Innholdsfortegnelse for 3-May-20 i Business Today

From here on, the world history will probably be quoted in pre-coronavirus and post-coronavirus eon stamps. For it is not just a healthcare shock to humanity. It’s an economic shock, humanitarian and livelihood shock, a consumption shock, a stock market shock, fractured supply chain shock – all rolled into one. UNCTAD believes that India and China are among the few world economies least likely to fall into recession. But don’t be surprised if it chooses to revise India outlook. World Bank already has – to the most pessimistic outlook yet – a near flat growth of 1.5 per cent for FY21. Even though India has a host of positives going for itself. First, whether it is the Modi government’s precocious, pre-emptive lockdown (now sealing), the warm weather, the universal BCG…

Q What keeps you going? What makes you wake up every morning thinking about helping others? Trust me, it gives me immense satisfaction when I extend a helping hand to the needy. I believe one should find a little time to help make life better for one’s fellow citizens. That’s why we’re called human beings. It’s in my DNA to serve society in whatever way possible. My grandfather, the late Chiranjilal Murarka, was a well-known philanthropist of his times and, then, my father, Kashi Murarka, who now continues to do a lot in terms of public service and social betterment. I have long learned that live life as if there is no tomorrow, end of our journey on Earth is inevitable, why not do what’s best possible for others.” Q…

The central government’s response to the economic fallout of coronavirus has been a mix of a few procedural and compliance relaxations, liquidity injection in the banking sector through the Reserve Bank of India (RBI) and a small package aimed at the poor and underprivileged. In short, it has been tepid and cautious. With several agencies predicting doom and gloom for the economy — the latest is World Bank forecast of 1.5-2.8 per cent FY21 real GDP growth versus 6 per cent previously — the government’s response to the situation has baffled many. The size of the package for the poor and underprivileged — ₹1.7 lakh crore — is less than 1 per cent of GDP, even when a large number of economists and experts are asking for a package that’s…

₹200 crore Size of the PPE market in the wake of demand for coveralls, face shields, gloves and masks ₹8,000 crore The opportunity in hand sanitiser and handwash categories. By the end of this year, they are slated to corner 16 per cent of the overall personal hygiene segment compared to just 2 per cent today ₹1,500 crore Expected increase in revenue for pharmaceutical companies. India is the largest producer of anti-malarial drug hydroxychloroquine and stands to gain the most from its demand ₹1,000 crore The potential revenue from increased ventilator production in the country. The potential for export is estimated at ₹200 crore on top of this ₹600 crore The expansion in the market for drones in the medium term. This includes legal as well as grey market sales…

FMCG &IT New supply chain management strategies Bigger role for third-party supply chain partners E-commerce companies to reinvent delivery, operating models AI, cyber security, analytics, robotics and drone companies to gain Telemedicine to get a fillip PETROCHEMICALS Fall in oil prices to help India and China to become production hubs China’s inventory to drive down prices PCPIR investments to get a boost PHARMA/BIOTECH A new API development ecosystem to take shape Thrust on biotech drugs and vaccines Focus on reinventing old pharmaceuticals Focus on new chemical entities instead of generics Development of science, IP-driven entrepreneurial culture PUBLIC HEALTH Increased spending on public health Focus on primary and secondary care Relook at health as a Centre-State subject Use of digital health tools in primary and secondary care MEDICAL DEVICES Corportes to…

PROBLEM 1: Factories are shut. When they reopen, they should be able to ensure safety of lakhs of workers. They will not be able to operate at full capacity due to restrictions on number of workers inside factories SOLUTION: Factories and industrial complexes need to be quarantined for the time being and food and medicines supplied to workers. Production can start with staggered shifts and remote employees PROBLEM 2: Most infrastructure and manufacturing companies such as Tata Steel, Reliance Industries, JSW Steel, Vodafone Idea and Tata Motors have huge debts. Since cash flow has fallen, it will be tough for them to service their loans SOLUTION: They will have to cut costs — raw material, employee and fuel — drastically to maintain cash flows. Suspend expansions, acquisitions and diversifications. Conserve…

