The outbreak of coronavirus or COVID-19 is primarily a human tragedy that affects not just hundreds, or thousands of people, but now the rate is as high as millions. The COVID-19 pandemic is moving quickly and continues to evolve. There is no doubt that this pandemic has a widening impact on the global economy. Impact Of Covid-19 In Indian Economy.
In response to Coronavirus, the government is regularly making significant interventions and the businesses are adjusting to the change in needs of people while navigating the financial and operational challenges. The COVID-19 outbreak is literally pushing businesses to function more quickly in different ways, and system resilience is being tested like never before. The amount of potential change to think through can be daunting with every industry, function, and geography affected. Coronavirus substantial economic impact on the global markets is tremendous. It is vulnerable to many industries like tourism, manufacturing, travel, and hospitality, Travel and tourism account for about 10 percent of global GDP, which strictly refers that about 50 million jobs are at risk worldwide.
The months ahead are more grave, volatile, and complex. It is now time to shift our focus and put equal efforts to support a return to work while focusing on the changes that are needed in the coming time ahead.
The investments are needed to be taken care of while we concentrate our focus on the ever- changing needs. IPO Corner strives to keep you updated on the latest IPO news and analysis. If you are looking out for an upcoming IPO, you can get all the latest IPO News including IPOs to Watch, Filings, Terms and Pricing, IPO Analysis, IPO subscription news, IPO listing details, IPO University, IPO allotment status, and Market Data and Analysis all at a one-stop platform. Read Impact Of Covid-19 In Indian Economy.
1. IMPACT OF COVID-19 ON AUTOMOBILE INDUSTRY
The outbreak of COVID-19 has quickly severely triggered financial markets and has presented a lot many challenges for the globally integrated automotive industry. It includes disruption of exports of Chinese parts, closure of assembly plants in the US, and also interruptions in large- scale manufacturing across Europe.
The world is already coping with a huge downshift in global demand. This intense pressure on the automotive industry is likely to increase activities for mergers and acquisitions. Consequently, 80 percent of the automotive companies have reported that this outbreak has directly affected their revenue streams for the year 2020. To run a full production line, 78 percent of businesses have stated that they do not have sufficient staff.
The impact of COVID on India’s automotive industry has been upsetting. It faced a decrease in demand of more than 50 percent. The factories suffer. Businesses are in loss. It will take a long time to return to normal, recovering the losses.
It is still unclear about the complete impact it has across enterprises and industry sectors. The global economy is slowing drastically and the markets have witnessed an enormous decline in sales, some at as high as by over 80 percent.
Automotive is seeing a major decline in the market due to various factors, including that almost ever plant is closed, dealerships are off.
It’s time to get Future Ready –
Seeming the major decline due to this Pandemic, there will also be a shift in the mindset and tendency of the working. The safety features in cars have always been considered as critical and policy-mandated fitting regularly continues to advance in such field. The pandemic is bringing in new measures and allowing people to take health considerations more properly.
2. IMPACT OF COVID-19 ON IT INDUSTRY –
There is no doubt that businesses all over the world are facing the effect of Covid-19, the technology sector has also seen a major set back and a significant impact. Be it from the impact of supply of raw materials to disruption of the electronics value chain, or an inflationary risk on products. If seen on a positive side, this disruption has caused acceleration on working remotely, with a rapid focus on evaluation and de-risking the end to the end value chain. Also, the potential impact is the reduction in carbon emission, which has, in turn, resulted in a major focus on sustainability practices.
Other Potential Impacts that could be seen in the sub-sectors of technology are –
- Production or Launch of new smartphones was deferred due to the constraint on the supply chain.
- The companies are facing a grave challenge in getting the production running back again smoothly, which could be more significant as the time comes by.
- Hardware companies are seeing major demand from the businesses for large orders of laptops and other mobility devices to support the present work from the home condition.
- The adoption of 5G equipment has become necessary more than ever. Access to faster data and automation is needed to improve the focus on the WFH situation.
- Companies already working on remote technologies have seen an increased demand in their work process.
What the future holds?
The technology leaders are already working their ways out to manage the crisis by responding, recovering, and thriving. By evaluating the value chain, adopting driven technology and innovation, considering M & A opportunities, understanding demand, and supply shocks, the businesses have developed strategies to mitigate and minimize future events.
