Tuesday, 12 May 2020

It is Time to re-align businesses, resources and to explore business opportunities : S S Sorot

Time to re-align businesses, resources and to explore business opportunities to reduce the adverse impact on the financial position of the Companies consequent to the outbreak of  Corona Virus ( COVID-19) : Due to outbreak of Corona Virus (COVID-19) as the global pandemic, a nation-wide Lock Down & Curfews were imposed by the State & Central governments to restrict the movement of the persons to ensure safety and good health of people. Under this catastrophic situation, the government has also directed to close all Private, Corporates, Commercial Establishments and Factories completely until 31st March 2020,  which  was  subsequently extended three times & latest extension of lockdown is up to 17.05.2020 with certain relaxation as per MHA notification dated 01.05.2020.
The lock down in India has resulted in  severe disruption in the  local & global business operations  of the Companies  due to the adverse impact of the  economic slowdown, trade, commodities, supply chain disruption, and logistic operations. The spread of the virus has also badly affected the GDP of the Country to a great extent.  It is estimated that the businesses shall have to bear the costs of 12 months with revenue from the following 9 months in case business is streamlined after three months. Considering that most businesses shall need at least another 1 to 3 months to streamline post lockdown, that too in a very optimistic scenario. The impact on the financials of the Companies for the financial year 2020-21 is expected to be huge. Some businesses may take much longer time to streamline or even see a permanent change in Sales patterns due to Customer behavior and preferences in times to come. We also forecast a substantial reduction in sales in the year 2020-21.
While adhering to the directives/guidelines issued by Center & State governments from time to time, the companies have taken all necessary preventive measures & due care to ensure safety of our employees. At the same time, it is necessary for the companies now to take measures for reduction in various costs in order to ensure mitigation of our losses and to continue as a going concern. Certain measures to be taken are : A reasonable assessment of financials of 2020-21, identification of fixed costs (wages/salary, continuing Bank interest, taxes & duties, rentals and many other fixed costs like minimum charges on electricity etc.), identification of the challenges post lockdown and remedial measures, to list out measures to minimize the fixed costs & the losses and to find innovative ideas/solutions to  face the challenges.
At the same time it is necessary for the industries to exhibit emotional bonding with them, extend their support to the possible extent, special care to those who extended their full support & proved that they are for the company during this challenging time. To develop a good bonding, the Managers should remain in touch with their team members to check about their wellness and give them confidence. They should also remain in touch with customers, business associates & Vendors, sub-contractors to check about their wellness, which does not cost much, but at the same time plays a vital role in building relationship.
Time to re-align businesses, resources and to
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