Innholdsfortegnelse for 19-Apr-20 i Business Today

We’re living through an extreme nightmare of human civilisation. This generation of humanity will retain the bragging rights to narrate coronavirus tales to children and grandchildren for decades to come. But no story will be complete without a tinge of regret over the economic fallout, death, destruction and social consequences that entail. Just as coronavirus ravages through countries, states, cities and villages around the world, India’s decision to go for a nationwide lockdown may have been the best case scenario to prevent a severe outbreak in densely populated areas, including among the most vulnerable citizens in villages. But most nations on Earth will pay an unimaginable social and economic price of the spread of virus. Depending on their reaction time – some more, some less. For instance, shrinking GDP is…

₹7-8 lakh crore (3.5-4% of GDP) Conservative estimate of impact of Coronavirus outbreak on Indian economy ₹3-5 lakh crore The total value of the economic package that experts say will be needed 1.5-2% Likely increase in the Centre’s fiscal deficit to fund an economic package ₹15 lakh crore The monthly Gross Value Addition estimated for FY20, as per NSO ₹24.5 lakh crore The Gross Value Addition for FY20 from trade, hotels, transport, communication and services related to broadcasting, the sectors most affected by the coronavirus outbreak ₹30 lakh crore The central government’s expenditure budget for FY21 ₹40-50 lakh crore The aggregate annual spending of state governments ₹7.96 lakh crore The central government’s likely borrowings in FY21…

China Market Immune… The Chinese market index has emerged almost unscathed amid a global market rout since Case Zero on November 17 …But Not Industry Retail sales fell 20.5% during the period, China’s first decline China’s industrial production, combined for January and February, declined for the first time in a year by 13.5% The Empty Table GLOBAL SEATED DINERS AT RESTAURANTS (% year-on-year) Global restaurant bookings have been collapsing as the pandemic keeps people home Travel Halts Mounting restrictions across the world have taken a toll on travel. The number of flights per day shrunk drastically from 1,67,470 to 96,970 between March 1 and March 26, a fall of about 42% Global Growth to Take a Hit The scenarios explored by the Asian Development Bank suggest global impact ranging from…

Three-month moratorium on EMIs of all term loans Deferring interest on working capital loans No asset downgrade on EMI deferment RBI measures are advisory in nature Will help MSMEs but clarity awaited They are not binding on banks Each bank will take a call independently based on its finances Banks to frame board-approved polices to extend relief Sharp cut of 75 basis points in repo rate to bring down cost of borrowing Credit will be cheaper, but will depend on bank and decided case to case Last date for filing income tax returns for FY19 extended from March 31, 2020 to June 30, 2020 Deadline for filing GST returns for March, April and May extended till June 30 Gives more time to meet compliance requirements WHAT MSMEs FORESEE Latent demand…

8.3% Estimated contraction in production during 2020 following a 13.2 per cent decline in 2019, as per Fitch Solutions 1,00,000 Number of jobs in danger if lockdown persists beyond March 31 58% Fall in footfalls in car dealerships across India in the first fortnight of March. This has since increased to over 90% …AND THE SOLUTIONS India imports components worth $4.6 billion from China every year. The industry will diversify sourcing and bring this number down The players will look to make in India with support from the government…

Mining as well as stores closed, expos cancelled and transportation stopped. The gems and jewellery sector in India is facing a bleak future. “We lost 50 per cent of our business even before the full lockdown was announced,” says Colin Shah, Vice Chairman, Gems and Jewellery Export Promotion Council (GJEPC). A lot will depend of what the global behemoth – Diamond Producers Association – does. It is an alliance of the seven largest diamond companies, which control over 75 per cent of the world’s diamond production, and prices. India accounts for only 7 per cent of global diamond consumption, so its influence is minimal. Indian businesses are, however, looking at the option of competing with value-added products like coloured gemstones, which have better margins. Getting more aggressive in the domestic…

