Tag: coronavirus impact

IT services sector’s revenues may contract up to 3 pc in FY21, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian IT services sector may see an up to 3 per cent contraction in its revenues in the current fiscal amid multiple challenges on the demand side, a report said on Monday.

In its report, domestic rating agency Icra also said that the profit margins for the sector will go down as the growth slows down.

“The (IT services) sector is expected to grow at -3 per cent – Nil in FY21 versus earlier expectation of 6-8 per cent,” the agency said in a report.

TCS is the only company which has announced results for the first quarter, and the sector leader reported a decline both in revenues and profits for the April-June period and hinted at a recovery to go back to the pre-COVID levels only in late FY21.

“The challenges on the demand front continue to persist. The US and the Eurozone which generates more than 80 per cent of IT Services export revenues will see their GDP contract by 8.0 per cent and 10.2 per cent as per IMF, respectively in 2020, Icra Vice President Gaurav Jain said.

The agency said it expects the pace of new contract award to fall by at least 7-9 per cent in 2021, with manufacturing, travel, airlines, hospitality and retail to be the most adversely hit.

The first half of FY21 will also see impact in the form of price discounts and extended furlough requests by clients as they restructure their businesses, Jain said.

The only silver lining is the benefit IT companies stand to get through trends of core modernisation, usage of collaborative technologies and cloud migration as companies shift to digital business models to pursue work from home model, he said.

The agency said the IT companies have achieved over 90 per cent levels on the work from home front, acknowledging that the transition to work from home for the banking, financial services and insurance segment was impacted because of confidentiality issues.

There would be some issues which may come up due to the travel restrictions which are being imposed, it said.

Explaining that usually, movement of labour to client-end is essential in the initial days of the travel, it said new projects to be commissioned will be delayed by minimum of 3-6 months while projects in pipeline will also face delays.

Profit margins for IT services companies, which have already been hit due to continued pressure on commoditised IT services, wage inflation, higher onsite costs necessitated by visa curbs and lower discretionary spends, will recover in FY22, it said.

Large size companies with diversified presence across sectors are likely to manage the headwinds better compared to mid-size companies which have moderately high proportion of revenues coming from few sectors coupled with vendor consolidation exercise during COVID-19 benefitting such large size players, it said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Coronavirus impact: India’s GDP to contract by 3 pc in FY21, says BofA

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s GDP will contract by 3 per cent in FY21 because of the coronavirus pandemic, assuming the economy is opened up fully from next month, a foreign brokerage said on Thursday.

BofA Securities also said the RBI will monetise the fiscal deficit through purchase of government bonds of up to USD 95 billion through open market operations, and its revaluation reserves of USD 127 billion may also be used to recapitalise state-run banks.

Economists have been sharply cutting their growth forecasts for FY21 because of the impact of the pandemic and all watchers, including the RBI, now believe the Indian GDP will contract this fiscal, with some estimates ranging up to 7 per cent negative growth.

BofA Securities’ base case estimate is for 3 per cent contraction with the assumption of the economy opening up fully from mid-August, which may go up to 5 per cent if the crisis prolongs.

Its India economist Indranil Sen Gupta told reporters that his estimate is among the more optimistic ones and differs from others on the likelihood of the COVID-19 impact, which he said is a health emergency which no one can predict with certainty at present.

He said the strict lockdown in April and May had a 3 percentage points impact on the annual GDP, and subsequently with the limited opening up, the monthly impact has gone down to 1 percentage point per month.

India’s GDP growth decelerated to 4.2 per cent in 2019-20, the weakest in over a decade. Gupta said the growth potential is over 7 per cent.

GDP growth will come in at 9 per cent in FY22 on the lower base, he said, adding that for two fiscal years (FY21 and 22), the growth will come at an average of 3 per cent, which would mean that the COVID-19 pandemic has set Indian economy back by a year.

The biggest strength for India at present is the over USD 500 billion in forex reserves which have been accumulated by the RBI over some months, and it is due to this kitty that the country is not being bracketed with other emerging economies by the markets at present, he said.

The rural sector also is a relatively bright spot because of better monsoons which will deliver a normal harvest for the summer crop and also the lesser instances of COVID-19 infections, he said, estimating the agriculture, forestry and fishing sector to clock 3.5 per cent growth.

However, on the flip side, India has a large population, limited healthcare infrastructure and has opened up the economy when the infection curve was rising, leading to tripling of cases in a month, he said, calling this as the biggest weakness at present.

The RBI will cut rates by 0.50 per cent by October in the base case, and if the economy contracts by a higher level of 5 per cent, the cuts will total up to 1.50 per cent more by December, he said.

However, the rise in the real rate of interest because of stiffness in the wholesale price inflation is a matter of concern, he said, adding that this needs attention.

