Most of the companies in the engineering sector in India fear the loss of revenue and cash flows in the aftermath of corona pandemic which will have an equally rippling effect on investments and capacity enhancements, a survey report by industry body VDMA said.
VDMA recently conducted a survey to assess the impact of coronavirus on the business and overall operations in the mechanical engineering sector. A total of 225 companies among VDMA members from 35 industrial sectors took part in the survey. Based on the findings from the survey, VDMA has released its report titled ‘India Flash Survey on Coronavirus 2020’.
Out of the respondent companies, a staggering 94% of the companies already feel impairments as cash flow has ebbed and the impact is across all industrial verticals within VDMA.
Accordingly, 91% of the companies foresee an overall loss of revenue in 2020 while 34% of the companies are expecting a 20-30% decline in their annual revenue in 2020.
Due to the lockdown, most of the industrial activities have come to halt. But even the companies, where the activities are running, expect disruptions in the next 3 months. This, in tandem with low cash flow and loss of revenue, will push companies to adjust capacity and alter their investment plans.
73% of the respondent companies are mulling a complete freeze of new hiring while others are in favour of a reduction in overtime, work time, accounts or holidays, etc. Investment scenario will also largely be affected as almost 71% of the mechanical engineering companies have already made plans, to reduce investments in 2020, the report said.
There is still uncertainty over a timeline for the restoration of normalcy across industrial activities. However, over 75% of the companies feel that the expected time to normalcy will at least 3 months or above.
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