The century-old Hindustan Unilever’s (HUL) people policies have over the years become industry standards. Not only does the company take pride in giving India Inc its best leaders, its various employee-friendly policies have made the FMCG major one of the best Indian companies to work for. HUL has pledged ₹100 crore to help India fight the pandemic. From donating two crore cakes of Lifebuoy soap and handwash to setting up isolation beds and working with municipal corporations across the country, the company is leaving no stone unturned to fight the pandemic. Anuradha Razdan, Executive Director (Human Resources), HUL, says that though its 18,000-strong workforce has expressed pride in being part of a company that cares for the society, in an uncertain environment like this, pay-cuts are there in everybody’s mind. With…

What is your assessment of the world economy at present? We had a situation that existed before the coronavirus and the current situation where there is coronavirus. The world was expecting something like 3.5 per cent growth, a little slower than in past years. The economic cycle around the world was getting a little old, but there wasn’t much concern about a recession except for, maybe, in one or two regions, typically Europe. That has now changed, not particularly because of the virus itself and its medical consequences but because of people’s response to that. It’s not so much in India, as of today, but in China, where there’s been almost a complete mobilisation of society, probably after decades. The first quarter has gone down for China’s economy. It is…

These are tough times for people across the country due to lockdown. One reason is that many citizens were unprepared for its impact on our incomes and were caught off-guard. While the government has come out with many schemes to support those in lower income groups, the only relief the middle-class has got is moratorium on payment of EMIs till May. While most self-employed people are facing a huge disruption in business and income loss, things are not much better for many salaried employees either due to delay in payment of salaries and, in some cases, even pay cuts and job losses. The first impulse of a person facing a financial crunch is to approach a bank for a personal loan. However, there are a host of other options than…

As the coronavirus pandemic continues to disrupt the economy, companies across the board are facing the heat. The CEO of a large consumer products company says though some of his production lines are operating – producing sanitisers, soaps – nearly 70 per cent of the business has stopped completely. “It’s a question of survival more than future investment. We are partially shielded because of the nature of our business, but activities in infrastructure, construction, transportation and entertainment sectors have come to a halt. Supply-side issues are affecting businesses that are still operating. We don’t expect things to normalise in the next three-six months,” he says. Most of his views are echoed in the latest Business Confidence Index (BCI) survey for the January-March period. A total of 67 per cent respondents…

MEASURE Three-month moratorium for borrowers Massive liquidity infusion Sharp rate cuts Deferment of GST/I-T compliance dates Increase in daily wages under MNREGS Suspension of Mp Local Authority Development Scheme Govt to make EPFO contribution on behalf of employee and employers for three months in entities with 100 or less employees IMPACT Additional interest cost a turn-off; lack of clarity on eligibility of NBFCs Heavy borrowings by centre and states to crowd out corporate borrowers transmission remains a concern; other macro issues may keep interest rates high these are procedural relaxations, need of the hour is sharp tax cuts to boost consumption MNREGS is a demand-driven employment programme; demand for jobs will be lower under lockdown More likely to negatively affect local interventions in times like this A handful of MSMEs…

Corporate Large companies are working directly with farmers to initiate purchases in several locations Some are using their own trucks to transport produce Some are looking at backward integration to reduce dependence of suppliers Government Reducing current market restrictions (provisions under the Agricultural Produce Market Committee Act, or APMC Act) for three months so that all buyers – including bulk buyers, processors and big retailers – can buy directly from farmers Haryana government has offered a higher MSP for wheat reaching its procurement centres in May (MSP + ₹50 per quintal) and June (MSP + ₹125). Punjab has also announced a similar incentive Registered warehouses are now deemed mandis so that farmers and buyers can avoid having to go to crowded mandis. This also facilitates e-NAM transactions e-NWR (electronic negotiable…

The Mahindra group is collaborating with two PSUs to make ventilators. It is also making face shields at its Kandivali factory and has helped a start-up convert its factory to produce masks Maruti Suzuki has tied up with AgVa Healthcare to produce up to 10,000 ventilators every month. Two other component firms Krishna Maruti and Bharat Seats are making masks and protective clothing Sugar mills in UP, including Triveni Sugars, Balrampur Chini Mills, Bajaj Hindustan and DCM Shriram, are producing hand sanitisers Liquor companies like Diageo, Jagatjit Industries and Radico Khaitan have also ventured into hand sanitiser production Apparel and textile brands like Arvind and Welspun have diversified to produce masks and protective coveralls…

