Coronavirus lockdown should be extended by 15 days, says Harsh Goenka

Goenka is hopeful the government will help the industry, going beyond lower interest rates

Harsh Goenka, chairman of the $3.8-billion RPG group, says he is ready for a longer lockdown and expects a mild recession in the economy because of the coronavirus disease (Covid-19). However, he is hopeful the government will help the industry, going beyond lower interest rates. In an interview with Surajeet Das Gupta, Goenka talks about the impact of Covid-19 on businesses. Edited excerpts:
 

From the perspective of its impact on industry do you think the lockdown should continue beyond April 14?
 

I have a contrarian view from most of my industrialist friends. I think the lockdown should continue for another 15 days and phased out after that step by step. In the first phase, you might allow 30 per cent of the workforce to come in and see how it goes. I think the government took a very sensible decision to go for a complete lockdown. It has to be a fine balancing act.
 

What do you think will be the impact on industry?
 

The first quarter will be a complete washout for our tyre business, though we will continue to bear fixed costs. While margins might not get hit because of drop in oil prices, there will be a demand issue. Then there will be bottlenecks in exports. We expect it to improve in the second quarter. One expects that the economy will go through a mild recession.
 

What kind of support are you expecting the government to offer?
 

We are looking at tax breaks and increases in working capital limit. Only lower interest rates won’t do. The government has to generate demand.
 

The good thing is that banks have become proactive — State Bank of India has offered us an increase in the working capital limits by 10 per cent, for instance. Others are calling up asking us what help we want.
 

What about your other businesses, how have they fared?
 

In the information technology business, they have successfully been able to work from home. But as most of our clients are in the US and they have their own pressures, we expect cancellations and re-negotiations of terms.
 

The transmission business is good, order books are robust as they are mostly from the government. The only thing is we have a shortened nine months to deliver the orders. I am not worried here even the international projects are on. Pharma, which is an essential commodity, is chugging along, but there is a serious shortage of labour.
 

How will the world of business look like after Covid-19?
 

It will be a huge change in many ways, like the world before Christ (BC) and after. This will also be Before Corona and After Corona.