India Inc says business will take a hit due to demonetisation

MUMBAI: Captains of Indian companies on Tuesday said businesses will take a hit in the short term because of the shock demonetisation of high value currency notes, but were confident an “adaptive Indian economy” will help tide over challenges in the long term.

“In our steel and cement industry, we have seen an impact of around 5-7% but it is not as huge as the impact on the consumer durables industry and FMCG consumption," Sajjan Jindal, chairman, JSW Group said.

TV Narendran, managing director, Tata Steel felt that the fallout of demonetisation is more a postponement of demand than vanishing of demand.

“Demand has definitely slowed, but it’s more of a postponement of demand than a vanishing of demand. We’ve seen some slowdown in rural areas where cash transactions usually happen,” Narendran said.

“Demand was picking up till recently. Overall the industry believes steel demand will be 5-6% more. Imports have come down so production growth has been around 8-10%,” Narendran added as he talked about the general demand situation of Indian steel that has been suffering from low demand, high production and fierce competition from Chinese imports.

“In the short term, it has had an impact on farm incomes and tractor sales, but we don’t know how short is short, whether it’s four weeks, six weeks, six months or a year. Most important thing for farmers today is that the sowing of the Rabi crop should not get affected because they don’t have money to buy seeds. In the urban auto space, it is clear that the current situation is not very conducive to people coming out and buying discretionary goods. November and December would be tough months, but we can expect normalcy to come back from January,” Pawan Goenka, managing director, Mahindra & Mahindra said.

Goenka added that India is an adaptive economy and to think that without a cash economy, there will be a long term impact on demand. is not right.

The captains of India Inc. spoke on the sidelines of the 15th Manufacturing Summit, organised by the Confederation of Indian Industry, CII in Mumbai today.