AFVOA Newsletter May 2020

Section 3 - Memoirs Newsletter No. 1 / 2020 P a g e 67 | 101 but preference for weapon platform always went to Public Sector Defence Shipyards directly or implied. We as a private defence shipyard has set the record of delivering all ships ahead of schedule even the first of the class, which has never happened in the history of Indian defence shipbuilding. In my opinion, it is only the mental block in the minds of decision makers at the top that private shipyards cannot build weapon ships. I would like to submit that a company like ours which builds strategic submarines, weapons/ sensors and power management systems for 70% of new built ships can be the best system integrator. Then why this mental block. Nevertheless, as we started reorganizing ourselves to weather the storm, came the blow of COVID 19. Fight for Survival How do we survive it is one of the questions that looms over our head? We are in a state of total flux, we do not know how long this pandemic is going to last, can a short-term plan of absorbing the financial shock will work or we must work on long term strategy. Liquidity and cash flow will be our biggest challenges. Till such time a vaccine is found, which is affordable and available to general public, we are looking hopefully for a miracle to happen soon. The curve of COVID is showing no sign of flattening and cases are on increase, at times I wonder if we were following the WHO recommendation to the hilt “TEST, TEST and TEST” where would have we landed. How far can we believe in the official figures where more than 30% of Indian population do not have access to basic medical care? What is going to be the overall effect an industry like ours is still a mirage. The Affect The overall impact on Defence Industries can be broadly classified under following heads: (a) Production will get stalled; supply chain will freeze and labor particularly migrant will have to be supported by principal employers in various labor Camps as a welfare measure despite stoppage of work. (b) Order state will be affected, some of the orders may be cancelled / scaled down due to lack of funds with the Government and its diversion for health care and meeting other social assistances which must be meted out to states (c) Future orders will be frozen and already sanctioned amount for roll on plans will get diverted which means no orders in near future. (d) Companies will have to bear the fixed cost of maintaining their assets despite no inflow of funds. It will severely affect the cash flow and liquidity will drop. As such, share prices of listed companies are taking the toll. (e) All the financial costs will keep building up, Bank Guarantees will have to be renewed and stage payments for various stages will be unrealizable.