QUARTERLY MAGAZINE January 2021 Vol 05
QUARTERLY MAGAZINE January 2021 Vol 05
Focus
The COVID-19 pandemic had a swift and severe impact on the global automotive industry. The impact hit all stakeholders in the value chain, placing intense pressure on an industry that was already coping with a downtrend in global demand. Businesses, the world over had to rethink and adopt new strategies to ensure business continuity, and for some, it was a struggle to stay afloat.
At CEAT, RPG Group’s flagship tyre company, the team was prepared to overcome this challenge. The team’s priority was to ensure business and operational continuity, while also ensuring utmost safety and well-being of its employees, customers and all stakeholders. The company focused on six Cs to overcome the challenges of the pandemic and improve their agility to thrive in a post-Covid-19 world.
Care for its people – be it employees, stakeholders or communities it serves in, has always been foremost at CEAT. As a result of its consistent efforts, it has often been recognised for its exceptional people practices, most recently by the Great Place To Work institute, where the company ranked 35th amongst the Top 100 best companies in India.
As Covid-19 disrupted lives, CEAT made it its top priority to help ease the burden of the pandemic. In addition to enforcing a seamless transition to working from home, the company undertook various initiatives to care for its employees and various stakeholders – including customers, suppliers, channel partners, etc. The company resorted to constant communication with all stakeholders to ease the fears of the pandemic. Under the guidance of its Chief Fitness Officer, it also paid particular attention to the mental and physical well-being of its employees, especially in times of remote-working through various sessions on fitness, and provided platforms for counselling on physical and mental health. Employees testing positive for Covid are given care kits in order to help recover better and improve their immunity. Additionally, the company continues to undertake various employee engagement initiatives to keep the morale high.
Strict adherence to protocols such as social-distancing, sanitisation, etc., are being maintained not only at factories, but also at its various retail outlets and touchpoints. The company has increased the ‘Care’ quotient not only towards its employees, but all its stakeholders to help recover from the difficult year.
The liquidity crisis triggered by the sharp disruption in economic activities prompted CEAT to rush towards cash preservation to keep operations going. One silver lining in the Covid cloud is that it brought to fore the critical importance of cash excellence—a set of best practices that enable prudent cash and liquidity management. These practices, in extraordinary times, can prevent a company from exigencies, or worse, bankruptcy. The need for speed to implement this core decision came as no surprise since severe downside scenarios had been predicted. While the sales in April were tending towards nil, there were fixed as well as semi-variable expenses to be incurred by the company. Amid the pandemic, the company pushed for expedition wherever payments were yet to be received. For those payments that were yet to be made, timeframes were drawn and adhered to, thereby maintaining the balance.
With a marginal spike in the net debt in Q1FY21, CEAT showed that the importance of cash is not just restricted to the context of enabling resilience during a downturn, but also in value creation in general. A cash-focused culture across people, structure, and processes, is an important prerequisite for overall cash excellence.
For most companies, cost management has been a strong, recurring imperative. Over the years, its role has evolved from reducing expenses to a means of driving growth, and is now often seen as a strategic initiative that is part of a larger transformation process.
At the onset of the pandemic, CEAT, as a reactive measure, cut all costs by 10%. The team was focused on looking at structural changes in the long term in order to build a robust and agile organisation. The company undertook various cost-cutting measures such as moving from briquette to optimising solar-based fuelling systems, focusing on new product development, and replacing consultants with internal teams. Each and every aspect of all the systems was scrutinised through critical eyes and changes were made across functions.
Extreme situations call for extreme measures, and CEAT’s fourth C, i.e., Change, aimed at turning this massive challenge into a meaningful transformation of existing business models. As the effects of the pandemic peaked in some industries and continued to rage in others, one thing was constant – the dire need for a new-normal landscape.
CEAT pivoted its business model to include home delivery of tyres, online shopping with DIY kits, and sale of PPE kits at its retail outlets as well as e-commerce websites. With customer-centricity at its core, the company started providing doorstep fitment of tyres and other associated services, and a completely contactless and safe experience at its retail outlets. Optimising technology to the fullest, a revamped website along with an omnichannel approach that identified a host of distribution channels, were focused upon.
One of RPG’s core tenets is giving back to the society, especially the communities it serves. Under the aegis of RPG Foundation, CEAT undertook several initiatives to provide relief to the underprivileged and the marginalised communities of the country. With the broad goal of taking responsibility of all those negatively affected by the outbreak, the covid-related CSR initiatives were laced with a business-like discipline, thereby aligning the larger social purpose with its ethical business values. As plants were converted to meal-centres for daily wage earners, migrant labourers and their families, more than 5 lakh hot meals were distributed by volunteers. CEAT provided 75 covid-testing booths, and also developed and distributed low-cost ventilators that are being supplied to isolation centers and hospitals. In addition to this, the company provided PPE kits to front line workers in Maharashtra, including health care workers and police personnel, and conducted truck sanitisation drives for over 9000 trucks, in association with AITWA.
To maximise their CSR impact, the company also devised ways to provide health counselling and fitness training by coordinating with channel partners, fortifying relations in the process.
In times of crisis, a company’s interaction with a customer can trigger an immediate and lingering effect on his or her sense of trust and loyalty.
At CEAT, the team is constantly working to ensure that our customers have an enriching and safe experience while interacting across touch points. Keeping this in mind, the company has launched CEAT doorstep services wherein customers can avail various services like vehicle pickup and drop, tyre replacement, wheel balancing, etc., anytime anywhere. Additionally, CEAT has partnered with ReadyAssist as part of its Roadside Assistance Program to offer 24x7 roadside services. They have also launched products like neck gaiters and sanitisation kits for customer safety.
Moreover, to help assuage the fears of the dealer community, the company ensured constant communication and engagement with dealers, and created dealer-friendly policies, bringing some relief to the dealer fraternity.
The manner in which companies deal with their customers, their employees, and the broader community in a crisis, is likely to leave lasting memories in consumers’ minds. Businesses will need to explore new ways of working, refine their supply chains, and adapt to unprecedented demand. CEAT has reconsidered how the business needs to work, and has taken imperative action in six key areas to emerge smarter, more resilient and more agile in the post-Covid era. Not only is the company mitigating the immediate impact of the pandemic, it is also preparing for the future.
Sanitizer distribution
Ventilator
Testing booths
Trucks
