Bhopal: Managing costs biggest challenge before industries post-second wave

BHOPAL: Industries across the state are now worried over the impact of the second wave of Covid 19. Most of the industrialists are concerned over weak demand and increased input costs besides tight financial liquidity. ††

Nevertheless, with states getting into the ëunlockí mode, there are early indications of improvement in economic activity; companies hopeful of better performance in the next 6 to 12 months

The second wave of the Covid-19 that hit India during April-May 2021 was extremely intense and impacted the functioning of businesses, which had just started moving on the path towards normalcy after the end of the first wave,í said Dinesh Patidar, CMD of Shakti Pumps and state convener of FICCI in MP.

Patidar said that FICCI had recently conducted a national survey to assess the impact of the second wave of Covid besides preparations to face the third wave of the pandemic.

Picture was not too bright and the survey reflected the sentiments of industries in Madhya Pradesh. The survey shows that 58% of the companies saw a ëhigh impactí on their businesses due to the state level lockdowns. Another 38% reported ëmoderate impactí on their operations due to the state level lockdowns. With different parts of the country under different sets of restrictions and consumer sentiment impacted due to the ferocity of the second wave, an evident dip in demand was witnessed by companies.

President of Mandideep Industries Association, Rajeev Agarwal said that over 60% of the companies are suffering due to weak demand. Another challenge faced by us includes managing costs and tight financial liquidity.

Almost all industries have suffered a setback due to weak demand. This time it was not just demand in urban areas that was constrained but even the rural areas saw a compression in demand, said prominent businessman from Guna, Amit Sogani.

About 40% of the companies reported a high impact on their sales in rural markets. The weak demand situation led to reduction in capacity utilization with most of the companies reducing their production to less than half of their installed capacity, he added.

Major representative bodies of industrialists FICCI and the Chamber of Commerce and Industries have also suggested some relief measures for ailing industries. Amongst other measures for relief- ease of compliances, moratorium for loan and interest payments and incentives for boosting demand stand out. On the taxation side, some of the key reforms companies wish to see include reduction in the tax rates, reduction in compliances and expediting refunds.

While the impact of the second wave induced lockdowns on businesses is clearly visible, there is a silver lining on the horizon. This relates to expectations about business performance over the next 6-12 months.

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