Coronavirus hits India Inc; companies report a slump in orders, cash flow

More than half of Indian businesses are already feeling a ‘marked impact’ of the coronavirus pandemic even at early stages, a study done by Indian industry body FICCI, stated. Three-fourth of companies said they are seeing cut in orders, while 80 per cent said they are facing a marked dip in cash flow.

As consumption drops to a trickle and orders dry up with citizens, businesses and the government moving into varying stages of lockdown and ‘social distancing,’ India Inc’s best-case hopes for a return to normalcy is at least six months. While nearly half the companies believe things will stabilise by then, almost 13 per cent companies felt it will take longer, to perhaps even as much as one year.

The survey was conducted by FICCI among member companies and associations this week. 317 companies from across the country participated in the survey.

The pandemic has had an impact on both supply and demand. While 63 per cent of the companies said their supply chain of raw materials or components has been delayed, a significant 35 per cent said unsold inventories are piling up due to lack of demand. 

In a study paper released along with the survey, FICCI noted that the outbreak has dashed any hopes of a revival to the protracted slowdown Indian economy has been facing for last one and a half years. “There was a strong hope of recovery in the last quarter of the current fiscal. However, the new coronavirus epidemic has made the recovery extremely difficult in the near to medium term. The outbreak has presented fresh challenges for the Indian economy now, causing a severely disruptive impact on both demand and supply-side elements which has the potential to derail India’s growth story,” it stated.