Covid-19 outbreak & roadmap after lockdown

The COVID-19 outbreak was declared a public health emergency of  international concern on 30th January 2020 by World Health Organisation (WHO), causing a huge impact on people’s lives, families and communities.

As the international response continues to develop, we know that organisations are facing potentially significant challenges to which they need to respond rapidly. There is a great deal of uncertainty as to how the COVID-19 situation will continue to evolve and the scenario is rapidly changing. The uncertainty arises primarily  from interruptions in production, supply chain disruptions, unavailability of personnel, closure of facilities/ offices due to the rapid outbreak of COVID-19,   decline in demand, liquidity, business continuity issues, etc. The resultant outbreak though started outside of India, started impacting entities in India as well.

As we are aware, the new financial year commences, COVID 19 has infected more than two million people across the world. It has disrupted systems in the country due to lockdown and businesses have taken a hit. Trades were already confronting turbulence due to a disruption from trade war. Now situation is aggravated by the COVID 19 pandemic.

As per latest projection from Word Bank, fiscal year 2020-21 GDP all across the World will be Negative, except INDIA & CHINA and undoubtably, INDIA will experience faster recovery once pandemic “Curve got Flatter”

Latest estimates shows that Loss to Our Economy (India) could be around Rs 22.50 Lakh Crores.

While India is under lockdown and focusing on health over economy, and secure the health of our valuable Human Resource & livelihood of our valuable / Talented / Young Human Resources ,  This is “Our” attempt to summarize the facts & put the perspective that bring out measures to overcome impact of COVID19 on business.

Suggested Roadmap after lockdown

Strategic Considerations

  • Establish Supply Chain activities with business associates as per Government protocols (as applicable)
  • Pending Sales orders
  • Resumption of production & other business activities
  • Cash and fund flow management
  • Statutory compliances – payments and reporting

Risk Measurement – Evaluation & Action Plan

  • Supply Chain activities- There is a high chance of un-availability  of trucks and drivers due to limited permission of commerce and engagement with other essential  activities .
  • Pending Sales orders – There is a high chance of out of stock situations due to long lockdown; and more requirement for Popular segment & products
  • Production capacity – There would be higher risk of getting optimum workman for production with full capacities due to open lockdown in phased manner.
  • Cashflow Management – High possibility of   pressure on cash/fund inflow as well as outflow due to re establishment of production and other activities
  • Statutory compliances – Although there are some relaxations on reporting due dates but need to be focused to ensure timely reporting as well as payment of statutory dues to avoid penalty / interest .

Identify opportunities with limited resources (manpower , fund , restricted movement , inventory etc) to ensure business continuity .

Planning and execution 

  • Balancing Demand – Supply chain with high contributory products . Strict “No” to negative or low contribution products
  • Push available finished goods stock to market to avoid stock out situations . Identify stock of perishable items if any and plan to sell/consume /re-process the same on priority
  • Assess availability of raw material , packing material inventory , review reorder levels defined , lead time etc to support procurement decisions for production
  • Review supplier service availability and resilience. Scenario planning
  • Use intelligent analytics that can allow simulate scenarios, enable real time critical decision making that helps complex permutations and combinations , to be reviewed and factored
  • Identify critical decision triggers to manage and contain the spread of the virus, e.g. travel restrictions; office closing/work from home, meeting restrictions/virtual solutions etc.
  • Model the financial impact of scenarios and potential triggers for urgent action (e.g. breach of covenants).
  • Generating  roadmap / plan with critical stakeholders and agree on communication strategies for them. Base the immediate response and communication on established facts from reliable, trusted sources.

Utilization of cash/fund

  • Evaluate the impact on cash flows through a thorough review of their credit lines, debtors and creditors outstanding.
  • Judiciously allocate existing resources into agreed strategic plans – achieving critical outcomes.
  • Reduce the amount of external credit needed and maximize the credit available from within an organisation. Instill a discipline of financial challenge to priorities the cash flows appropriately.
  • Use technology infrastructure which can support remote operations.
  • Appoint functional workstreams, owners and align activity with response objectives.
  • Ensure alignment with organisation reputation, purpose and values (e.g. supporting the wider community response).
  • Ensure proper communication with staff and stakeholders provide for feedback loops. Balance transparency and preparedness without appearing to be overreacting

Major Announcements to Support businesses by Government of India so far (latest developments as available in public domain )

  • Electricity charge waiver- various states have announced relief by slashing tariff rate, Fix waiver / deferment in fixed electricity charges etc
  • Provident Fund contribution- Central Government is contributing Provident Fund for 3 months for both employer and employee share, this will benefit organized sector.
  • Rescheduling of Payments – Term Loans and Working Capital Facilities / CIBIL Score / IBC relaxations….
  • Easing of Working Capital Financing – Working capital financing facility with lower rate of interest.
  • Classification as Special Mention Account (SMA) and Non-Performing Asset (NPA)- RBI has relaxed the norms for classification of SMA and NPA. NPA classification will exclude moratorium period. NBFCs can grant relaxed NPA classification to their borrowers.
  • LCR (Liquidity Coverage Ratio) requirement is being brought down to 80% from 100% to maintain the liquidity in the market.
  • Different statutory reporting due date extension to June’20 which was due in Feb’20 onwards with minimum penalty and interest.
  • Major step taken by Indian Government : FDI policy revised to block threat of takeovers of companies

Please get in touch with us and let’s discuss what we can do for you !

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