“Ravin Group is already working towards building new capacities, new products and investing a lot into R&D, technologically far superior, as well as cost-effective products designed for the Indian market.”
Excerpts of the interview with Mr. Vijay Karia, Chairman & Managing Director, Ravin Group of Companies:
Challenges to reckon with:
The COVID-19 situation has brought massive changes in the working styles and corporate culture. It has also impacted the progress of infrastructure building across the world, as a lot of countries have faced nearly a year of complete/partial lockdown. The cable and wire industry has been badly impacted basically in terms of rising raw material prices, the lockdown impacting the demand, and the financial tightness due to the banks not willing to lend money.
Currently, what we are seeing is the release of the pent-up demand, when the infrastructure works have restarted. The country has also faced peak power demands in the last few weeks, touching close to 190 GW. Hence, the Q4 of the current financial year is seeing a good growth in terms of numbers for all the companies, who have the wherewithal to supply their products, not only in India but also outside of the country. The grey area is the demand from June onwards. If the union budget being presented on 1st February 2021 accelerates infrastructure spending, and liberalizes the money lending from banks for manufacturing under the ‘Make in India’ as well as the ‘AtmaNirbhar Bharat’ schemes, we could see the industry picking up in terms of demand by September/October 2021.
However, to overcome the challenges of increasing commodity prices, and where they will land up (as is a matter of pure speculation); there is a lot of liquidity in the world markets, implying that the industry has to rework their way to quote on a variable basis. The industry would have to move away from extending credit, and quoting on a firm price basis. This change in the mindset of both the seller and the buyer is the biggest challenge facing the industry. We hope to overcome this challenge at the earliest.
Expectations from the Government:
As an industry, we have realized that we can expect very little from the Government at this moment, as it has a number of fiscal challenges to meet. However, some visible areas of policy change and support which we would expect from the Government is to reduce import duty on commodities such as aluminum, polymers, steel and copper. The first three, i.e. aluminum, polymer and steel need reduction in import duties as the cable industry faces a negative duty structure on these commodities. We also look forward to support in terms of simplifying imports of advance license to help spur exports.
The Government and its bodies, especially the utilities hold the onus in terms of delays in payments as they can very easily bring about payment facility, either through the banks, or through other means for immediate release of payments for supplies. There is enough liquidity in the banking system to allow the payments/discounting facilities for supplies made to the utilities be they Government or Private players. This will ease the liquidity crisis facing the industry.
The local companies, who have pre-established facilities for more than ten years, should be allowed to quote for tenders without an earnest money deposit, or the performance bank guarantee. This can hugely help the industry to ease the liquidity, and it will also help the industry invest more in their manufacturing facilities as well as in R&D.
We definitely look forward to the simplification of the GST rules, both for local sales as well as exports. Though the current rules have expedited the movement of goods vehicles across the country, but a lot yet remains to be rectified. The cable industry faces huge amounts of penalties in terms of transportation of bigger drums. This leads to increased costs, as well as a slowdown of goods movement, as well as corruption. The Government should scrap all laws which would deter movement of commonly used and essential items, due to over height. Yes, they may charge an additional amount of toll tax for such vehicles, if they so desire. However, imposing penalties for transportation of materials of height beyond permissible limits need to be scrapped immediately.
All of the above said expectations are simply policies which would not impact the Government fiscally.
Strategies to strengthen the economy post-COVID:
I agree that the COVID-19 situation has created huge opportunities, both to the Government as well as to companies to build more resilient and diverse revenue sources, as well as creating new markets across the world both under the initiatives – ‘Make in India’, and ‘AtmaNirbhar Bharat’. India has got huge opportunity to grab some market share from China, for supplies into world markets. The resistance for imports into India from China as well as some of the other unfriendly countries has created a demand for the domestically manufactured products.
Ravin Group is already working towards building new capacities, new products and investing a lot into R&D, technologically far superior, as well as cost-effective products designed for the Indian market. We are acutely aware that the current levels of infrastructure, especially in terms of metro railways, airports, buildings, and other populated constructions require all products especially electrical products, with high levels of safety and fire resistance. Actually, we are looking to offer such products into the market. Also, we are looking to expand our capacities, with emphasis on higher voltages.
We are the only cable manufacturing company, who also has EPC capability for both solar as well as EHV, and also manufacture specialty power equipment. All these capabilities put us in an advantageous position to offer a complete range of products to our customers.
“The Q4 of the current financial year is seeing a good growth in terms of numbers for all the companies, who have the wherewithal to supply their products, not only in India but also outside of the country.”
Fast forward to 2021 – the way ahead:
We are not reactive, but we would like to consider ourselves as proactive. This is the reason why we had started cable exports from 1999 onwards, which no other cable company in the country at the time had ventured out into, especially after that stoppage of paper cable exports to Russia.
The pandemic has created a huge impact on the economies globally, and a lot of companies have come under financial stress. Though we had very little downtime in the situation, as we had undertaken the responsibility of electrifying a lot of COVID-19 hospitals and quarantine centres. We are already in 2021, and as stated above, our key focal area is expansion of capabilities as well as the product range, and we also look to acquire some stressed companies in similar businesses.
