Keys Takeaways From Webinar by IMF Chaired by Raghuram Rajan
- As we all are already aware of the virus which fastly spread in our country and all countries as well, this virus spread already too far, so to save our life we have to take all the precautions otherwise, we have to face the worst phase which we can't afford.
- As our government takes a huge step for saving our lives and save us from this virus that is a lockdown, and lockdown simple means is social distancing, but on the other hand Business is suffering, so We have to make a plan for our business according to of this.
- According to the survey our country (India)is handling this virus(corona)far better than other countries like Italy, America, China, etc. In that courier their capital is destroyed very badly, they have less capital in their country for expanding in this virus for saving their persons.and on the other hand In India still there is no issue regarding capital issues, here is less problem in the capital as compare of other countries.
- As we all are aware that this coronavirus is starting from the country that is China and China is the reason for this virus, and this virus destroys this country very badly economically as well emotionally. As according to survey China is manufactured a good which is not good in fact a very bad qualities goods, And before this virus in mostly country including India here is mostly trading from China .japan Govt.already has announced to return the goods which are manufactured in china and now we also have to be careful about Chinese goods, We have to ignore Chinese goods and in business make a plan accordingly.
- Now every individual wants their safety first, they all are taking their life in first priority than other things, they are spending more on this as compared to other things.
- Now people are trading cheap goods more as compare to expensive goods. and they are trying to delay trading any goods .the list of spending is drop for some time.
- The more acceleration can see in digital economies,like everybody taking an interest in indoor activities like -home fitness, home entertainment, and students are taking online classes or home education.
- There is good news and according to survey people's are giving the first priority to their safety as compared to other things, people do not believe in brands, they take their safety in place of brands an all.
- But one issue arrives Due to this condition that stakeholders like customers,clients, borrowers, banks, etc they are not trusting completely each other. The trust raised between them.
Liquidity and P&L
1. There is a separation between Good cost and Bad cost.
a) Good cost like digitalization, technical cost, best employees, etc they need to be protected as compare to vain goods.
b) Bad cost like a standard office, bad performers, and traditional working method needs to ignore this time.
2. There is no need to spend money on any wastage, just drop this for some time at least.
3. This all the stakeholders should trust each other so try to make a middle ground so that if any loss in arising they can distribute that loss between each other with the consent of each other as well. Whatever is justified for all.
4. In this condition, there is only one result win and loss, the person who makes a brilliant plan for facing this problem that person will win otherwise he or she will lose.
- Due to this COVID, our economy is affected very badly. The government has low confidence for giving us an appreciation.
- Our economic growth affected very badly due to this COVID virus, In a survey found that India earn $60-70 billion a week from taxes. But due to lock down all the works are stopped which affects this very badly, In India the size of the economy is $3 Trillion now it's become $1 Trillion.
- In this COVID virus as our economy is affected very badly due to lockdown. The gap between poor and rich people is increasing day by day. But the time the government tries to ignore it and do work on mass health welfare.
- Govt found a printing currency but there is a side effect that is inflation. The rich country has more facilities for this.
- Govt should try to take capital from other countries.
Result of backlash against china
- As we know that in the whole country most of the trading is done by china, but now everything is going against China.
- But as a survey, we know that china is not manufacturing good quality goods so we have to make all the plans according to this. And make an alternative as well.
- Now India and all the Indians need to play a smart game.we should become a contactual manufacturer of the world, such as China. India should take advantage of this opportunity.
- All the huge fund like wealth fund and the sovereign fund should awash with liquidity, this liquidity needs to be attracted to India.
- There are two types of company i.e good company and Bad company, Management should invest in those companies who give a profit.
- In India, Indian exports need to take trust on each other, and try to make a trustable relation with each other at this time. And make a good quality good and delivery on time. Don't make a false promise just for profit.
- As from the survey, it found Bangladesh people make trust in each other and make a trustable relation with each other due to this great step Bangladesh comes in a winning position.
Wholesale, Retail, etc.
- In this condition people are trusting in retail, they believe in good quality goods, they prefer online shopping and not doing shopping from markets. They choose to move towards of safe and clean place for shopping.
- Customer also needs to be ring-fenced:
- a) As a standard restaurant giving offers to their clients as 40% coupon value gift, that coupon clients can use up to December 2020.
b)And car companies giving various offers to their customer.
- People are looking for cheaper goods.
Brick & Mortar in Discretionary Spends.
- Cinema is doing a very great job in the industry, it can take a big hit in the future. As entrainment could move home.
- There can see an increasing business in the case of cafes and restaurants.there is build a chain like social distancing, etc to build confidence in customers.
- There is taking care of their employees, like paying a salary on time and put up a notice that no one is COVID negative.
- Due to this virus, people drop travel-related trading and try to adjust In this condition.
- The industry is highly leveraged with low margins.
- They are considered their unsold inventory as appreciating assets, but maybe then convert it into a flawed view.
- Indian real estate economy is sitting on a huge inventory with huge cost-of-carry.
- Market was already overdue for a huge reset, which will be accelerated by the pandemic.
- In some companies still employees doing their official work doing from home which appreciates as more business to their own small spaces.
- Due to this Virus, the Indian wedding industry will take a hit due to social distancing and travel avoidance, etc, this affects all connected industries.
- Jewelry, as a discretionary spend, will take a hit.
- Gold -as- an asset could see appreciation.
- In the same sector, there is value destruction and value in different companies.
- It's difficult to find a High Debt low margin company.
- No debt high margin company are best rewarded now.
- New technologies are born due to this virus.
- Know more about the CEO and management and their actions and activities.
- High Debt high margin companies could be rewarded, but caution needs to be exercised.
- No Doomsday scenario is there, such a scenario doesn't seem realistic.
- Now Govt trading a more in oil because in the future there is no possibility of trading at such price.
- As we all aware of the foreign economy destroy very badly as compared to the Indian economy. This scenario could change depending on the spread of the disease in India.
- Avoid all spikes.
Outlook for the near future.
A. Large companies
a) Companies are paying a payment to their employees in the lockdown as well.
b) HUL also decided to pay of their employees and suppliers even in lockdown period.
c) Companies are taking a first priority of their employees.
d) All this is possible because they company reserved their provision for facing these types of
B. Medium and Small businesses.
a) These companies are doing this work on using their reserve. Excess capital is using as personal assets.
b) These companies are purchasing a good by their surplus of the company and ignore to invest in the business.
c) Due to this, they are unable to receive the cash expenses of even next month.
d) The restaurants in Delhi are not able to pay their servant's payments as no liquid reserve.
e) Medium and Small businesses should coordinate with each other and make a plan and build some business reserves to endure such disruptions.
C. Force Majeure in Contracts
- In this condition, there is no need for getting into litigation.
- All type parties are affected due to COVID virus-like landlord financiers etc.
- All party needs to find a solution by mutually decided and should make a plan on how to deal with this? And distribute all losses between all the persons as with consent.
Work From Home Scenario.
- Most workers are doing their work at home due to lockdown they are not able to visit in office.
- As from the survey, it is found that only 30% of staff doing their work at home and others are doing their work form hue due to work from home there is more stress, communication expenses, time wastage, etc.
- Workers are safer at WFH.
As per a McKinsey survey,53% of Indian entrepreneurs are optimistic, and in Japan 25% of the entrepreneur is optimistic.
Indian economy take a U- curve.