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Demonetization Industry Comments: Cements See Contraction, Automobile Slowdown, Low Impact on NBFCs



We record what companies have said about the impact of the demonetization of Rs. 500/1000 notes to their business. This is a live post – more reactions will come as we see them.

Here are the companies we covered in Part 1: What Listed Companies Are Saying About The Demonetization Impact
Today we cover a few more companies from other varied Industries such as Building Materials, Consumer Electronics, Electronics Distribution, Farm & Construction Equipment among others.


Building Materials: Ultra Tech Cement in their presentation

  • FY17 GDP may shrink due to recent demonetization step taken by Government
  • Post demonetization interest rate and inflation likely to fall further
  • Demonetisation will have a negative impact on cement industry
  • Sector Guidance – Short term impact on demand due to demonetization, though Industry expected to grow 7-8% in long-term


Auto Manufacturers: Daimler

  • Daimler has gone in for block leave (no production days) for three days last week
  • Planned a similar exercise this week
  • Production always follows anticipated market development, which we are currently observing with special scrutiny

Food & Beverages: Industry Views

  • Estimate that sales have fallen by 50% in the wake of less spending by consumers for a number of FMCG products, including juices, snacks, sauces, bakery items, chocolates, etc.
  • Too early to assess the situation
  • Temporarily it has impacted the operations as demand has gone down by half
  • We hope this would be temporary and the situation would ease by January
  • The effect on packaged foods will be seen clearly in the end of next month
  • The last 15 days will put us all to the test in which case the industry works on credit or goes cashless
  • Processed food manufacturers are storing the products as ample quantity of it is produced, but the consumption rate is low


Credit Services: Bharat Financial Inclusion in their presentation

  • Collection Efficiency Of 97% With A Lag Of 2 Weeks
  • Disbursements – Rs. 173 crore during 14-Nov to 18-Nov and Rs. 253 crore during 21-Nov to 25-Nov
  • 15% Cap on disbursements portfolio outstanding for each state (20% for Karnataka and
  • Odisha, Karnataka and Maharashtra exposure are at 60%, 49% and 44% respectively the net worth.
  • Immediate Plan until 31-Dec -> 90-100% Cash Disbursements + POS Growth
  • Short Term Plan -> 90% Cash Disbursements + 10% Bank Account DIsbursements + POS Growth
  • Long Term Plan -> 20% Cash Disbursements + 90% Bank Account DIsbursements + POS Growth


Electronics Distribution: Shilpi Cable
Manish Bhatt, CEO said:

  • B2B – the impact of their sales which will impact their performances is yet not dawning on them.
  • B2C – activities have come down to 20%-30% of what used to be at the retail outlet

Ajay Mahajan, CFO added:

  • Demonetization impact on receivables – drop of almost 30% to 35% collection
  • Hope this is a temporary effect and maybe from the next quarter everything will be in line


Credit Services: Satin Creditcare
Mr. H.P. Singh, Chairman and Managing Director said

  • We are able to service debt for the next 6 months
  • Getting more debt into the company – closed 3 debt deals in the last 2-3 days
  • No collections from 8th – 13th November. From 14th November, overall collection record at about 55%
  • Collection issues are present in UP but only in certain pockets. Of the Rs. 4,000 crore loan book, UP accounts for 33% exposure.
  • Pilots for cashless disbursements and disbursements into account
  • Trying to curtail costs
  • Short term blips but overall fundamentals remain intact in the long term
  • Market is going to shrink to a certain level
  • Currency has reached Bihar and MP where we see a growth in collections pickup. Rajasthan and UP still have long queues.
  • Elections now technically have gone to a background in terms of their impact
  • Banks have still not reached  a lot of places – so that is a very big problem
  • Guidance given last quarter will not hold true.
  • Loan installments are small. In the range of Rs. 800 to Rs. 1,400
  • Delays in collection and we will do our best to make sure it does not go into NPA
  • Ours is a very small problem – maybe a truck operator or SME which has taken loan of over 10 lakhs or so will be affected far more than us



Farm & Construction Equipment: Escorts in their presentation
The demonetization of ₹500 and ₹1000 banknotes step taken by the Government of India, positive move for long term growth and development.


Specialty Finance: PNB Housing Finance
Mr. Sanjay Gupta, Managing Director said:

  • Impact of demonetization on the growth of individual housings? – too early to give a guidance
  • There might be a temporary dip of one or two months but we do not envisage a long-term negative impact
  • This is a golden opportunity that the informal sector also comes into the formal sector to take housing loans and LAP loans from the formal sector and increase the penetration of mortgage to

Mr. Ajay Gupta, Chief Risk Officer added:

  • Direct impact of demonetization could only be on liquidity and not on viability or solvency of the business
  • Small dip in the business volume in a short term
  • Loan to Value – even if there is a fall in price which may be temporary in nature, it will not adversely impact portfolio quality
  • There may be increase in bouncing, delinquencies for a very short period

Mr. Shaji Varghese, Business Head added:

  • In the long run, this may help to expand the market.
  • In the short term, there is a likely chance for postponing the decision to buy the property.


