AFVOA Newsletter May 2020

Section 3 - Memoirs Newsletter No. 1 / 2020 P a g e 69 | 101 hold. Though Government will roll out some financial package for the PSUs but Shipyards like ours which is exclusively a private defence shipyard will have to look for other avenues by diversification to remain afloat. May be look at building/ repairing commercial ships. Government Restricting Defence Spendings and Capital Procurements. Under the circumstances, Government has no choice but to restrict Capital spending since healthcare and other social measures to sustain people below poverty line will take the front seat. The Hon’ble Defence Minister has already put a stop on new acquisitions and meeting the committed outgo on existing projects itself is a challenge. In case we land up in state of low liquidity, low reserves with limited avenues to raise further funds from international organisations, it will have no choice but to hold on to defence spending. It may have its effect even for revenue budgeting also and military exercises will be limited, refits of ships may be postponed by doing bare necessary routines on major equipment and keeping them on time/ life extension. In other words, military spending will take the biggest blow and we in the business of defence industry will bear the blunt. You can imagine, an industry which was already starved of fresh orders will be put on the drip and wait for being declared DIL. Drop in Stock Prices. Majority of defence industries like us who are listed on Stock Exchange are facing heavy drop in share prices. This is not only pertaining to us in India but even major giants like Navantia, Thales, Lockheed Martin, Naval group are facing drop in share prices up to 30- 40%. An unprecedented phenomenon never experienced before. There is a need to worry about, how many of us will be able to keep our head above water under these circumstances. All business expansion plans have already been shelved and may have to implement strict cuts in our R&D operations, revenue expenditure by taking strict austerity measures with the holy mantra to cut cost wherever possible. Emerging Scenarios and Way Ahead. With no vaccine in sight at least till end of the year, we may either learn to build “heard immunity” or use plasma therapy to the extent possible. Government may have to ease out extended containments and blockades and change over to limited blockades, social distancing at place of work will become a norm. Our main worry is exodus of skilled/ unskilled migrant labor the moment trains are started, getting them back in the shortest possible time and ensuring that they are not the asymptomatic CORONA carriers when they return will be our biggest challenge.