As many as five banks’ capital adequacy could slip below the minimum 9 per cent level mandated by the Reserve Bank of India. Similarly, three banks’ asset quality could get severely impacted if their top three large borrowers fail. That was the scenario painted by the RBI’s extreme stress test in Indian banks in its financial stability report released three months ago. Covid-19 has suddenly put the ₹166 lakh crore industry in one such extreme stress test scenario. And the industry is not in the best of health. Two-thirds of the banks are in the midst of consolidation. Private sector banking, which has one-third market share in deposits and advances, is recovering from the failure of Yes Bank. Half a dozen banks have been tagged as weak and have restricted…

In pursuance of ‘Creating your Comfort’, we have touched a mark of 60 years of Innovation in our Air Conditioner series. Our perseverance for efficient solutions and eco-consciousness is focused in providing reliable, high-quality products and contributing towards technology, Mitsubishi Electric has made new benchmarks for the HVAC Industry. Being a premium player, we understand “Comfort” in real sense in the way the world sees it, with factors like noise control, air flow quality and efficiency which are key factors for a customer who want to buy the best. With invention of World’s first crossflow fan air-conditioner popularly known as the smaller or lighter air conditioner to conceiving the idea of Spilt air-conditioners, we now stand at creating a comfortable environment with our wide range of products. A legacy of…

Testing kits: there are 49 approved private testing labs, 129 government labs and four kit-makers (as on March 30). Most labs have testing stocks for a few more days. Makers will either ramp up production or increase pack sizes to handle more tests per kit PPES: supplied typically by small manufacturers, personal protective equipment (PPES) such as medical gloves, face masks, and suits are seeing a spurt in demand. supplies are much lower. Manufacturers are increasing production. textile companies also roped in Medicines to combat Covid-19: some medicines touted to help combat the virus are seeing double the demand. these are usually supplied by big companies, which say they have enough production capacities and are constrained only by supply chain bottlenecks…

Telcos be allowed to pay the “unpaid” amount in annual instalments over 20 years, duly protecting the NPV (net present value) using a discount rate of 8 per cent. To freeze payments for components like interest on the “unpaid” amount, penalty and interest on penalty after October 24, 2019 Allow change in due amount after reconciliation between telcos’ self-assessment and the DoT’s assessment. Considering the huge amount to be paid by telcos, there will be certain inevitable consequences which may not be in anyone’s interest…

SHRINKING TOP LINE Revenue growth of corporate India (excluding BFSI) shrinks for sixth consecutive quarter REVENUE GROWTH (%, Y-o-Y) EBITDA ALSO IN NEGATIVE EBITDA slips 1-2% in Q3 – for the second quarter on the trot EBITDA GROWTH (%, Y-o-Y) NET MARGINS DIP SHARPLY Touch a 10-quarter low STEEL, PETROCHEM BADLY HIT Both sectors see revenue fall of more than 18% y-o-y. While poor demand ails the steel sector, fall in feedstock naphtha price has affected petrochem companies KEY SECTORS* (%, Y-o-Y) STEEL PRODUCTS (%, Y-o-Y) PETROCHEMICALS (%, Y-o-Y) AUTOMOBILES (%, Y-o-Y) POWER (%, Y-o-Y) *Airline services, aluminium, automobiles, auto components, capital goods, cement, petrochemicals, construction, FMCG, IT services, media and entertainment, pharmaceuticals, power, retail, steel products, sugar, cotton yarn, telecom services and tyres -40% Fall in telecom companies' net…

Construction ₹8,70,000 crore IMPACT Availability of workers to be hit; delay in awarding projects in Q4FY20 and Q1FY21 Gems & Jewellery ₹5,20,000 crore IMPACT 60% of India’s gold and rough diamond imports are from the top 15 affected countries. 50% of revenue is from exports and 84% of this comes from these countries Auto Ancillaries ₹3,59,000 crore IMPACT 20% dependency on imports for raw material. Of this, 70% imports are from top 15 coronavirus-affected countries Petrochemicals ₹2,30,000 crore IMPACT Imports — 20% of domestic consumption — to be hit. Prices to be under pressure because of low crude prices, fall in domestic demand Hotel Industry ₹1,10,000 crore IMPACT With near zero occupancy, experts say the informal segment will suffer more compared to the organised segment due to its sheer size…