When the nervous global reinsuers pulled out from offering terrorism insurance cover after the 9/11 terror attack in the US, the general insurance industry in India came together with an innovative idea of creating a 'Terrorism Risk Insurance Pool' in the early years of the 2000 decade. Individual insurers started offering terrorism cover as one of the add-ons to existing property insurance policies. Over the years, India has built a capacity of ₹2,000 crore under the pool to cover terrorist attack on business establishments like 26/11 when the iconic Taj Mahal Palace Hotel and the Trident suffered heavy losses to property and business in Mumbai. More recently, the industry created yet another pool - Nuclear Insurance Pool - for nuclear operators and suppliers to cover corporate liability or losses arising…

Avoid hasty decision-making; wait till the end of the lockdown or even end of the month, if possible. Instead of taking piecemeal calls, take decisions that are final Before taking any tough decision, get buy-in from the entire organisation. Involve more people in the decision; ask for suggestions on where the company can save on costs Go overboard with communication. Explain the rationale and the situation the business is in, not just through an email, but also personal meetings or a townhall While the communication is not always pleasant, do not stop employee engagement activities that can be done digitally so that camaraderie in teams remains Walk the talk. Leaders should be the first ones to take the brunt of a pay-cut. That puts out the message that they are…

Equity markets were trading near all-time highs when all hell broke loose and a black swan – novel coronavirus – bit the world. Its spread and fears of a looming global recession sent world markets, including India’s, into a tailspin. The fast-spreading virus has triggered unconventional market trends – not just in equities, but also the debt market, and even gold. Debt funds witnessed heavy redemptions in March after bond yields spiked, though the repo rate cut by the Reserve Bank of India (RBI) has now boosted bond prices. Gold, which was at a high in the first week of March, tanked as much as 10 per cent in the following weeks. It has recouped some losses since. With wild swings in asset classes, if your portfolio has taken a…

Rather than liquidating long-term investments, take a loan or advance against them A secured loan is less costly than an unsecured loan like personal loan Take loan against old FDs locked in at higher interest rates You can take 75% non-refundable advance against your EPF balance Take loan against PPF balance at just 1% interest or go for partial withdrawal Rather than liquidating your beaten down shares and MFs, take loan against them Use gold loan; higher gold prices may get you a bigger loan In uncertain times, an overdraft facility could be better than a term loan…

As a child, Sandeep Lodha, CeO of Oyo-owned Weddingz.in, was not into reading. His love for books started only after he started working. “A friend suggested that I read Shoe Dog by Phil Knight when I was toiling to set up my start-up. The book, which talks about how Knight created Nike, helped me deal with the stress. The book taught me how to ride through the initial challenges such as family pressure and rejection from investors,” says Lodha. Now, books on entrepreneurship – The Airbnb Story by Leigh Gallagher; Alibaba: The House That Jack Ma Built by duncan Clark to Cold Steel by Tim Bouquet and Byron Ousey – keep Lodha motivated. “In 2016, we were a hand-to-mouth start-up. When demonetisation happened, we felt our business would shut, but…

*MCLR: Marginal Cost of Funds Based Lending Rate. Average of scheduled commercial banks considered; Source: Care Rating, RBI 4.4% The current rate, after a reduction of 75 basis points, is the lowest since 2001 6 Number of times the central bank has reduced repo rate since January 2019 59 BASIS POINTS Fall in average MCLR* since January 2019; much lesser than the fall in repo rate. So, retail loan interest rates have not reduced much…

The only way to control the raging global coronavirus pandemic, the biggest health crisis of our times, is to switch off the global economic engines through a complete lockdown and social isolation. The resultant economic pandemonium, though, is the last thing that governments want – or can afford. The dilemma leaves nations performing a balancing act, of finding answers to a very complex problem that needs health, social and economic solutions, all at the same time. Business Today brings together five renowned names in macroeconomics, public administration and public finance for their views on how to re-start India’s post-lockdown economy when restrictions are lifted, even as the country continues to fight the disease outbreak. Here are their prescriptions. “GIVE CREDIT, WORKING CAPITAL, EXPORT SOPS, FISCAL INCENTIVES. NOT SEQUENTIALLY, BUT SIMULTANEOUSLY”The minimum…

