Impact of COVID - 19 On Manufacturing Industries

Impact of COVID -19 on Manufacturing
Industries
Submitted by:-
Group – IV
 Harshit Krishali (19709018)
 Prachi Singh (19709019)
 Shrey Batra (19709020)
 Nithin Shahji (19709021)
 Arjun Anand (19709022)
Outline of the Presentation
Market Growth Estimation before
COVID-19 Pandemic Effect
• THE MANUFACTURING SECTOR IS A MAJOR PART OF THE ECONOMY AS
IT ACCOUNTS FOR NEARLY 16% OF THE GLOBAL GDP IN 2018
• AS A RESULT ,THE GOVERNMENT ACROSS THE COUNTRIES PRIMARILY
FOCUSES ON ENCOURAGING THE MANUFACTURING SECTOR.
• POLICIES TO PROMOTE THE MANUFACTURING SECTOR INCLUDE MAKE
IN INDIA AND MADE IN CHINA (MIC) 2025.
Contd.
▸ Make in India is an initiative was launched in 2015 to encourage
the production of goods in India.
▸ During the period, April 2014 to March 2019, FDI inflow
in India was $286 billion, which is nearly 46.9% of the overall
FDI received in the country since April 2000.
Deviations in the Manufacturing Industry
Growth Rate Due to COVID-19 Pandemic.
▸ After the outbreak of coronavirus, the global FDI inflows has witnessed a sharp
decline.
▸ Estimated by United Nations Conference on Trade and Development, Covid-19
could cause global FDI to shrink by 5%-15%, due to the downfall in manufacturing
sector .
▸ The manufacturers of the automobile, chemical, electronics, and aircraft are facing
concerns regarding the availability of raw material.
▸ Chinese vendors have increased component prices by nearly 2-3% due to factory
shutdown.
Pictorial presentation
Market Overview
The disruption on manufacturing caused by COVID-19 has severe operational,
COVID-19 has disrupted social and financial consequences. It is forcing manufacturers to rethink risk
operations on a massive scale, management and contingency plans, workforce safety protocols,
challenging manufacturers to manufacturing operations and new ways of working opportunities, all at the
assess the impact. same time.
Highly volatile demand for
certain products necessitates Management need to focus on building a business that is as future-proof as
the assessment of short-term possible using new technology solutions. This strategy will not only increase
effects on workforces, resilience, protect operations, and support workers through the crisis, but
ecosystem relationships and will also help sustain a competitive advantage to accelerate business
network assets. growth once economies start to rebound.
Demand and Supply
* Factories shut- demand exists but no supply- inflation?

*Jobs lost.
*The Labour problem- How to reopen?
Starting Operations (POST COVID)
Three areas of focus can help plant leaders navigate the transition from initial crisis response to the
“next normal”:
Protect the workforce: Formalize and standardize operating procedures, processes, and tools that
help keep staff safe. Build workforce confidence through effective, two-way communication that
responds to employees’ concerns through flexible adaptation.
Manage risks to ensure business continuity: Anticipate potential changes and model the way the
plant should react well ahead of the fluctuations to enable rapid, fact-based actions.
Drive productivity at a distance: Continue to effectively manage performance at the plant while
physical distancing and remote working policies remain in place.
GOVERNMENT SUPPORT
GOVT. 20 LAKH CRORE