₹1 lakh crore Durable liquidity from RBI up to this amount for a three-year tenor ₹1.37 lakh crore Amount that will free up as RBI has reduced cash reserve ratio to 3% ₹1.37 lakh crore Increase in standby marginal liquidity facility from the central bank No NPA classification on term and working capital corporate and retail loans for three months 75 basis point-cut in interest rate; lower borrowing cost for home, auto and other loans Last tranche of capital conservation buffer deferred by six months…

Imagine that it is a hot day, a couple of degrees over 40 degrees, you are 10 minute away from your home and you get a prompt on your smartphone, “Do you wish to turn on your AC?” And what if you could control the AC remotely from anywhere in the world from your smartphone? This and many more such experiences is no more a dream but a reality. With a vision to provide convenience, comfort and connectivity, at Panasonic we have forayed into the Connected Living Solutions space with the launch of our IoT & AI-enabled platform – Miraie; conceptualized and developed at Panasonic’s India Innovation Centre based out of Bangalore. With the literal meaning of Miraie being ‘future home’ in Japanese, the platform presently hosts India’s largest range…

If telcos have to pay the entire ₹1.69 lakh crore upfront, the chances of duopoly, or even monopoly, in the sector cannot be ruled out If the payments are staggered over 20 years, they will continue to operate under a large financial burden The telcos are likely to go for another round of tariff hikes; this will be apart from any floor price being recommended by TRAI With the coronavirus hit and strained balance sheets, the government might push the 5G spectrum auction to next year…

While on a video call with Kerry Singleton, the Singapore-based cybersecurity sales director for Asean at Cisco to discuss his work from home life, his three-year old son, holding a small toy, video-bombed the interview to say ‘Hello’ to the writer. The mother pulled him out as he kept saying, “Do I need to go?” Singleton says, “He likes seeing and talking to people. This happens at least once a day, so you are lucky. Sometimes it’s difficult to manage him alongside work.” That’s become the new normal for millions of employees across the world as companies mandate work from home due to the prevailing lockdown to check the spread of coronavirus. While many new-age and technology firms have always offered flexi-work options, the difference now is the sheer number…

Almost 80 per cent of India’s ₹204 lakh crore economy has ground to a halt since the 21-day national lockdown began on March 25. At an average of ₹55,890 crore per day, India’s gross domestic product (GDP) will suffer a setback of at least ₹9.4 lakh crore. Hence, in FY2021, the Indian economy will in all likelihood shrink rather than grow. The lockdown, though necessary to break the chain of transmission of coronavirus, will leave destruction across industries such as travel and tourism, aviation, hotels and restaurants, malls, multiplexes, automobiles, among others. And, to a lesser degree, impact sectors such as consumer durables, fuel, electricity and petrochemicals. But, that is provided the lockdown lasts just the 21 days announced so far. Experience of coronavirus containment in South Korea and Japan…

The 21-day lockdown in the wake of the Covid-19 pandemic will be in force till April 14. But cash-starved micro, small and medium enterprises (MSMEs) remain uncertain about their future and survival for months beyond this period. The 63 million MSMEs are the lifeline of India’s economy as well as big employers, providing livelihood to 110 million people, around 40 per cent of the total workforce. They account for 48 per cent of exports and contribute 30 per cent to the nation’s GDP. Finance Ministry and the Reserve Bank of India (RBI) have announced a host of measures to bring relief to MSMEs but that hasn’t calmed their nerves yet. The RBI has allowed banks and other financial institutions to provide a moratorium of three months to all term loan…