1.5-2.8% World Bank’s India Fy21 real GDP growth forecast, from 6 per cent earlier, despite government measures to pep up the economy 6.5% yield on 10-year bond, up from 6 per cent at the start of March, even after the rBI’s push to inject liquidity and cut the repo rate. this means rate transmission is not happening and companies will continue to pay more to raise funds ₹1.7 lakh crore economic package; of this, incremental cost to the government is just ₹70,000-80,000 crore ₹10 lakh crore Package that many are saying India needs to get out of the crisis…

In 2016 when Delhi-based neurosurgeon Deepak Agrawal teamed up with robotics engineer Diwakar Vaish to set up a company to make portable ventilators in Noida, the aim was small. India needed about 6,000-8,000 additional ventilators every year and AgVa Healthcare, the company they founded, had a peak capacity of 5,000 units (though it has since then been producing around 300 units) every month. The coronavirus pandemic outbreak earlier this year has completely changed the script. While overall mortality rate of the virus is low, in its most fatal form, it attacks lungs, which necessitates use of a ventilator. India has barely around 57,000 ventilators and the pandemic has opened up floodgates for companies like AgVa to scale up their business. Almost overnight. “We were producing about 300 of our low-cost…

“What’s true of all the evils in the world is true of plague as well. It helps men to rise above themselves”Albert camus, The Plague Unusual misfortunes create unexpected business opportunities. R.C. Mansuhkani, Chairman of Man Industries – which makes special steel pipes for oil & gas and hydrocarbon sectors, is keen to restart his factory at Anjar in Kutch, Gujarat. So far, Corona has not reached Kutch. The 2,000-plus workforce, mostly migrant workers, is idling in dwellings provided by the company. This ₹2,200 crore-plus company, the largest supplier of such specialised pipes, has a near ₹2,000-crore order book, half of which is for exports. Raw material (steel) prices are cooling and supplies, even from China, Japan and South Korea, have not been hit so far. Crude oil prices are…

Make a pandemic insurance pool to provide cover for business disruption Longer-term health cover needed. Short-term cover is available, but is temporary in nature Existing health insurance covers coronavirus hospitalisation, but widespread cases can increase losses Insurers need regulatory forbearance on the lines of RBI’s relief to banks. These should include: • Relaxation in solvency ratio• Relief from mark to market losses• Postponing rural obligations for a year…

For most Indian companies, the equity grants come at the end of the fiscal year after the annual performance of the organisation and evaluation of executives. With challenges posed by coronavirus along with other factors, such as oil prices (down by about 66 per cent in past one year) and depreciation of rupee, stock prices across industry clusters have reacted sharply to the uncertainty. The key indices are down 15-50 per cent from April 2019 levels. In these circumstances, how should the Nomination and Remuneration Committees approach equity grants? There are broadly two types of grant structures that exist for companies that do this annually or have a grant cycle of more than one year. Given the present situation, these grant cycles might have to be treated somewhat differently. If…

Equity markets are facing another meltdown, more than a decade after the subprime crisis roiled global markets. Such steep corrections – close to 30 per cent-plus in the last couple of months – can make even seasoned investors impatient. So, it is normal for the retail investors to get jittery about their future course of action at this stage. Some investors may be thinking about exiting, anticipating a further crash, some may be thinking about not putting more money in equities and preferring to wait and watch, while others may be willing to continue their investments but with a lot of anxiety. A courageous lot may be willing to be adventurous and put more money in markets to buy at what many people are saying are low prices. Is This…

ACHARYA BALKRISHNA, MANAGING DIRECTOR, PATANJALI AYURVED Q: What was the problem you were grappling with? A: The last few years have been full of learnings. First, it was demonetisation, followed by GST. We realised that our supply chain and distribution network were not geared to embrace the new system. Most of our MNC competitors were ahead of the curve as they were prepared for it. We had to reinvent ourselves completely. Q: Who did you approach for advice and why? A: We knew we needed to upgrade ourselves and met a lot of supply-chain solution providers. Each of them told us the benefits of their product and disadvantages of their competitor’s product. By the time we met the fourth or the fifth solution provider, we knew what questions to ask…