of a prolonged shutdown. Of course, this is an annual practice that you are undertaking right now but beyond January, do you see any trouble?
No, I do not. Yes they have found some mutant Covid strains and all that yes they are there but I personally think that we are going to face this particular problem time and again and we have to be ready with it and deal with it. Every year, we are closing down by the 22nd-23rd anyway and people have misunderstood the whole situation.
The car companies which are supposed to be working till the 23rd are open till the 23rd and the others which close down earlier, have already closed down. I do not think in any circumstances, the governments are going to start locking down plants. The problems in Europe and the UK are unique. They have to keep the schools and the industry open because one cannot stop the whole life completely and people are more cautious. I would advise all my people to be very cautious. Everything is safe because people are cautious.
That is good to know and I hope that the concerns of people on the street are put to rest because the stock has been cracking quite significantly. There are some new challenges that the auto space seems to be facing. We are given to understand that there is a severe shortage of shipping containers in India which perhaps has caused major disruption in global supply chain?
I agree there will be a lot of challenges because governments have to be careful. This is an unknown devil, they are trying to find a good method by which they can control this situation. In the automotive side, I would be very surprised if people have left this to the last moment. I think they all covered up very well. At least in our plants, we are covered till January end. We are sure this particular problem will resolve very soon.
Freight rates are going up in high double digits, 50% odd; container rates have almost doubled as well. Could the industry be looking at significant cost overruns or is it something that the sector is prepared for?
Vivek Chaand Sehgal: Definitely there is going to be an impact on the price and we are very sure that our customers are also going to be facing the same problem. So together we will work it out as to how we have to do what we have to do but we will try and put a minimum amount of damage to the ultimate customer.
Another bit of a pain point from an investor standpoint has been rising commodity costs. Can you give us some ideas on the pass through of costs?
This is something which is beyond our control. Basic raw material costs are going up. We have mechanisms by which we pass through and in the past so many months, prices also have been taken down. Definitely price up moves will also happen but we normally settle that when the problem is over. I think by February, March, most of the price increases that have to happen will happen.
Going into 2021, how are OEMs and suppliers preparing themselves as there is still a significant amount of uncertainty in different pockets of the world?
I do not know why people think that 2021 will be a different year from the past so many years. Car makers have requested increased activities for renewing their models and the facelifts and all these things are ongoing as per normal. There is no increase but surely there is no decrease for sure. The entire thought process of personal transportation has changed dramatically in the last one year.
I believe this particular state will carry on for at least a year and a half, two years if not more because it is not going to be easy to solve these particular issues on a day-to-day basis. Our customers have told us to be ready for more of such things. In fact they are eagerly waiting for the January opening up of their plants and we are back in a big way. There is no doubt about that, at least among our customers.
