Govt has to play a big role to ensure firms don’t go bankrupt: Apollo Tyres MD

New Delhi: The government has a big role to play in extending a stimulus package to prevent Indian corporates from going bankrupt amid a sharp fall in demand, Apollo Tyres managing director Neeraj Kanwar told ET.

Kanwar said the business environment is “very difficult” currently. In Europe, which accounts for a third of the revenues at Apollo Tyres, several vehicle and component manufacturers — Volkswagen, Renault, FCA, Magneti Marelli — have suspended operations.

“In India, no one really knows what is going to happen. It is a dynamic situation, something new which the whole world is facing. The government will play a big role in ensuring that corporates don’t go bankrupt,” Kanwar said.

With most companies looking at de-risking supply chains by diversifying out of China after the Covid-19 outbreak, Kanwar said India has much to gain if the government takes the right measures and develops the country as a global automobile manufacturing hub.

“China exported auto components valued at $35 billion in 2018. Given the issues in China, it is an open opportunity (for India) in the manufacturing segment. All MNCs are looking at India from that perspective (for developing alternative bases),” he said.

For now, Apollo Tyres has decided not to cut down capital expenditure planned for the upcoming financial year. Kanwar also said there will not be any layoffs across the company’s operations in India.

The announcement of the much-awaited scrappage policy, for one, could help in reviving demand not only for tyres but also in the commercial vehicle segment as well, Kanwar said.

It is also crucial that the government takes measures to provide finance to consumers for mortgages. “Banks have stopped loaning to transporters since the IL&FS scare. The PSBs (public sector banks) can give money to the NBFCs (non-banking finance companies), which can offer finance to transporters. Then we will see movement and purchase of vehicles,” said Kanwar.