3. IMPACT OF COVID-19 ON PHARMA INDUSTRY –
The impact of Covid-19 on Pharma Industry has the major economies suffering around the world. The businesses are experiencing huge losses, 75% of people now are jobless and many of the people are facing the challenge of absolute lifestyle turmoil. The pharmaceutical industry is no exception in the fight against Covid-19 impact on Pharma Industry and has taken the center stage. Even though the Pharma industry has been reinvigorated with drugs and vaccines to fight against the pandemic, it has also disrupted the workflow in the industry, primarily by disorderly supply chains.
It is significant to note that the disruption in supply chains and the following shortage in drugs not only affect the patients who have been prescribed already or taking those medicines. It also widely affects investigation drug clinical research that relies on parallel fabrication plants.
The coronavirus has emphasized on the importance of having a risk mitigation framework in place that puts an emphasis on evaluating potential problems arising from the loss of a supply chain partner or location. Having alternate solution supply arrangements as far as feasible from a quality perspective minimizes prospective disruptions while guaranteeing adequate stocks provide a buffer against transitory disruptions.
The solution to Future Disruption –
Digital health may be the next big thing as telemedicine/video consultations, health-related videos, and apps are gaining popularity. Investment in online portals will increase which will aid the interaction between doctor and patient. While there are contingency plans in place for the pharmaceutical industry and some flexibility in the supply chain and clinical trial process, such as virtual trials, this pandemic situation is unfathomable. Potentially, it is unsure how long it will last, and how much more destructive it could become.
4. IMPACT OF COVID-19 ON BANKING AND FINANCIAL SERVICES –
Communication is a vital component of an impactful disaster management process. For banks and capital markets firms, this takes on greater significance because integrity and reputation are fundamental to what they deliver to customers. The on-location activity is extremely important for some industry roles, as with merchants needing robust, significant-time communication and sales teams subject to particular compliance monitoring. This causes a diverse range of workforce hurdles that have remained relatively ineffective on a scale — to this day.
In the short term, COVID-19 impact on the financial sector to customers will be equitable to the global recession of 2008-09, setting up a period of economic paralysis and leaving a gaping hole in bank reserves. India’s forex reserves are drying up, the rupee has hit, and exports refuse to pick up pace in the middle of closed borders.
Emphasizing on the Framework –
Banks are gearing up for large scale network transitions as clients are anticipated to shun branches. The pandemic has offered the digital teams with unique opportunities to massively increase, optimize, and prove digital across a whole broader spectrum of capital brackets, age groups, geographical regions, and use cases.
Accelerated digital activity due to Coronavirus Pandemic could drive fintech and wider adoption of personal financial management tools. To avoid exposure to the virus, users will shift from in- store payments to electronic payments. Covid-19 points out the complexity of the insurance plan as well as the gap in cyber insurance coverage.
5. IMPACT OF COVID-19 ON FMCG INDUSTRY –
According to data compiled by market researcher Nielsen, FMCG sales saw a sharp decline in the last week of March after a high double-digit growth during the first three weeks due to the nationwide lockdown due to the Covid-19 outbreak. Traditional trade saw a tremendous increase in demand for essential food items followed by snacks, and modern trade saw the highest demand for lifestyle items following a decline in both outlets in demand for chocolates and cakes.
The country has been shut down and businesses are facing a vague future.
6. IMPACT OF COVID-19 ON STEEL AND CEMENT –
In March, India’s core sector output had contracted to 6.5%, resulting in the worst performance in key infrastructure areas since 2005. Infrastructure industries grew only by 0.6 percent as compared to the last year 4.4 percent for the full year.
India’s GDP growth is at a decadal low, and there seems no way out of this. Any further dent in the output of the economy will only bring in more pain to workers who have lately seen their wages erode.
The numbers are not Good –
During the month of March, Crude oil production had contracted by 5.5%, steel by 13%, cement by 24.7%, natural gas by 15.2%, refinery products by 0.5%, fertilizers by 11.9%, and electricity by 7.2%. The only industry that grew by 4% was Coal. ICRA expects industrial output to shrink more by 15 to 20 percent on the basis of automotive production, core sector contraction, and exports of non-oil merchandise.
