The second wave of the Covid-19 blockade will affect business in the short term, with tire giant MRF Ltd saying there will be some uncertainty over vehicle demand in the coming months. MRF Chairman and Managing Director KM Maman, in the company’s 2020-21 address to shareholders in its annual report, said the company is hopeful that demand for tires will recover as the blockade eases.

He wrote, “In many cases, businesses have been negatively impacted, but the industry has learned to deal with the embargo. The embargo has also affected our business, and we are hopeful that tire demand will recover with the lifting of the embargo.”

Maman said automobile companies have also reduced production during the blockade and “it seems that once the blockade is lifted, things will return to normal.” There is some uncertainty as to how demand will evolve over the next few months.”

The company’s latest annual report says the outlook for the automotive sector has been affected by the second wave of COVID-19 as the situation improves.

The report says, “FADA data shows a 28% decline in monthly vehicle registrations in 20214. Plant closures are prolonged. Rural areas were also more affected by the second wave, especially the demand for wheeled vehicles in both regions.”

“Considering the second wave of COVID-19,” he added The outbreak and the closure measures imposed by the state government in the first quarter of the financial year 2021-2022, we expect our business to be impacted in the short term.”

Additionally, the company said shortages of components, including key parts such as semiconductors, will have a short-term impact.

While the sector’s recovery has been linked to progress in curbing the spread of viruses and vaccinations, MRF’s “pent-up demand could benefit the sector in the second quarter and beyond, as it did last year, especially with the current backlog.” “The sector.”

In addition, the company believes that the government’s announcement of a scrappage policy for autonomous vehicles will “energize the automotive sector significantly in the long term.”

The report says: “But in the short term, in addition to economic growth, the fortunes of the sector are linked to rising employment and income levels given the rising cost of entry-level models.”

MRF also said that the automotive industry will remain sluggish in FY 2021-2022 due to the challenges posed by the second wave of the COVID-19 pandemic.

“Slower growth will pose a challenge to the company’s performance,” he added, adding, “In addition to continued volatility, disruptions in the supply of COVID-19 raw materials are expected to continue, and raw material prices will also be impacted.”