Ceat Tyres’ Ltd. (Ceat) Managing Director, Anant V. Goenka, is uncertain about the viability of the business for the next 12 months, where a V-shaped demand revival after the end ofa national lockdown, due to COVID-19, seems rather unlikely. Goenka claimed the tyre industry’s business could shrink by a minimum 25%, but India-based Ceat is working on “multiple scenarios” to keep its business viable even at 20-50% decline in revenues; Ceat has also assured all employees that there will be no job or pay cuts.
Goenka said such a pay cut would be a “last resort” and is not part of the thought process for the company currently; the company remains in touch with thousands of its employees on a daily basis, to monitor their physical and mental health and well-being.
“We will not reach normalcy for the next 10-12 months. The larger level economic pain will be there, spending will be much lower, the economy will be much weaker, private investment will be missing for a while – and all these things will change the paradigm of business,” cautioned Goenka.
Before the lockdown, in March, Ceat produced more tyres to ensure adequate stock availability at dealerships to cater to demand, which was sure to spike after the lockdown period: “We planned business at 50% or 70%-90% of last financial year’s sales – you can never predict [business] exactly, so one has to think month by month and plan for the worst,” Goenka said; adding that the government could offer tax cut(s) for a temporary period to improve affordability and create demand in the short term.