PACKAGE
• Package to cater to various
sections including cottage industry,
MSMEs, labourers, middle class,
industries, among others.
Moratorium of three months on
payment of instalments and
payment of Interest on Working
Capital Facilities in respect of all
Term Loans.
• Easing of Working Capital
Financing by reducing margins.
• Provided Relaxation in Statutory
and Compliance matters.
Automobile sector
The Indian automotive sector was already struggling in FY20. before the Covid-19 crisis. It saw an
overall degrowth of nearly 18 per cent. This situation was worsened by the onset of the Covid-19
pandemic and the ongoing lockdowns across India and the rest of the world. These two years (FY20
and FY21) are challenging times for the Indian automotive sector on account of slow economic
growth, negative consumer sentiment, BS-VI transition, changes to the axle load norms, liquidity
crunch, low capacity utilization and potential bankruptcies.
Impact:
The COVID-19 pandemic has a swift and severe impact on the globally integrated automotive
industry. Symptoms include a disruption in Chinese parts exports, large scale manufacturing
interruptions across Europe, and the closure of assembly plants in the United States. This is placing
intense pressure on an industry already coping with a downshift in global demand, and likely leading
to increased merger & acquisition activity.
Opportunities:
Automobiles sector has proposed a “Protect-Restore-Rebound” structure to ride the
Covid-19 storm in the short term and devise long term strategies to minimize the future impact.
Food and Beverages companies
The food and beverages market consists of sales of beverages, food, pet food and tobacco products by
entities that produce beverages, food, pet food and tobacco products. The companies in the food and
beverages industry process raw materials into food, pet food and tobacco products, package and
distribute them through various distribution channels to both individual customers and commercial
establishments.
Impact:
Consumer Products food & beverage companies are facing significantly reduced consumption as well as
disrupted supply chains. At-home consumption has increased, but out-of-home consumption – which
historically generates the highest margin – has come to nearly a standstill. There may be long-term
changes in customer behavior and demand.
Opportunities:
The major destinations where Indian food sector has witnessed demand are the US, Europe, Australia,
New Zealand, Israel, Palestine and Egypt. Indian exports are also getting enquires in the spices category,
owing to the supply Chain disruption hitting China due to the Coronavirus. There is huge opportunity
amid this Covid-19 crisis for Indian food sector.
Chemical sector
Impacts :
Demand for chemicals falling by up to 30%. On the other hand, demand for pharmaceuticals, food additives, and
disinfectants is peaking, and chemical companies exposed to these sectors are reporting record outbound
volumes.
Chemical sector has observed an accelerated deglobalization of supply chains.
In response to major supply chain disruptions, chemical companies have started to relocate the production of
critical chemicals supplies and medical goods closer to end-customers (for example, pharmaceutical active
ingredients, disinfectant gels, masks). Trade conflicts and structural sector trends were already impacting supply
chains and the deglobalization trend is now accelerating.
Opportunities:
The opportunities are also plenty and include technological developments around 3D printing, polymer
recycling, green hydrogen as a source of energy, bio-based products etc. There is a unique opportunity to
increase green investments via government stimulus packages and reach the United Nations sustainable
development goals.
Machinery sector
Impact:
The lockdown has resulted in various infrastructure
project sites staring at closure as it is mainly due to
an effect on the labor movement due to the
lockdown and also due to supply chain disruptions
that may contract further as more states enforce
COVID-19 lockdown. The fiscal situation in the
construction sector for both the Centre and states is
already worsening and continued funding of infrastructure capital expenditure will be a challenge in the near future.
Additionally, all these problems will be further aggravated by the relief packages that are being rolled out by many
states to support the loss of income caused by the lockdowns. This may further stress the government's ability to
spend on the infrastructure over the next one or two years, further dampening the construction and the
infrastructure segment.
Opportunities:
Finance minister Nirmala Sitharaman recently announced that the state governments have been directed to use the
welfare fund for building and construction laborers, which has around Rs 31,000 crore, to help those who are facing
economic disruption because of the lockdown.
Electronics sector
Worker shortage isn’t the only problem the electronics industry is facing. The pandemic has
also reduced demand for these products in the country. Companies are not sure that
demand will pick up, even if the government does allow manufacturing to resume. Demand
won’t be the same for 6-7 months more.
In India, the handset manufacturing industry is staring at close to INR 15,000 crore in losses
as production halts amid the nationwide lockdown. Companies such as Foxconn, Flex and
Wistron, which together make the bulk of the smartphones sold in India, are closing
operations.

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Impact of COVID -19 on Manufacturing

* Factories shut- demand exists but no supply- inflation?

GOVT. 20 LAKH CRORE

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