Mumbai: A severe economic crisis in Sri Lanka has forced many Indian automotive firms to slam the brakes on exports of vehicle kits as well as production at the local assembly operations they have set up in the island nation.
Shipments of vehicle kits, including those for light commercial vehicles, trucks and buses, have declined sharply, as the neighboring country is grappling with precarious forex reserves and fuel shortages, said industry executives.
While companies like Tata Motors have been exporting vehicle kits to distributors in Sri Lanka, others such as Mahindra & Mahindra, Ashok Leyland and TVS Motors have local assembly operations in the country.
“We are unable to get the kits, so we cannot put finished products out in the market,” said Rajeev Pandithage, chief operating officer-mobility sector at Diesel & Motor Engineering, one of the oldest and largest dealers for Tata Motors and Mahindra tractors in Sri Lanka.
Imports of vehicle kits are heavily restricted in Sri Lanka owing to the forex crunch.
Diesel & Motor Engineering had started assembly of the Tata Ace small commercial since there were import restrictions on completely built units of vehicles. It wants to launch the vehicle soon given the huge demand for such low-cost vehicles, said Pandithage.
Besides, the distributor can import fully built tractors. However, Pandithage said, “We are facing forex issues to open LCs (letters of credit). Before the season starts, we have a stock of at least 1,000 tractors. This time we have just about 150, which is clearly not enough.”
Farmers want to buy new tractors, he said, but higher interest rates and rising inflation are not allowing them to do so.
A Tata Motors spokesperson said the company stays committed to the Sri Lanka market and prays that the country recovers from the crisis at the earliest. “Tata Motors continues to have a positive outlook about the Sri Lanka market,” said the spokesperson.
Tata Motors has been running its operations in Sri Lanka since 1961 and the country continues to be a priority market. “The company has consistently grown grown over the years and is now the largest selling commercial vehicle brand in Sri Lanka. It has the widest range of products, from the 750 kg Ace to 45-tonne Prima trucks,” said the company spokesperson.
Two-wheeler maker Bajaj Auto said due to the forex shortage, imports of most auto products including two-wheelers and three-wheelers were stopped by the Sri Lankan government almost a year ago. “As a result, our exports in the previous year were negligible. In 2019-20, we exported over 30,000 units, which also was a decline over the previous highs,” said Rakesh Sharma, executive director, Bajaj Auto. “A small restart was made recently based on efforts to localise and generate employment there. Now, with this dislocation, we have to wait and see how that initiative unfolds.”
Mahindra & Mahindra set up assembly operations in Sri Lanka with the Ideal Group to produce the KUV 100 mini sport utility vehicle (SUV) and Bolero Maxi pickup truck in August 2019. “We cannot ramp up production as there is difficulty in sourcing,” said Nalin Welgama, executive chairman, Ideal Group. “The target was to sell at least 5,000 vehicles a year through this JV (joint venture). We sell about 200-250 of such vehicles a month. Our assembly is continuing despite the forex challenges.”
The KUV 100 and the Bolero Maxi are entry-level products and there is a good demand for them, he said.
Distributors are hoping they can accelerate production of such low-cost vehicles, which continue to have a good demand in Sri Lanka.
Mahindra & Mahindra set up a completely-knocked-down assembly plant in Welipenna through a JV with local partner Ideal Motors. “Our vehicles including KUV 100 and Bolero City Pickup have been well received. Further, last week, M&M signed an agreement with Sri Lanka Police for 750 Scorpio SUVs,” said a company spokesperson.With over 35,000 customers in Sri Lanka, M&M remains committed to the long-term prospects of the market and will continue to work on building and strengthening its brand and position in the country.”
TVS Motors retails several of its two-wheeler models such as the 100 cc economy motorcycle TVS Sport and the 125 cc scooter TVS NTORQ Race Edition through local assembly. The launch of this scooter, in January 2020, triggered a turnaround in the Sri Lankan scooter segment.
In January this year, the Sri Lankan government approved the purchase of 500 buses from Ashok Leyland for its transport board.
Queries emailed by ET to TVS Motors and Ashok Leyland did not elicit a response till press time.
As Sri Lanka battles the worsening crisis, automakers realise that production cannot be immediately ramped up due to economic uncertainty and low business activity, said industry executives. However, local players are confident that production will not come to a complete halt, they said.
As Sri Lanka moved from a market economy to a product economy, exports of CBUs (completely built units) came to a halt
Due to forex shortages, imports of most auto products including for 2- and 3-wheelers were stopped by the Sri Lankan govt
Automakers are adopting a wait-and-watch approach because of economic uncertainty and low business activity
Covid sent Lankan economy into a tailspin, drying up earnings from tourism, foreign remittances In March 2020, the govt imposed an import ban on new cars, which left car parts in short supply. (ToI)
More than 6 bn worth of substandard drugs dispensed to patients
The Committee of Public Accounts (COPA) has disclosed that Rs. 6,259 million worth of drugs faced a quality failure from 2011 to 2020 due to improper storage. The COPA report has further revealed that 99% of such drugs had already been dispensed to patients when the condition was brought to attention. In that situation, it was not possible to recover the cost of substandard drugs from the suppliers, the Parliament said.
The Committee on Public Accounts has directed the Ministry of Health, Nutrition and Indigenous Medicine to expedite the process of facilitating better storage of drugs to ensure their safety.