Auto Parts: Suprajeet Engineering
Mr. Ajith Kumar Rai, Chairman and Managing Director said:

  • So far no 2 Wheeler manufacturer customer has revised production schedules
  • Not significant but some effect in the replacement segment
  • Larger effect in the aftermarket – spares market

Integrated Shipping & Logistics: Container Corporation of India
Mr. V. Kalyana Rama – Chairman and Managing Director said:

  • Expecting some growth onto rail
  • May get into some problem in logistics, the first mile and last mile
  • Nothing really considered alarming at our terminals (trucks movements)

Industrials: S H Kelkar
Mr. Kedar Vaze – Whole Time Director and CEO said

  • We will have a much clearer picture towards the end of December as to what is the effect on the business in the short-term
  • Long-term this is a great shot in the arm for companies like ourselves who are organized and have a national presence
  • Impact of demonetization on our business will be very small
  • Bigger companies will face some of the demand erosion
  • The business will come to the middle, the mid-sized retail companies will continue to grow, very small ones will have a very difficult environment, the big ones will see some decline in their product offering because of the liquidity being affected.


Auto Manufacturers: Atul Auto
Mr. Jitendra Adhia – President Finance said

  • Premature to confirm how it is going to impact the business. Once this first phase is over then we will have some more clarity about the issue
  • Sales are largely dependent on retail finance availability

Building Materials: IFGL Refractories
Mr. Kamal Sarda, CEO said:

  • Too early to say since it’s been only 6 days
  • It will impact smaller or mini steel mills or ultra steel mills whose business model could be dependent on taking their benefit of excise and sales tax by going through the unorthodox way of selling
  • We also have to look at consumption size – whether the consumption size has got enough money to consume in the same quantity or not.
  • Impact on real estate will be watched over the next 3-6 months

Business Services: ICRA

  • Too early to assess the impact of de-monetisation but NBFC’s (financing commercial vehicles), logistics, CV manufacturers might get impacted in near term.


  • Cash collections of commercial vehicle financiers has dwindled over last 10 days. Some leading NBFC’s have 30-60% of cash collection. Small fleet operators and LCV owners usually pay in terms of cash.
  • Cash crunch might ease, but it might be followed by slowdown and in turn might impact viability of fleet operators and loan servicing. Delinquency levels may go up in near term.


  • Impact on operators more in Tier II/III than in metros. Demand for trucks has fallen by 15-30%, owing to high reliance on cash for the daily operations.
  • Small fleet operators/Single LCV owners are most hit. Unavailability of cash to meet trip expenses has pushed this sector to edge.
  • Organized fleet operators are least hit, due to their cashless system, except for certain expenses which cannot be met by online payment

Commercial Vehicle Sales:

  • Demonetisation might reduce commercial vehicle  sales. Fleet owners might no go for vehicle addition or replacement owing to liquidity crunch. 90% of the CV sales in India rely on external financing.
  • Weak industrial activity, uncertainty of impact of GST have been the major factors for declining trend in commercial vehicles (especially heavy commercial vehicles) sales. The trend might have reversed from April 2017 due to application of BS-IV emission and end of the fiscal year.
  • Inventory levels stands at 4-6 weeks, which might increase in coming weeks. OEMs would continue to dispatch vehicles already produced, but realign inventory based on future demand.
  • Growth forecast revised for M&HCV from 12-13% earlier to 5-8%. In Sept 2016. LCV’s also might see a decline in sales.
  • Bus segment is least impacted due to higher sales to institutional clients. Typically orders are placed 6-12 months in advance.

Chemicals: Godrej Industries
Adi Godrej – Chairman said

  • We welcome the recent demonetization step
  • Too early to tell the effect of the demonetization

Real Estate Services: Brigade Enterprises
Mr. M.R. Jaishankar – Chairman and Managing Director said

  • Brigade is also one of the participant in the fraternity so we cannot escape from any negative news on this.
  • Price correction may happen for finished inventory of any unorganized market
  • True impact of demonetization after 31-Dec
  • Banks will be flush with funds which will lead to drop in interest rates in which case it will have a positive impact on every industry including real estate industry


Luxury Goods: Tribhovandas Bhimji Zaveri
Mr. Saurav Banerjee, CFO said

  • Manner in which a jewellery is purchased will be far more disciplined.
  • Hallmarking, Excise duty, the GST which is round the corner, demonetization and whatever else is happening, all these measures will actually make the brand stronger


Consumer Electronics: Bajaj Electricals
Mr. Shekhar Bajaj, Chairman and Managing Director said

  • More fear in those people dealing with cash. Therefore likelihood of more people coming in the official channel is likely to go up. This means dealers who were not dealing with us before since they wanted to deal without any bill, will be ready to buy from us . We call this FMCG model for consumer durable industry.
  • People depending on no bill type of people will lose out
  • Introduced channel financing to all dealers which will increase substantially over the next 3-6 months.
  • No impact on consumer products business. Cash flow is made a little difficult for short term.
  • We are not a luxury item which customers are going to worry about
  • Might impact smaller markets where banking is very far in rural areas
  • This demonetization is an issue with the illegitimate money keepers and so we don’t have to worry at all

Like it or hate it, do leave us with your comments!


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