Firms Continue To See Improvement In Performance As Covid-19 Vaccine Approvals Kick In; Business Firms To Benefit From Shifting Global Supply Chains; Captains Of Industry Rely On Continuous Support From Centre And RBI To Strengthen Growth And Better Results In 2021
The prospects of an introduction of multiple vaccines for Covid-19 in early 2021 have improved the confidence level of businesses. The latest news reports about approvals to Covid-19 vaccines are bringing cheer to the industry and business sectors. The opening up of the economy and implementation of a broad set of measures under the Atmanirbhar Bharat package have already led to a continuous improvement in the business performance. Once the vaccine for coronavirus is administered to all sections of the society, it'll ensure pre-Covid level economic activity, observe representatives from the industry. Findings of the Ficci-Dhruva Advisors Survey carried out in December 2020 confirm this trend and show that members of India Inc are expecting even better results in 2021.
About 35 per cent of respondents expect pre-Covid level operations in next six months after the availability of vaccine, 19 per cent companies said it would be three months, 29 per cent say it would take at least one year to reach normal level of activity. Ficci-Dhruva Advisors Industry Survey (December 2020) points to strengthening of business confidence on the prospects of Covid-19 vaccines in early 2021. Almost 74 percent of the survey participants have said that they foresee a significant positive impact on their business once the vaccine is made available.
Uday Shankar, president, Ficci, said: "The results of the survey are encouraging and highlight the ongoing industrial and economic recovery. This momentum needs to be built upon and now all eyes are on the upcoming budget. The Government has been seeking growth inducing ideas and we have shared several suggestions. The context of this budget is completely different due to an unprecedented social and economic challenge. We are sure that the government will take bold steps to respond to these challenges.”
Dinesh Kanabar, CEO, Dhruva Advisors LLP, adds: “The survey results portray a continued improvement in the business environment in India, with weak demand and managing costs still remains India Inc’s key challenges. The vaccine news has infused optimism among businesses. Given the impact of the pandemic on the economy, the Union Budget 2021-22 is one of the most anticipated budgets. It would be interesting to observe the growth-oriented measures, which are introduced and if tax cut proposals are tabled. Recently, the production-linked incentive schemes have been introduced for several sectors, which is definitely a step in the right direction. The Government should now focus on building a robust manufacturing ecosystem to leverage on the opportunity of making India a global manufacturing hub.”
The Covid-19-induced travel restrictions have limited the ability of companies to undertake business operations efficiently and 74 percent of the survey participants have validated this. To overcome this challenge and maintain business operations, companies have leveraged digital tools for communication. Given the benefits of use of technology, 64 percent of the surveyed companies have said that moving forward they will use a mix of travel and virtual meetings even after the situation becomes normal.
Another major outcome of Covid-19 is the likely shift in global supply chains away from China to other economies. Nearly 70 percent of the survey participants have said that India could benefit from this move and they expect a fair share of manufacturing to shift from China to India in the near future.
To capitalize on the opportunities that could come India’s way, there is need to strengthen India’s manufacturing ecosystem. Under the Atmanirbhar Bharat package, the Government has introduced several measures to address the immediate pain points of the economy as well as steps to improve India’s manufacturing competitiveness. These measures have been well received by the industry, with 45 percent of the companies rating the latest set of announcements made under Atmanirbhar Bharat package 3.0 as ‘good to excellent’.
The results of the December 2020 survey also indicate that there has been a further improvement in the performance of companies compared to the situation in August 2020. With improvement seen in the economy, nearly 40 percent of the surveyed companies are currently operating at a capacity utilization level of over 70 percent, vis-a-vis 30 percent of the companies in August 2020. Other indicators of improving business performance in the December 2020 survey are related to order books and exports. Nearly 50 percent of the companies have reported that they have seen an increase in their order books and about 40 percent have said that their exports have increased. In the August 2020 survey, the corresponding figures were 44 percent and 30 percent, respectively.
"Even as we see signs of improvement in performance of businesses, the impact of Covid-19 still lingers. Survey results show that businesses continue to face challenges on account of weak demand (59 percent), managing costs (54 percent) and financial liquidity (48 percent). Given this, survey participants expect both government and RBI to continue with their support measures even next year. There is a strong demand that the upcoming budget must prioritize growth-oriented measures, including a cut in direct tax rates," said Uday Shankar.
Federation of Automobile Dealers' Associations (FADA) stated that the Year-2020 was an unprecedented year for the entire world and Indian auto industry was not left untouched. FADA is upbeat on V shape recovery in sales.
