Bajaj Auto has restarted operations at its factory in Waluj, Aurangabad. This factory serves Bajaj Auto's export demand and the company is seeking to fulfil orders amounting to approximately Rs 1,000 crore. The decision to restart the factory was taken after the Government of Maharashtra allowed a partial relaxation of the lockdown, specifically in areas that don't have a lot of coronavirus-positive cases.
Reports state that up to 850 workers will be allowed to work inside the factory, and as a result, get the economic wheel to roll once again. The company believes that restarting operations will bring in the cashflow that's required to pay out some of the huge fixed and variable costs that an automobile company usually incurs.
Bajaj exports motorcycles in the form of knocked down kits to countries in Africa, Latin America and Southeast Asia. It is one of India's largest automobile exporters with a sizeable chunk of its production being sent to markets abroad. While export supply channels have started slowly, after nations have begun gradually easing lockdown, it will be a while before it’s up to full steam.
While the Waluj plant has begun operations, Bajaj is hopeful that the rest of its factories will also get the green light to restart soon. Its Chakan facility, for instance, remains shut after the Maharashtra Government revoked its decision of allowing some form of industrial activity in around Pune and Mumbai, two of the worst affected cities in India. Maharashtra, in fact, has reported the most COVID-19-positive cases in India, forcing authorities to continue with the stringent lockdown.
As far as catering to the domestic market is concerned, Bajaj is sitting on adequate BS6 stock and is confident of meeting the demand, whenever the lockdown is lifted.
Besides Bajaj Auto, we expect other two-wheeler manufacturers to also begin operations soon. However, that depends largely on the Government's plan of easing the lockdown in a phased manner after May 3. With the lockdown causing the automobile sector to incur losses running into thousands of crores, restarting the sector has become critical.
Azaman Chothia
Vishal Venugopal
