The stimulus infusion of $2.3 trillion will surely enable projects to pick up.

There is extremely high optimism in the industry due to the potential $2.3 Trillion stimulus package which Trump has announced for infrastructure sector.

Karan Parikh, Executive Vice President, Miller Formless

Tell us about the challenges faced due to COVID-19 and its impact on the Construction Equipment sector and overall economy?

In short span of 12 years we have seen economy revive from 2008-2009 recession, then elections in India leading to tremendous infrastructure sector growth and demonetization again reducing the growth. Hence in sense we have been riding the at bell curve for a while now.

Now, I am looking at the sector from a different perspective and the approach taken by federal (central) and state government in USA is quite different from approach taken by Indian government. Although the mainstream media shows high fatality rates and increased numbers in terms of Covid 19 patients in the USA, the decisions at federal level were quite prompt to ensure economic survival of citizens and businesses. Most construction equipment manufacturers are essential business and due to very limited people on roads it does make sense to keep these businesses operational. Fortunately for us, we have been booked through Q2 and there is extremely high optimism in the industry due to the potential $2 Trillion stimulus package which Trump has announced for infrastructure sector. Overall, we see the impact will lead to a reverse bell curve where there will be momentary dip overall in the sector but quick pick up once we are past the pandemic. For the overall economy, the impact is yet to beseen as no other country in the world has ever given out a stimulus package which aggregates to total of INR 176,990,750,000, 000 ($2.3 trillion) and further packages are being worked out.      

With depreciation in sales, what will be your revival strategy to handle the situation post the lockdown?

Federal government pays a key role in developed countries to stay ahead of the curve. There are practical implications of how it plays out from point of world economies. Using the experience in a developing country and in developed country, I am trying to optimize using the best solution for my company's sustainment and eventually growth once we are past this pandemic. World leaders are also struggling to come up with a good revival strategy so lot of what we do now is speculation as no one really knows how this will play out.    

However, we have to stay optimistic and positive. The stimulus infusion will surely enable projects to pick up, hoping for a brighter future in near term. We plan on being at the same level without any major cost cuts but managing inventory and manpowerresourcesat current levels. We had some strategic plans for Q2 and Q3 for machine enhancements and manpower development which we may postpone slightly. I am looking at everything from needs, wants and desires perspective and currently working in needs zone. I have peers in India and have been in regular communication on what actions they have been taking to form a strategy for Miller Formless. It helps to have multiple sources of knowledge to take better informed decisions.         

How do you see the challenges in the supply chain scenario?

We do envision some disruptions in supply chain through next couple of months due to limited production at some of our partners and in turn it pushes out our current on hand deliveries further leading to operating cash flow delays. However, all being said we envision good volumes of orders coming in once the infrastructure sector stimulus bill is passed. Further, there is going to be a global change in how countries manage their manufacturing with more countries looking to retain production of essential commodities, products and capital equipment's internally or outsource to countries with more business continuity programs in place. I am looking to handle this is similar manner and would start looking forpartners through the world which could manufacture non - critical components for us while we retain the brain of the product. The planning is still in initial stages but overall in the world, the gross requirement of infrastructure products towards Q4 of 2020 would be more than envisioned levels as reviving infrastructure sector would be and has been traditionally, the first step in developing economies past global economic downfall.  

The COVID-9 wipeout has impacted laborers immensely. What are the measures being taken to support them?

The federal government and state government have plans in place for US tax filers who have been unemployed and also for small businesses. One good example is government has issued forgivable loans to small businesses who keep their businesses through this period without layoffs. It means government is paying 3 months of salary to all employees of small businesses who do not have layoffs in this period and the loan will be forgiven. Further, for the 2.2crore Americans who have filed for unemployment till date get 6 months of $600/week and additional 50% of regular pay from state government. Many would end up earning more than what they usually earn every week. Again, the economic impact on how this would be recovered in future is to be seen and can be through increased taxation or reduced budgets in some sectors, but as such the laborers are not hugely impacted as in other countries. These are mind boggling numbers but so is the situation in the world so we can only hope whatever is being done by the center works well for survival of human population at large.        

In India, maybe economic policies need to be drastically change and a major change could be by ensuring you continue to pay laborers and they in turn continue to buy things and in turn lead to increased demand and thereby requirement of more production. What if India would give money to all its citizens as many developed countries have done? Most likely it would end up being saved which in turn would not serve the purpose for what it
was disbursed!

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