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Economic recovery will take time, says N Chandrasekaran

Economic recovery will take time, says N Chandrasekaran

Economic recovery will take time, says N Chandrasekaran
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By Shereen Bhan  Nov 4, 2019 9:31:04 AM IST (Updated)

The economy has slowed down but certain sectors are showing signs of improvement, however, recovery will take more time, Tata Group N Chandrasekaran told CNBC-TV18 in an interview.

The economy has slowed down but certain sectors are showing signs of improvement, however, recovery will take more time, Tata Group chairman N Chandrasekaran told CNBC-TV18 in an interview. He added that despite the market downturn the consumer segments of Tata Group companies have continued to be in rude health.

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“I think the fact that the economy has slowed down, as it has been talked about quite a bit, I think as of today if you really see, still, some sectors are under stress. We need to see them come back. However, at the same time, we see certain sectors showing improvement, but we have got to give it a little more time,” he said.
Chandrasekaran added that retail and passenger vehicle sales improved in October but it is unclear if the spike in sales was a function of festive season or if it is improving for good.
“If you take the month of October, the retail sales in the passenger cars have been very good, but whether it is only October because of the festive season or it is going to pick up, but the retail sales in passenger cars are doing very good. I also feel that the improvement in terms of liquidity has been much better.
“Currently, whether it is commercial vehicles or passenger cars, there are no credit issues and that used to be a big issue in the past. Then, if you look at diesel consumption, that is going up. So, there are signs indicators that we are seeing and also the freight charges are also gradually going up. So, we are seeing these trends.”
The auto sector in the country has been hugely affected by the ongoing economic downturn with all major automakers registering declining sales for most of this year.
Vehicles will soon need to comply with BS-VI norms in order for them to ply and the uncertainty surrounding the switch to new emission norms has often been cited as one of the factors for the slowdown in the automobile industry. Chandrasekaran cited the new norms as well as the vehicle scrappage policy to be holding back commercial vehicle sales.
“However, we have still not seen an improvement in the commercial vehicles (CV). Commercial vehicles pickup is still not happening and both the payload increase and also the reduction in the stock because of the impending BS-VI affected the commercial vehicles and still, it has not lit up. So, that is something that we look for. Maybe scrappage policy can help. So, we need to see when there is a pickup in the commercial vehicles and that is a very important thing that we are looking at.”
Chandrasekaran highlighted the cascading effect of the slowdown in the auto sector, saying that the lack of demand for vehicles is also impacting the demand for steel.
“The steel demand is impacted because auto demand is impacted and if construction demand is impacted, obviously, it will show in the steel demand. So, we are exporting more steel than before, but we still largely sell in the domestic market. Also, steel is linked to some of the global prices. So, steel is a little bit of a difficult industry where you can predict everything based on domestic sentiment.”
Chandrasekran said that the consumer segment of the Tata Group remain unaffected by the industry slowdown and they are in good shape.
“However, on the consumer segments, I think things are okay. Whether it is the tea, jewellery, Titan or any of these other sectors, or our apparel companies, all the consumer product companies have been doing well.”
Read the full interview here.
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