Indian banks need over USD 7 billion in recapitalisation support, which will make sure that they continue to lend, he said, adding that bankers should desist from shying away from lending due to concerns of NPAs in future.

Given the difficulties in arranging the finance, the government can look at RBI’s revaluation reserves to be deployed into bank recapitalisation.

Asked if such a contentious step will be considered, he said this is the best option given the circumstances as it does not put any pressure on the fiscal situation.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

COVID-19 pandemic to add Rs 1.67 lakh crore to corporate delinquencies by FY22: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The COVID-19 pandemic will result in Rs 1.67 lakh crore of debt owed by top-500 corporates turning delinquent by March 2022, a report said on Monday.

This will take the cumulative quantum of delinquencies to Rs 4.21 lakh crore or about 11 per cent of overall debt, India Ratings and Research said in its report.

Concerns over banks’ asset quality have been repeatedly expressed since the onset of the pandemic earlier this year. The RBI has allowed a six-month moratorium on loan repayments ending August, which has resulted in the stress not being recognised. The government has announced a nearly Rs 21 lakh crore stimulus package to restrict the economic impact of the pandemic.

The rating agency said the pandemic and the “associated policy response” will result in the additional loan stress of Rs 1.67 lakh crore from the top 500 debt-heavy private sector borrowers getting delinquent.

It said before the onset of the pandemic, it had estimated debt of Rs 2.54 lakh crore to turn delinquent till FY’22 and the addition of the Rs 1.67 lakh crore will take the overall delinquency to Rs 4.21 lakh crore.

This will constitute 18.21 per cent of the corporate sector’s debt, which is higher than the 11.57 per cent of debt currently considered as stressed, the agency said.

After estimating the slippages, incremental stress and loss given default, the agency said the credit costs which majorly include loan loss provisioning to be set aside by lenders will come at 3.57 per cent of the system debt.

However, in a scenario where funding markets continue to exhibit heightened risk aversion, an extra Rs 1.68 lakh crore of corporate debt would fall into the stressed category, resulting in Rs 5.89 lakh crore of corporate debt turning stressed by FY22 and leave a 4.82 per cent hole as credit costs, it said.

The agency warned refinancing pressures will persist and securing timely funding could continue to prove challenging for the private companies.

It expects Rs 4.81 lakh crore of fresh credit demand by the top 500 debt-heavy private sector corporates to emanate from a mix of receivable financing and a further drawdown of unutilised bank limits to shore up liquidity, meet cash flow shortfalls and to fund various isolated pockets of capex spending largely restricted to maintenance capex.

Lenders will prefer shorter tenure loans and will be more selective, which will weaken the resource mobilisation ability of lower rated issuers in the investment grade, it said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Warehousing, industrial space demand to be hit this year due to COVID-19: Experts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The demand for warehousing and industrial spaces will be adversely affected this year due to the COVID-19 pandemic, but the sector has bright prospects in the medium-to-long term driving on the growth of the e-commerce sector, according to experts.

The government should prepare a national policy for industrialisation and ease land acquisition process to make India a manufacturing base and attract companies that want to shift operation out of China, they said at a webinar on the warehousing sector.

Niranjan Hiranandani, co-founder and managing director of Hiranandani Group, said there are huge development potential in the warehousing, industrial parks and data centre projects.

About making India a manufacturing hub, he said, “Intention is there. Hopefully action will be there.”

Hiranandani, who is also president of Assocham and Naredco, said a lot of policy measures are needed to push manufacturing activities in India.

He even suggested that the government should send a team to Vietnam for studying how it has been able to attract companies for setting up factories.

The webinar ‘Bridging the Middle- transforming warehousing Industry in India’ was organised by Knight Frank and Reed Exhibitions India.

Rajesh Jaggi, vice-chairman (real estate) of Everstone Group, said this year could be a complete “washout” for the warehousing sector due to challenges posed by the coronavirus pandemic in both demand and supply sides.

Jaggi is managing partner of Everstone-backed IndoSpace, which is into the warehousing and industrial space segment.

“I am not at all bullish for the short-term perspective,” he said, but added that medium-to-long-term growth prospects remained intact for both industrial space and warehousing.

Post-COVID-19, Jaggi said there would be a thrust on e-commerce.

“If India plays it right, we have a huge scope on industrialisation,” he said.

Jaggi advocated a pan-India manufacturing policy and a consolidated effort from both the central and state governments.

“If we do not have a national policy on industrialisation, we are going to miss this opportunity,” he said.

Jaggi said the company would continue to invest in this sector and has not changed the expansion plan.

To boost the manufacturing sector in India, All Cargo Logistics Chairman Shashi Kiran Shetty suggested that the government should revive special economic zones (SEZs) where both factories and warehousing can co-exist.

He said the government’s industrial development authorities and Railways have huge land bank that could be utilised for development purpose.