$1.5 billion Combined losses for IndiGo and SpiceJet together in March and June quarters if the shutdown continues for three more months ₹9,412.8 crore IndiGo’s free cash reserves – as of December 2019 – might be wiped out. And small and regional carriers may cease to exist Aircraft orders with Boeing and Airbus would be deferred or even cancelled. Some aircraft would be returned to lessors Tata Sons might be compelled to operate just one of its two airlines (AirAsia India or Vistara) Air India’s privatisation is likely to be pushed to next year. The national carrier will require financial assistance of about $1.5 billion to survive Domestic and international traffic could fall 30-50 per cent year-on-year in 2020/21 subject to restart of operations from July Delhi and Mumbai airports…

CP. Gurnani, CEO and MD, Tech Mahindra, travels for about 200 days a year meeting customers, employees and partners. But with the 21-day lockdown, he is confined to his home in Noida, and work seems to have only multiplied. In just 10 days, he has “signed up five new clients across the US and Europe for workplace as a service solution.” He says, “My aim is to keep the lights on within Tech Mahindra and within my client’s location.” The solution he is talking of is their home package, Workplace as a Service (WaaS), which provides a unified enterprise workspace that allows a user to work from anywhere on any browser-based device. The coronavirus scenario has thrown up new demands for the IT company, such as delivering solutions to police…

The summer sun of 2020 is gradually spreading its warmth in the Indian sub-continent. Before the hot season peaks to record breaking mercury levels, people are gearing up to face the notorious weather head-on by purchasing energy efficient smart aircons saving on inflated bills, besides are highly technology driven and easy to operate. The market is flooded with various brands of aircons bearing different price tags to choose from to fit one’s budget. Every year, the companies vie to come up with unique features for that special leverage to become the customers favourite buy. But before that a little homework would do no harm on the popular trends, features of latest technologies that aircons come with, ease of installation etc. Some of the most popular and leading brands in India…

Alcoholic beverage-maker Diageo India has announced that it would be making hand sanitisers as part of its pledge to fight the deadly Covid-19 virus. The company’s Chief Strategy and Corporate Officer, Abanti Sankaranarayanan, in a LinkedIn post, says, “Five days ago, we at Diageo India didn’t know anything about producing hand sanitisers. Between yesterday and today, thanks to the tireless efforts of about 50 people in Diageo India, we produced the first batch of hand sanitiser packs at our Goa, Assam, Aurangabad and Hyderabad manufacturing units, as part of our pledge to produce over 300,000 litres of bulk hand sanitisers for public healthcare workers on the frontline.” While one isn’t sure whether Diageo would be looking at the hand-wash category as a long-term business proposition, hand sanitisers and handwash products…

In October 2019, telcos lost a 14-year-old case to the DoT. The Supreme Court asked them to pay ₹1.69 lakh crore AGR dues by January 23 Telcos filed a review petition; it was rejected Vodafone Idea reported ₹50,922 crore net loss in 3rd quarter of FY20 – the highest ever in Indian corporate history – due to provisioning for AGR dues As a small relief, the government gave telcos a two-year moratorium for FY 21 and FY 22 spectrum payments Telcos filed modification plea for easier payment terms. SC rapped telcos and DoT The government files a petition for staggering AGR payments over 20 years; SC says self-assessment of AGR dues by telcos is not permissible…

DR. PRATHAP C. REDDY, FOUNDER & CHAIRMAN, APOLLO HOSPITALS GROUP Q: What was the problem that you were grappling with? A: Back in the eighties, banks were not allowed to lend to hospitals. At that time, our hospital in Hyderabad was a separate company – Deccan Hospital Corporation. In the absence of funding from banks, we were struggling with escalating expenses, our capital was getting wiped out and technically, we were close to becoming a sick company. Q: Who did you approach for advice? A: It was then that we sought advice from N. Vaghul, former chairman of ICICI Bank, for his counsel to address the situation. Q: What was the advice you got? A: It was N. Vaghul who suggested the merger of Deccan Hospital Corporation with Apollo Hospitals…