Business in times of Corona
Monday April 13, 2020,
7 min Read
Business in times of Corona
This extremely mysterious yet beautiful place called Earth never fails to establish its supremacy by bestowing calamities and pandemics after every few years on mankind.
The most recent such pandemic that the humankind is suffering from is the novel CoronaVirus, which has affected more than half of the world (courtesy) and further spreading its reach rapidly. This outbreak led to lockdown in many cities of a country or for precautionary purposes the entire country like India had been put on a lockdown which worst hit the earnings of daily wagers and other labourers. Not only the daily mongers but even the biggest set-ups have been affected by the novel outbreak, which has taken a toll on the economies of the powerful countries. While some segments are flying high due to higher demand-supply during this pandemic.
Sectors soaring in crisis in India
The healthcare industry:
The Healthcare industry is winning the battle against CoVid-19, as the need for PPEs (Personal Protective Equipments) like Gloves, Masks, Sanitizers and Goggles has surged. Due to the rapid spread of CoronaVirus these one-time-use products are running out of stock from almost all the parts of the nation.
Looking at the shortage, the Indian government allowed companies to start manufacturing such equipment which saw the entry of several new players in this segment. Many companies grabbed the opportunity of producing such equipment and are fulfilling the scarcity also because of the Government’s fast-tracked allowance.
If the situation gets worse India can get in big trouble with less than 50,000 ventilators. Nonetheless, on the brighter side, many Indian firms have joined the queue for producing medical devices for Intensive care like Ventilators, most of which were imported from China earlier.
Frontrunners like Tata Motors, M&M are working with the Defence Research and Development Organisation (DRDO) in order to develop a multi-patient ventilator, which can support multiple patients at a time.
FMCG sector has been another key player during the crisis. Because, amid the announcement of 21-days of Lockdown 1 thing that sold like hot cake was essential food items. Most people indulged in panic buying and heavily stocked up not only eateries but also indulgence items like Chocolate, Biscuit and salty snacks. This surged the demand of food items to ten folds.
FMCG sector has performed extremely well and companies like Nestle, Dabur, Amul, HUL, etc are set to gain big amid the skyrocketed demand of eatables.
But, along with profits there are challenges too. The complete lockdown of 21 days partially affected this segment with reduced stuff, and impacted their production as well as supply chain. This resulted in the delay in deliveries.
Top FMCG brands are also into manufacturing hygiene products like wet/cleaning wipes, disinfectants and sanitizers. Thus, these brands are ramping-up their production to meet the requirement.
Online Grocery and E-Commerce
Online Grocery and E-Commerce companies performed really well in these trying times.
Due to the lockdown situation, delivery of Essential food items and groceries were allowed by the Government.
Some of the companies who are expected to perform extensively well during the lockdown are Groffers and Big Basket, given the heavy order stock-piled by their customers. These players earlier faced severe interruption during the lockdown announcement. After the government gave a go ahead these companies are now delivering essential goods normally.
Many online grocery delivery companies have opted for the unprecedented ways and started working with E-commerce companies like Amazon and Flipkart to deliver essential items.
The only mode of entertainment in lockdown for the youth and partially middle-aged group has been their mobile phones and laptops. According to the Economic times report, there has been a hike of 10% in internet usage and web contents consumption.
According to the Cellular Operators Association of India (COAI) director-general Rajan Mathews, the mobile data consumption had spiked by 30% but with a shift in video-streaming from HD to SD, it has certainly seen a slump but is still high enough at 20%.
Online Content Caterers and social media influencers have also seen an increase in the number of their viewers. It won’t be surprising to see players like Netflix, Hotstar and Amazon Prime witnessing an exponential rise in their business.
Sectors struggling amidst the Outbreak
The Deccan Herald quoted, India, with an annual GDP (gross domestic product) of approximately Rs 210 lakh crore, will lose about 4% of its GDP during the 21-day lockdown period.
A lot of sectors are witnessing losses like never before due to the crisis prevailing around the world.
Also, to tackle this growing health crisis and keeping their businesses afloat many organisations had initiated the out of their usual methods like Work from home.
The Pharmaceutical, FMGC, OTT platforms and e-commerce companies have been seeing higher demand-supply. On the other hand, the Aviation, Hospitality, Textile Industry, Cab service providers, Film Industry, etc are bearing the brunt in these distress times.
To contribute in the effort to stop the spread of the novel virus, India suspended almost all visas for a month. According to the fact shared by the government in the Lok sabha, the Indian private carriers had cancelled 93 international flights and global airlines 492 flights.
“There will be a further demand slump in the domestic segment, at least for the next few weeks,” says Kapil Kaul, chief executive for aviation consultancy CAPA India.
This segment saw 35% fall so far. As CoVid-19 is stretching its spread like a shot, people have become more wary and are refraining from travelling or going out. Due to the 21-days of lockdown restaurants have reported a decline of 30-35% in business. To add to it, restaurants at malls have recorded a sharper drop, says Anurag Katriar, president of the National Restaurant Association of India.
According to the ministry of commerce, India exported over Rs 1 lakh crore of garments in 2018-19, out of which 35% of export orders came straight from Europe, accounting for a third of India’s garment exports. This fact may surprise one, but exports bring in 60% of Indian apparel maker's revenues.
India being declared the new epicentre for the disease by the World Health Organization, new orders are bound to be affected. If the lockdown is further extended, it may worsen the situation for the Indian Apparel manufacturers and exporters.
Government extending a helping hand
As the crisis intensifies in India, many daily wagers, MSMEs, etc are bearing the slump in their earnings. To support them the Finance minister of India introduced an array of measures to address the economic impact and the lockdown of 21 days.
- To support daily wage construction workers, the Ministry of Labour and welfare has advised to directly transfer funds to about 3.5 crore registered workers.
- The government has advised companies that if their employees, especially contract employees take leave as a precaution towards CoVid-19, they should be treated ‘on duty’ and their salary should not be deducted.
- Uttar Pradesh state government announced cash handouts to an estimated 3.5 million daily wage earners and labourers.
- Kerala state government announces a financial package worth £2.2bn (INR 20,000 crore) covering health packages, loan assistance, welfare pensions, free food grains, subsidised meals, tax relief, and arrear clearance.
- The West Bengal Chief Minister has announced free food grains and rations under a public distribution system for the next six months.
- To help support the MSMEs, SIDBI launches two schemes - the SIDBI Assistance to facilitate emergency response against coronavirus (SAFE scheme) and SAFE Plus. Under the schemes, loans are being extended at a low rate of interest of 5% within 48 hours.
In these distress times, when the Indian economy is going through a low phase, it can avoid further damage only if the economic activities are normalised and the lockdown is removed.