“We need to move fast, else will miss a golden opportunity,” Shetty said.

Shishir Baijal, chairman and managing director of Knight Frank India, said the warehousing segment has been least impacted and will also recover quickly compared to other asset classes in the real estate space.

On Thursday, Knight Frank India reported that the warehousing demand fell 11 per cent during the last fiscal year at 41.3 million sq ft across eight major cities due to economic slowdown.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Vocal for Local: Sustainable fashion brand Rewanta launches initiative to support khadi artisans

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Rewanta, a sustainable fashion brand, has launched #PledgekhadiEmpowerWeavers initiative under the Reclaim Khadi Movement, to extend support to weavers and artisans by enabling them to earn a dignified living by creating a positive demand cycle for Khadi.

Through this initiative they address the nation to pledge one khadi garment in their wardrobes to create a positive demand cycle, which has considerably gone down due to COVID-19 outbreak.

The fashion brand says that this initiative is to support Vocal for Local vision of Prime Minister Narendra Modi amid India-China stand-off at the LAC and strong current against the use of Chinese products across the country.

Rewanta, in a statement, says it aims to create an opportunity for 7,500 artisans and daily wage earners for the next three months by weaving five lac meters of Khadi fabric and creating garments from it.

The campaign intends to build a more participative and inclusive national-consciousness in building self-reliance and economic independence through supporting indigenous weaver communities.

Sandeep Pable, co-founder, Rewanta, said, “This unprecedented pandemic has impacted every aspect of life as we know it. But the challenges it has conjured for daily wage workers require urgent and immediate action. More than 4.5 lakh artisans are attached to Khadi and Village Industries, of which most belong to marginalised communities.”

“The gravity of the problem is palpable. We want to do our part by supporting the Honorable Prime Minister Narendra Modi’s vision of “Vocal For Local”, with our initiative # PledgeKhadiEmpowerWeavers and take as many Indians along as possible to garner support for the sector through pledging at least one khadi garment .”

Khadi’s off-peak season received a further blow owing to the lockdown and economic impact of the pandemic. Alongside, the manufacturing units in cities also employs a large number of migrant workers who function as tailors and garment workers, who face the same risk of being out of work.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Coronavirus is expected to have cost 400 million jobs in the second quarter, UN agency estimates

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The coronavirus pandemic is expected to have resulted in a 14% drop in global working hours in the second quarter of 2020, the International Labour Organization has said.

The United Nations’ labor agency said this updated fall in working hours was the equivalent of 400 million full-time job losses globally in the second quarter, based on a standard 48-hour working week.

This marked a “sharp increase” on the 10.7% fall in working hours, or 305 million job losses, that the ILO forecasted for that period, in its previous report on the impact of Covid-19 on the labor market, published in May.

In this fifth edition of its “Covid-19 and the world of work” monitor, the ILO said that the Americas were the most affected region, with an estimated 18.3% drop in working hours, or 70 million full-time jobs.

The working-hour losses are calculated based on the ILO’s “nowcasting” model, which is statistical forecasting drawing on real-time economic and labor market data. It uses the fourth quarter of 2019 as the basis for falls.

In the first quarter, the ILO calculated a 5.4% fall in working hours worldwide, equating to 155 million jobs, in comparison to the fourth quarter of last year.

The ILO said there were multiple factors causing this global decline such as, shorter working hours, temporary leave — or furlough — as well as unemployment and “inactivity.”

The second half of 2020
The ILO’s report also outlined three different scenarios for a labor market recovery in the second half of the year.

The baseline model projects a 4.9% decline in working hours, or 140 million job losses, compared to the fourth quarter of 2019. This scenario is assuming a rebound in economic activity according to existing forecasts, the lifting of workplace lockdown restrictions, in addition to a recovery in consumption and investment.

A pessimistic scenario would see an estimated 11.9% fall in working hours, or 340 million job losses. This is based on there being a second wave of coronavirus cases, prompting the return of lockdown restrictions, therefore meaning a “significantly slow recovery.”

The optimistic model would work out to an estimated 1.2% decrease in working hours, or 34 million job cuts. This best-case scenario would be the result of workers’ activities resuming quickly, “significantly boosting aggregate demand and job creation.”

Gender inequalities exacerbated
The ILO report also highlighted the disproportionate effect of the pandemic on female workers. It pointed out that 510 million, or 40%, of all employed women globally work in the four most hard-hit sectors by the coronavirus crisis, compared to 36.6% of men.

The fact that women also dominate the domestic work, health and social care sectors, has meant that they are at greater risk of infection and transmission of the virus and of losing income. Meanwhile, the distribution of unpaid care work of children, for example, has become more unequal during the pandemic, made worse by the closure of schools and care services.

