The world has never ever seen something like this. Never before had one single negative incidence affected 200 countries and over seven billion people at the same time. And the worst - almost every affected country is experiencing loss of lives.
WhatsApp messages are full of COVID-19 information – some useful, many repeats, quite a few myths and several fakes. That is what is confusing everybody.
In this baffling picture, the key question keeps cropping up: what happens to our businesses?Near term probability
The business community at this juncture is facing a huge dichotomy. We are being told that everyone should be homebound. And yet each one of us is expecting the supply-chain to function. How will the truck driver go out, if he needs to stay at home? Moving forward, even if the driver wants to drive, who will repair his vehicle tyres or give him food on the highway? The whole nation is in that dilemma.
The short term implication for next few weeks, unfortunately could be a serious breakdown in the supplies of our basic necessities – food and medicines.
Most businesses are shut with most workers not reporting for work, even if they belong to the ‘necessity’ segment. And of course, raw materials are not moving in with end-product dispatches stuck.
Service sectors like insurance and banking will crawl through with the work-from-home model working fairly well.
Next two weeks (till mid-April) are critical from our health point of view. We need to keep ourselves isolated and yet help to make the basic wheels of commerce somehow roll on.
Immediate advice for all those who are managing production of necessities – guide workers to practice extreme hygiene with work places spaced out, as much as the facilities provide. Open air has no danger, and hence keeping fresh light and air moving in and out, will be the best option inside manufacturing locations.
Conserve funds. Defer payouts, though it is a cruel suggestion. The best friend for uncertain days is the balance in your wallet.
Medium term possibility
Businesses should plan such that they can ride through with April and May being ‘wash-out’ months.
The deferral of loan liabilities by three months is good news, but employee salary disbursements are a must. With most businesses in a possible cash crunch, some could negotiate to defer a portion of their wages (please don’t cut them).
Expect further disruption in the supply chain. Though the government is doing a good job trying to move essential things, to keep 1.3 billion stomachs filled up twice a day for the next few weeks, will be a humongous challenge.
Given the unpredictable scenario, each one of us need to keep doing physical exercises within our homes to bump up our immunity systems (keep your heart pumping more air), motivate as many as we can to keep their spirits up, and prevent every possible move of poor hygienic behaviour around us.Long term prognosis
The definition of long term varies - in the long term we are all dead. But for the purpose of COVID-19, my long term is six months.
We need to plan for a deep recession till September. Global travel is unlikely to resume before January next year – very few will risk a contagion. I expect that the wheels of commerce would start moving only from April next year. The battle for survival will be long and may get quite arduous.
Cash is going to be king. Conserve every bit of it. Outflows should take place only (as much as can be feasible) from inflows. Vendors get paid only when customers pay (chicken and egg situation though that will be). Try not to borrow on your undrawn limits, if available. Or negotiate fresh head rooms in your drawing power, if possible and before it is too late.
Renegotiate terms with your suppliers. Cost cutting and its effectiveness will be the key to survive. Expect many businesses to go belly up, and some could be your customers.
Clearly the world is flat – we are all interconnected. The business role that was apportioned to China - who has let mankind down - and the trust that the world had in it will undergo a huge change. The world will seek India as a safe backup – fresh commercial opportunities galore.
The way we will behave and do business, will go through a metamorphosis. The brave and patient will flourish. Stock markets will again boom with the few good company stocks being chased by many. Good governance will gain a new definition in our daily business life. And the new sun of hope will rise brighter.
Tough times don't last – tough people do.Robin Banerjee is Managing Director at Caprihans India, one of the oldest and largest Polyvinyl Chloride (PVC) film manufacturers in India. Earlier, in his career spanning over 35 years, he was Group CFO at Suzlon Group and Executive Director at Essar Steel and Thomas Cook among other senior positions.