With the Lockdown bringing the entire world to a standstill, businesses have been struggling keep afloat during these tough times. With Zero revenues for over a Month, once the Lockdown is lifted, companies will still have to pay their fixed expenses such as Salaries, Interest payment on Loans taken, among others!
For Manufacturers and Capital Intensive Industries, survival is all the more tough owing to them employing thousands of people and with huge operational fixed costs and minimal revenue, companies would struggle to meet these costs.
Even after the lockdown is lifted, factories would have to follow social distancing norms, which would compel factories to operate at 30 – 40% capacity. Scientists suggest that maintaining a six feet distance between workers could help prevent the spread of the virus, which means that a single person would have to operate multiple machines, in addition to the spacing between machines will also need to be changed, which will not be an easy task. Amidst this, Automation might seem as the long term goal for such businesses!
Demand has also been severely affected during these times. Demand for FMCG (Fast Moving Consumer Goods) and Consumer Essentials, which is the least affected, has also seen a dip of 15-20% owing to the changing spending pattern of the consumers due to limited savings and uncertainty of regular income in the future! This has led to consumers cutting spending on their wants and luxury items.
The companies operating in this segment are currently focusing on maintaining their supply chain and are trying to ensure uninterrupted supply which is posing a serious challenge to the industries right now. Individuals will be spending more on Health and Safety goods. This area will see a surge in demand whereas other sectors will see a severe slump.
That is only for the FMCG and Essentials Sector. The demand for other goods, which has and will drop drastically, even after the lockdown is lifted and the impact may last for more than a quarter and businesses may be severely hit due to this.
This also leaves us with the question of the recovery of the economy. The chances of a V Shaped recovery (Swift Downfall and Swift Recovery) seem bleak(er) by the day, a U or L shaped recovery seem more realistic but which might push the World Economy into a recession(wherein India and China might be the exceptions), as suggested by various reports, including one by the IMF (International Monetary Fund). On the contrary, the RBI Guv. Mr. Das, suggested that the Indian Economy could be looking at a V Shaped Recovery of the Economy, suggesting that the RBI is pretty optimistic with their TLRTO operations.
Instead of the concept of Netflix & Chill, several organizations have looked this period of lockdown as a positive opportunity wherein they can plan for the future and work on their problems and solve them. Instead of outright pessimism, Organizations should be optimistic about the future and can start by chalking out detailed microscopic plans as to how can they tackle this crisis head on instead of getting crushed underneath it.
Details are the key here. Focus on every little detail and chalk out a steady plan as to how can you emerge stronger from this crisis. A detailed plan, focusing on the challenges faced by the business in the past and the plan to resolve them can be chalked out! This would give a clear sense of direction once the lockdown is lifted as to how can you sustain the business, instead of running around like herds of sheep and wondering what to do at that time!
Taking this time as a Boon, several businesses can use it to fight the virus rather than stumble under it. Take this as an opportunity and analyze your survival plan and the way of conducting business in the future. One thing which seems pretty evident now is that with the changing mindset of the consumers, businesses will surely have to rethink how they conduct business and will have to fine-tune their mindset according to the consumers too!
What lies ahead is pretty uncertain. But, all we can do is get our thoughts together and fight this virus and its effects on our Physical and Economical front together. The future is uncertain, but we can make it less so. Businesses which are able to analyze the road ahead and take timely action will surely emerge victorious after the tide is over.
The Financial Forum 
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