The ILO said this impact on women risked undoing some of the progress on gender equality in recent decades and exacerbating work-related gender inequalities.

Guy Ryder, director-general of the ILO said: “The decisions we adopt now will echo in the years to come and beyond 2030.”

Despite the fact that a lot has already been done to help deal with the impact of the virus and that countries were at different stages of the pandemic, Ryder said that “we need to redouble our efforts if we want to come out of this crisis in a better shape than when it started.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Airbus to lay off 15,000 employees as coronavirus pandemic hits business

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The world’s largest aircraft manufacturer Airbus has decided to lay off nearly 15,000 employees across France, Germany, Spain and the UK as demand for air travel has nosedived amid the COVID-19 pandemic.

“This adaptation is expected to result in a reduction of around 15,000 positions no later than summer 2021. The information and consultation process with social partners has begun with a view to reaching agreements for implementation starting in autumn 2020,” the Europe-based company said in a statement.

The decision will impact 5,000 positions in France, 5,100 in Germany, 900 in Spain, 1,700 in the UK and 1,300 at other worldwide sites of Airbus.

The unprecedented disruption in demand for air travel has led to a nearly 40 percent drop in commercial aircraft business activity and this translates into need for lesser number of aircraft in sync with the market size.

“…With air traffic not expected to recover to pre-COVID levels before 2023 and potentially as late as 2025, Airbus now needs to take additional measures to reflect the post COVID-19 industry outlook,” the company, whose biggest customer is IndiGo, said.

The company will implement the decision via compulsory action, voluntary departures, early retirement, and long term partial unemployment schemes where appropriate.

“Airbus is facing the gravest crisis this industry has ever experienced…To confront that reality, we must now adopt more far-reaching measures,” Airbus CEO Guillaume Faury said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Shell writes down oil and gas assets by $22 billion

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Energy producer Royal Dutch Shell warned Tuesday it will slash the value of its assets by 22 billion to account for lower oil and gas prices amid the COVID-19 pandemic.

The company predicted the write-down for the quarter and said it continues to adapt to ensure the business remains resilient in challenging times. Earlier this month, its competitor BP, also cut the value of its own assets by up to 17.5 billion.

Shell predicted prices for Brent crude, the international oil benchmark, would be at 50 dollars a barrel in 2022. Earlier it had predicted a price of 60 a barrel. On Tuesday, it was trading near 41 a barrel.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Emami Q4 net profit down 59.5% to Rs 23 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Homegrown FMCG firm Emami Ltd on Friday reported a 59.44 per cent decline in its consolidated net profit to Rs 22.75 crore for the March quarter due to decline in sales because of coronavirus-induced lockdown.

The company had posted a net profit of Rs 56.09 crore during the January-March quarter of 2018-19, Emami said in a regulatory filing.

Its revenue from operations was down 16.81 per cent to Rs 532.68 crore during the quarter under review as against Rs 640.35 crore in the corresponding period of the previous fiscal.

The pandemic and the lockdown led to a sharp decline in consumption due to rising unemployment and a significant drop in demand from low-income groups, the Kolkata-based firm said.

This led the consumers shift towards more essential items like food, groceries and hygiene products thereby affecting the sale of its discretionary line of products.

All these developments arising out of an unprecedented and extraordinary environment that prevailed across the globe, impacted the company’s performance significantly in Q4FY20, the company said.

Emami’s total expenses in the fourth quarter of FY20 stood at Rs 434.15 crore, down 10.46 per cent as against Rs 484.92 crore in the year-ago quarter.

For the fiscal year 2019-20, net profit was marginally down to Rs 302.30 crore. It was Rs 302.53 crore in the preceding financial year.

Its revenue from operations in 2019-20 was Rs 2,654.88 crore, down 1.47 per cent. It was Rs 2,694.63 crore in 2018-19.

In FY20, revenues at Rs 2,655 crore marginally declined by 1 per cent due to a 17 per cent decline in Q4FY20. Tight cost control measures helped improve gross margins by 130 bps at 67 per cent and despite one-time write-off amounting to Rs 11 crore, cash profits at Rs 639 crore grew by 2 per cent during the year with margins growing by 80 bps, the company said.

Emami Director Mohan Goenka said financial year 2019-20 has been one of the most challenging years for the company.

While commenting on the outlook Emami Director Harsha V Agarwal said the company has geared to respond to these demands, which are relevant in today’s time and has forayed into hand sanitizer, soaps and handwashes under the Boroplus brand and few other products in health care under the Zandu brand.

We are aggressively pushing to launch more products in both personal hygiene and healthcare categories in the next one to two months, he said.

As the current situation is gradually improving to reach normalcy the demand for discretionary products could quickly come back to normal, he added.

Shares of Emami Ltd were trading at Rs 223.55 per unit on the BSE, up 0.88 per cent over previous close.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow