India’s production lines are being hurt by extended factory shutdowns in China


The Print
February 28, 2020

India’s production lines are being hurt by extended factory shutdowns in China

Shares of TVS Motor Co. tumbled as much as 6.7% on Tuesday after India’s third-biggest two-wheeler maker said that a shortage of some parts imported from China may lead to a drop in production this month.

TVS isn’t alone. Swathes of Indian businesses that import raw materials from China are bracing for a hit from the coronavirus outbreak that has shuttered plants that feed the global supply chain with all sorts of industrial components.

While India has so far reported only three confirmed cases, compared with over 82,000 globally, prolonged disruption in raw-material supplies can delay a recovery in India’s economy — set for its weakest growth in 11 years. Shifting overnight to suppliers elsewhere in Asia isn’t feasible and airlifting parts for transport will bump up the cost of components, according to ICICI Direct.

To be sure, there will also be some winners from the coronavirus crisis. Textiles, fertilizers, oil refiners and other users of global commodities will benefit from the softening in their prices, according to Nomura and Citi Research. Producers of the basic ingredients used in medicines are expected to gain from the rise in their prices, according to Emkay Global Financial Services.

Here’s what some brokerages are saying:
ICICI Direct

    March quarter is unlikely to see an immediate impact as vendors stocked-up on inventory ahead of Chinese Lunar New Year holidays
    Prolonged shutdown will severely impact sales of air-conditioners, LEDs, fans and kitchen appliances, which will been seen in the April-June quarter
    Alternatives in Thailand, Malaysia, Vietnam unprepared to meet challenge of sudden demand; airlifting parts will boost cost of components and finished goods by 5%-6%

Nomura

    China accounts for about 14% of India’s imports; disruption will lower import of primary and intermediate goods, hurt domestic production
    Over 60% of Chinese shipments to India comprise electrical machinery and equipment and organic chemicals, with an additional 7% in the form of plastic articles and fertilizers
    Pharmaceuticals, autos, electronics, solar and agriculture among sectors to be hurt
    Gainers include textiles, fertilizers and mid- and small-sized firms that would face less competition from Chinese imports

Emkay

    Peak summer sales could be at risk if the delay in part supplies persists beyond February
    Chemicals and agro-chemical companies like Dhanuka Agritech Ltd., Rallis India Ltd., Vinati Organics Ltd. and Camlin Fine Sciences Ltd. appear vulnerable
    Tata Motors Ltd. and Motherson Sumi Systems Ltd. may be hurt in autos; Oil & Natural Gas Corp. earnings may be impacted due to lower crude prices
    Lower oil prices to benefit companies like Asian Paints Ltd., Pidilite Industries Ltd. and Apollo Tyres Ltd.
    Lower LNG prices to help Gujarat Gas Ltd., Gujarat State Petronet Ltd., among others; Divi’s Laboratories Ltd. and Granules India Ltd. to gain from expected rise in API prices

Citi Research

    India’s direct vulnerability to coronavirus outbreak, beyond supply chains, is limited
    Manufacturing sector accounts for less than one-fifth of India’s real GDP
    Support from monetary policy side may come if needed as fiscal space remains constrained
    Electronics, electrical machinery, chemical, pharmaceutical and textiles are most vulnerable sectors
    Electronic goods imported from China, including mobile phones, are mostly sold by unlisted companies

Capital Economics

    Coronavirus outbreak to have limited macroeconomic impact on India
    There could be “serious consequences” for companies in textiles and electronics, which respectively import a third and half of intermediate goods from China
    It will be difficult for these sectors to source goods from other suppliers immediately –Bloomberg

Reference: https://theprint.in/economy/indias-production-lines-are-being-hurt-by-extended-factory-shutdowns-in-china/372635/

Comments

Post a Comment

Popular posts from this blog

India Joins Russia in Voting Against West-Backed Move to Expand Powers of OPCW

The Wire: June 28, 2018 New Delhi: India voted against a UK-backed move that will allow the global chemical weapons watchdog to apportion blame for illegal attacks, criticising the decision to grant “unchecked powers” to the head of the group which could be used for “partisan” purposes. On Wednesday, more than two-thirds of the member states of the Organisation for the Prohibition of Chemical Weapons (OPCW) voted to authorise the international body to identify the perpetrators and sponsors of a chemical weapons attack. It also specifically called on the OPCW’s technical secretariat to begin work on identifying the perpetrators behind the use of chemical weapons in Syria. The draft decision, sponsored by 30 countries, was adopted at the fourth special session of the conference of the states parties to the Chemical Weapons Convention at the Hague, with 82 in favour and 24 negative votes. While Europe, the United States and their allies voted ‘yes’, there was strong oppo...
Read more

As financial insecurity rises in urban India, so does investment in insurance

Image
Scroll.in March 13, 2020 Urban Indians are becoming less confident about their financial security. Up to 58% of them fret over financial independence post retirement, which is a 4% increase from last year. An equal share of urban Indians worry about meeting their daily medical expenses and sustaining their current lifestyle once they stop working. The findings are part of a survey published by Delhi-based Max Life Insurance in association with London-based consultancy Kantar. The firms surveyed 7,014 respondents in 25 cities, including six metros, nine tier-1 cities, and 10 tier-2 cities, between December 2019 and January 2020. Source: Max Life Insurance via Quartz The trends Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz A significant share of urban Indians also say their families will have no financial support in the event of the breadwinner’s death. In such a scenario, around 57% believe the family sav...
Read more

ED tracks Swiss Bank A/Cs of Agusta scamster

The Poineer February 10,2019 Rakesh K Singh The Enforcement Directorate (ED) has tracked a dozen Swiss bank accounts in the name of Rajiv Saxena, who is key accused in the Rs 3,600 crore AgustaWestland VVIP chopper scam. The ED has also found out accounts held by  his family members and associates where the kickbacks in the now scrapped deal were allegedly parked. Two bank accounts are in the name of Rajiv Saxena’s  associates Pankaj Jain and Sumita Jain who are also the authorised signatories. The  third is in the name of another associate Ajit Singh Bubber, but Rajiv and his family members are authorised signatories. The remaining nine accounts are largely owned and operated by Rajiv, his family members and associates. Rajiv Saxena was deported by the UAE authorities on January 30 and the ED formally arrested him the next day and a court later granted his remand to the agency. He is currently undergoing custodial interrogation by the ED. The agency had in 2017...
Read more