Vinkesh Gulati, president, FADA, said: "As the 2020 year concluded, we believe that the worst is now behind us and the entire eco-system now needs to make collective efforts in reviving the economy. While the Government is keeping an eye on limiting the spread of Covid-19, the pharma companies are making all possible efforts to roll out the vaccine. All these efforts will be pivotal in bringing economy back on track. Even before Covid hit us, the auto sales were slowing for the entire year of FY19-20. For the first time in history, we saw zero sales in April 2020, but since unlocking began, we are also witnessing one of the best V Shaped recoveries aided by good monsoon, better harvest, festive demand and marriage season, though on a yearly basis there is still some degrowth. Tractors have particularly done well thus showing Bharat kept India moving. Lately we have seen good pent up demand in Passenger Vehicles and hopefully it will stay as safer mobility due to Covid and new launches in the new year will keep the demand going. While the Industry will witness an overall degrowth of around 20-25 per cent on FY basis, things will start looking better beginning April aided by lower base of last year." Gulati further added that the Covid-19 has taught the industry to make tough choices to ensure our dealerships survive. Decisions such as rightsizing, financial prudence and adapting to the new normal were difficult, but have eventually resulted in robust business models and improve efficiency.
"We are a resilient industry and automobiles remain an aspirational purchase. Despite the current challenges, we are now at the cusp of entering exciting times as India will once again increase its momentum to achieve the 3rd position globally in PV segment as the entire Industry will work towards achieving this goal,” remarked Gulati. “2020 has been a roller coaster ride with the Global economies witnessing its worst phase in many decades. India too saw an unprecedented change in consumer behaviour, says Sunil Bohra, Group CFO, UNO MINDA Group, which is engaged in manufacturing, development and sales of diverse auto components for global and domestic markets.
Bohra further stated that technology took centre stage. The adoption of technology during the pandemic due to social distancing norms was a big change. And now with the easing of restrictions and steps being taken to revive the economy, the economic clock has started ticking in the upward direction. The last few months have been very encouraging for the auto sector and the recent festive season has given a significant push towards growth.
Anuj Kapuria, founder & CEO at Hi-Tech Robotic Systemz Ltd, adds: "This year 2020 has totally changed not just the consumer behavior but also how organizations view their supply chain and related digitization and automation needs. There will be a significant rise in the adoption of AI and Robotics in the coming year, perpetuated by the social distancing norms, contact less deliveries and higher productivity along with less manpower dependence. While the vaccine availability will ease and smoothen the restrictions in business operations, it is AI and Robotics that will lead the way in heralding the new normal.”
"We expect 2021 to be a year of hope and optimism. Strategic long-term government plans and policies will play a key role in reviving the market and regaining customer confidence. The industry may witness a sharp recovery, as a clear sign of revival was noted in the past few months. With OEMs planning a slew of launches in 2021, it is a positive sign and will boost confidence among customers, giving a much-needed push to the automobile ecosystem. At Minda Industries, we are making all possible efforts to sustain the momentum, focussing on product development, offering best service to our OEM partners and following the government’s Covid regulations and restrictions. We are already operational across manufacturing lines, operating close to or better than pre-Covid levels and all set for the post-Covid era,” said Bohra.
Startups are now seeing a way out after being worst hit by Covid-19 pandemic. The stress amongst corporate millennials and startup entrepreneurs, was a rising concern in 2020, remarked Richa Singh, co-founder and CEO, YourDOST. She further added that the 2020 Covid-19 pandemic and the consequent nationwide lockdown caught everyone unaware and ill-prepared. "Such a global event of this massive scale is bound to have a significant psychological impact and it was no surprise witnessing mental health instability across age brackets and professional segments. But a gradual shift towards opening up about such concerns has helped a way out. Looking at the scenario across segments in 2020, a concerning factor that has grabbed attention is the stress amongst startup founders. It's just not the working millennials and people in general who are engaging in the platforms but also the startup founders who too are engaging with experts on YourDOST's platform. Witnessing this spiked engagement, YourDOST has also facilitated a specific initiative called 'The Founders' Program' focused on providing consultation to the entrepreneurs wherein the organization is currently facilitating consultation to over 250+ entrepreneurs," said Singh.
After the announcement of Unlock by the Prime Minister Narendra Modi-led NDA government, startups started moving in recovery path. YourDOST has seen an increased acceptance and 2x jump in utilisation of their counseling services across their clients. In comparison to the past four years, YourDOST in 2020, has seen an increased consultation in both the corporate and the entrepreneur segment by 140 per cent. The organization has added 100+ corporates in the last three quarters wherein it is facilitating various programs around emotional wellness related to remote working, reintegrating the workforce back to the office, layoffs, etc, says Singh.
The writer is a business journalist with 27 years of experience