It has also been observed that the temperature in the warehouses, owned by the Medical Supplies Division, is maintained properly and that the medical supplies are stored in the corridors of the central drug warehouses and hospitals.
Furthermore, the Secretary to the Ministry has pointed out that if there is a system to detect the failure of drugs as soon as they are received, the loss can be recovered from the suppliers and if the quality testing of 60 drugs can be done by the State Pharmaceutical Corporation, this situation can be avoided to some extent.
These concerns and observations were contained in the first report of the Second Session of the Ninth Parliament on COPA, which was tabled in Parliament recently (20) by Prof. Tissa Vitarana, the Chairman of the Committee on Public Accounts.
The report contains information about the investigations of seven state institutions summoned before the Committee on Public Accounts and one Special Audit Report during the period from 04.08.2021 to 19.11.2021.
CBSL Chief: Economy could be stabilised in year or so if …
By Hiran H. Senewiratne
The prevailing Balance of Payments (BoP) crisis could lead to a major social crisis as the available foreign reserves were only sufficient for a few weeks’ imports, Governor of the Central Bank Dr. Nandalal Weerasinghe warned on Monday.
“The economy can be stabilised in the next 12 month if the IMF negotiations and debt restructuring are finalised within the next seven to eight months. Until then we have to support the poor people,” Dr. Weerasinghe said, addressing a seminar on the “State of the Economy and Talks with the IMF”. It was organised by the Press Club, together with the Press Institute, at Colombo Hilton.
The CB Governor said the current BoP crisis would worsen and, therefore the economic pain could only be minimised if essential policies and measures were implemented in an expeditious manner. But “IMF technical level virtual meetings are likely to conclude this week, and thereafter further discussion will take place to finalise everything,” Dr. Weerasinghe said.
Dr. Weerasinghe suggested that the monetary and fiscal authorities tighten the monetary policy by higher margins and fiscal policy by restoring tax rates to pre-2020 levels.
The Governor said, “We have three categories of creditors namely International Sovereign Bonds, which raise short term funds from global markets, which account for 35 percent of the government debt, while other two creditors are Paris Club and non-Paris Club (India and China).
Dr. Weerasinghe said that the country’s debt needed to be brought to a sustainable level. “For that purpose a debt sustainability analysis needs to be drafted with a fiscal policy for the IMF bailout”, he said.
Speaking about the country’s worsening economic fundamentals, Dr. Weerasinghe said: “The nation is currently experiencing a historically low economic growth and falling trend of per capita GDP since 2017 with rising levels of poverty. It is also running the highest fiscal deficits since 1988 with the lowest ever government revenue as a percent of GDP.
“Amid those developments Sri Lanka’ poverty level will increase, unemployment level soar and local industries will have to shut down due to restriction of importation of raw material. Therefore, we have to seek humanitarian assistance from the World Bank, Asian Development Bank and other bilateral and multilateral agencies”, the Governor said.
“We are seeking short-term bridging facilities from official creditors until an agreement is reached with creditors on restructuring,” he said.
In his presentation, Dr. Weerasinghe analysed the links between banking and the currency crises. He pointed out that the problems in the banking sector typically precede a currency crisis with the currency crisis deepening the banking crisis, thus activating a vicious spiral.
Sri Lanka also had the highest-ever government debt which was unsustainable at the moment. Debt dynamics might be worsening in the next few years unless the debt was restructured, he said.
Sri Lanka also recorded the highest rate of inflation in 12 years which was increasing sharply and was experiencing the highest-ever levels of money printing by the CBSL, he added
Dragonfly thought to be extinct found again
By Ifham Nizam
Scientists have rediscovered Sri Lankan Clubtail (Anisogomphus ceylonicus), one of the rarest species of dragonflies in the country. The team that made the discovery comprised Amila Sumanapala of the Department of Zoology and Environment Sciences, University of Colombo, T. Ranasinghe of the Butterfly Conservation Society of Sri Lanka, and D. Sumanapala of the Faculty of Graduate Studies, University of Sri Jayewardenepura. According to lead scientist Amila Sumanapala Sri Lankan Clubtail is one of the rarest species of dragonflies.
First collected in 1859, it was only known from the original collection and another collection record made a century after in 1962. This species had not been found anywhere in Sri Lanka for close to 60 years until the team encountered a larva during a survey conducted in 2021.
Anisogomphus ceylonicus is one of the few Odonates of Sri Lanka with no photographic records of a living specimen available hitherto.
The present observation provides the first photographs of a live A. ceylonicus larva and the most recent documentation of the species. These observations, coupled with previous work (Lieftinck 1971, Bedjanič & van der Poorten 2013), provide an improved understanding of the species, which might enable further targeted surveys to be made
It was first discovered from Ramboda over 140 years ago based on a female specimen, which was originally described as Gomphus ceylonicus and later assigned to the genus Heliogomphus by F.C. Fraser (Bedjanič & van der Poorten 2013). Almost a century later, Lieftinck (1971) collected an immature male and its exuvia of a clubtail dragonfly from Rambukpath Oya, 10 miles northwest of Hatton in 1962 and described it as Anisogomphus solitaris. However, Bedjanič & van der Poorten (2013) recognized that H. ceylonicus is conspecific with A. solitaris, and thus reassigned it to the genus Anisogomphus. Since the discovery of the species, only these two records have ever been documented (Bedjanič et al. 2014), despite odonatological surveys and numerous biodiversity explorations conducted countrywide.
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