7. IMPACT OF COVID-19 ON REAL ESTATE –
The ongoing outbreak of Covid19 and its Covid-19 impact on Real Estate economy in the quarter ended March have pushed real-estate sentiment to its all-time lowest level. The real estate sectors that have been hit hardest, and hotels, restaurants, bars, and other entertainment retail, closely followed by retail and housing.
The real estate economic disruption impact varies vividly and will, in fact, to continue to vary from one state or metro area to another.
As per the recent survey, it is regarded that when it comes to sales, launches, and prices; both commercial real estate sectors and residential are expected to be hit gravely.
It is believed by 42 percent of respondents that for the next 6 months, the situation will be more grave; and the sector will be the worst hit.
8. IMPACT OF COVID-19 ON EXPORTS BUSINESSES –
Coronavirus has all the markets in a grip of crisis and there is no indication as to how far the world will suffer this pandemic. The uncertainty is more worrisome and seeing the outbreak more rapid and unpredictable than ever, the scope of its economic impact on international trade is hard to envision.
During the period of March 1 to March 19, India’s import basket saw a 16 percent drop largely driven by lower imports of gold, precious and semi-precious stones, and a sharp drop in crude oil prices.
Pharmaceutical exports, worth $20 billion, have been hit by China’s snapping of raw material supplies, while jewelry and diamond exporters face an even sharper disruption in foreign-market supplies. Passenger flights used to carry cargo in their bellies which most countries have grounded.
The top destination of countries is completely paralyzed, and Indian exporters are in a state of turmoil, which makes it imperative for the industries exporting to take critical relief measures. With the economies of the world slipping into a ‘near halt’ due to the Coronavirus pandemic, the situation is becoming hard to predict. Other countries like the US, the UAE, Germany, UK, Singapore, Italy, and China are the largest supplier to the merchandise export basket in the country. The trade is crippled in almost all these destinations due to the disintegration of the global supply chain.
9. IMPACT OF COVID-19 ON GOLD AND JEWELLERY –
The fear of the outbreak has severely affected the country market sentiment and kept away the buys from the retail stores, further leading in the fall of demand. This has significantly also led to a drop in gold jewelry purchases, as the whole situation has negatively impacted the mode of people, the feelings, and celebrations.
The outbreak has put the entire world on standstill and India’s sales of jewelry are have taken a plunge leading to the lowest level in a quarter of a century.
WGC Managing Director (India) Somasundaram P R, also said, After the COVID-19 outbreak, we face unprecedented levels of global anxiety that have affected all asset classes including gold. It seems that gold price volatility is driven by massive liquidation across all assets and likely magnified by leveraged positions and rule-based trading.
10. IMPACT OF COVID-19 ON E-COMMERCE –
The ongoing COVID-19 impact on e-commerce has affected our lives in every way it could. Be it the way we spent our time, our priorities to life, or the way we spent money. Online shopping was regular for us.
In general, it would seem that e-commerce would be fairly in a good spot even during the outbreak of coronavirus. Online shopping may turn many people switching to spending hours and hours, well, now the whole day shopping, instead. However, it’s not simple. There is no doubt about that.
With more than 90 percent of people trying to put into practice social distancing, more and more people are now switching to online shopping for a new product category. However, it is more about the nature of the demand, and not about a rapid increase in online shopping. While some of the biggest retail chains have made an announcement on their expansion of sales in e-commerce. However, due to coronavirus, the whole process has made difficult.
Customers have now switched to categories that were not predicted, and even though the companies made fair progress, the nature of demand has changed drastically.
The Covid-19 pandemic, in the last few months, has seen quite a modernization in plans, be it the events and holidays to revenue forecasts and marketing calendars worldwide.
The bottom line is that no one can predict what’s going to happen. The scale of COVID-19 pandemic at this point is unprecedented. There’s no other choice than to just be completely positive. Positivity is the key and all we have to do is work around and change our habits and situations as we need to react to the changing situation and information in a real-time world.
It is time to make small adjustments, and be positive and strategically to get ready to the state of normalcy for us and for the business.
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