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(This article was originally published on April 8, 2020.)

NEW DELHI: Due to COVID-19, carmakers Renault, Nissan, top two-wheeler seller Hero MotoCorp along with local firm Eicher Group factories and retail outlets were closed for 21 days, which will lead to a delay in partial payments to many vendors in the year 2000. Go to the automotive industry. Force majeure is a term used to describe unforeseen circumstances that prevent someone from performing a contract.

Sources said the decision could lead to a delay in total payments starting from $50 Rs 100 crore to Rs 100 crore. In a letter to suppliers, the companies cited the downturn in business and promised to repay the debt when things return to normal.

India’s largest two-wheeler maker said in the letter, “As things stand, Hero MotoCorp (HMCL) has no receivables, its on-site inventory of BS4 and BS6 vehicles and its all-India dealerships have been closed for 21 days.” , We have no option but to invoke force majeure and tell HMCL that it cannot fulfill all its obligations.

“Heromoto Corp made payments on March 22 on a normal cycle, but from today it will no longer be able to maintain a perfect record of timely payments,” it added.

“By announcing the emergency measures, we have decided to fully protect our small and medium-sized partners,” said the head of A Corp. “We have paid all small suppliers and SMEs in full based on their due dates. We are making payments to our other supply chain partners in phases and have made 50% of the payments so far.”

Renault Nissan Motor India Pvt Ltd (RNAIPL) also said that the situation has impacted equipment procurement contracts and orders. “As you would expect, as a result of these force majeure events, RNAIPL is no longer able to perform its obligations under the contract…RNAIPL is liable for the failure to perform its obligations required under the Master Purchase Agreement as a result of the following reasons: will not lose. Eicher’s joint venture with Volvo, VE Commercial Vehicles, told its suppliers: “Unprecedented force majeure forced us to comply with anti-epidemic measures. The “severe impact on accounts receivable” resulted in poor cash flow. “Therefore, we would like to inform you that the payment cycle may be disrupted, resulting in payment delays,” said Pradep Mishra, senior vice president of procurement and supply chain.

Vinod Aggarwal, CEO, VECV However, the statement should not be over-interpreted: “The company will take all steps to provide relief to distressed suppliers.” “We are also prepared to pay advances to our suppliers if they encounter any problems and we will take all necessary steps to ensure that our suppliers fulfill their obligations, be it payment of salaries or fixed costs.

Jain, President, Auto Parts Manufacturers Association The organization discussed the issue with the companies. “We initially wrote to Siam, the automotive industry body, and they assured us that they would write to all manufacturers separately. We know that our suppliers have serious working capital problems and we must remember that we don’t need. Now your support.