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Restart Post COVID-19: The Road Ahead

The world has rarely been the same, every time it witnessed a pandemic. Every crisis left a lasting impact of its own – some changed business & management philosophies and others the fundamental laws governing the larger society. One undeniable outcome, however, has been the victory of the indomitable human spirit - We came out stronger, more empathetic, and more knowledgeable every time.

We at EMA Partners, believe that we would come out of this crisis stronger and better than before; however, re-starting in a post covid era will not be without its unique challenges as well as opportunities. To uncover deeper insights and validate our take on ‘Restart – Post COVID – 19’ we recently invited an industry audience to share their perspective.

The e-panel moderated by A. Ramachandran (Managing Partner – UAE and Senior Partner – India, EMA Partners) witnessed the participation of eminent leaders from the industry who shared their thoughts on the journey to normalcy. This paper is a curated account of the discussion.


Impact on Businesses

While most senior leaders have put people and cost as their top two priorities in the midst of all the chaos; supply chain has evolved as another key area of focus for all organizations, elaborating on the same Vishal Sharma (CEO – India, DB Schenker) commented that traditionally logistics had been viewed as a cost in P&L statements; however, the COVID crisis has pushed it to the fore.

According to him the logistics and supply chain businesses will not be unscathed and will face its fair share of challenges too. He feels that one of the biggest bottle necks in supply chain is the limited access to trucking capacity, without which most organizations will struggle. Congested ports, restricted transportation and curtailed airfreight capacities have all contributed towards the drop in business volumes in the last 3-4 weeks (~25 to 30% of normal). Vishal also opined that without production and distribution, supply chain as a function is bound to take a hit. Though, he acknowledged that there is a demand in the market however owing to the current restrictions, catering to them has been difficult.

Mohit Kampani (Deputy MD More Retail) was confident that food industry will be the fastest to re-coup post lockdown. According to him the biggest challenge that food industry faces currently is in their value chain and he expects this to be resolved in a matter of weeks once they are able to get the wheels running.

Retail in general however, is going to have a tough time ahead, according to Mohit. Citing global reports & statistics on how long businesses can sustain themselves in case of a lock-down (basis their cash-reserves) he mentioned that grocery retail on an average could survive up to nineteen days and lifestyle close to thirty days. Lifestyle retail, which he classified primarily as apparels, home, and electronics, could potentially be one the hardest hit segments, particularly considering that for most retailers this is a full price sale season at this time of the year.

In terms of revival, grocery retail and the overall food & grocery industry would get back on their feet quickly post an obvious dip in sales, claimed Mohit, and probably within a time frame of 2-3 months. For the non-food retail segmented he estimated 6 – 9 months for a reasonable recovery.

Ashwani Maheshwari (CEO – India Business and Whole Time Director, Varroc) spoke about the already ailing auto industry being dealt a severe blow.

Ashwani stated that while certain policies like work-from-home (a first in Varroc), could be implemented with relative ease, policies and workflows which had to be adopted for shutting down their plants and manufacturing locations, were much more complex in their orientation.

Interestingly, Ashwani was of the opinion that re-opening the plants & manufacturing sites is going to be an even more complex exercise, especially with regards to coordinating between geographically dispersed plants and the connected supply chain. He also stated with regards to restarting operations in plants, the larger manufacturing eco-system including vendors and other support systems have to start operating.


Role of Government

Almost all the panellists voiced their opinion in favour of stronger financial interventions and support from the Government.

According to JK Dadoo (Independent Non – Executive Director & Former IAS Officer) the current socio-economic ecosystem hinges on the following aspects:

  • Politicians, who he claimed are trying to avoid any more deaths, this he says is crucial to their re-election
  • The Industry which wants a steady resolution of the situation for its own economic interests
  • Migrant Labour and the poor who are unable to return to their native due to the current travel restrictions; and
  • Civil Society which is trying to avoid a financial and health crisis

Mr. Dadoo also stated that out of the 720 districts and their 6000 towns, 3000 towns have not been impacted by Corona thus far, and according to him government and private players should focus on re-starting their operations there. He drew attention to the MHA guidelines (for essential items) on the resolution of logistics & supply chain issues at a district level.

He also drew positives from the government’s decision to restart core-sectors such as Steel, Power & Mining additionally he also stated that sixteen other allied industries are also being deliberated upon by the highest offices of the government for a potential restart at the earliest. Like every other leader on the panel, Mr. Dadoo too acknowledged that these are unprecedented times and therefore warrant unprecedented solutions.

Uday Khanna (Former Chairman Lafarge India & Former Non-Executive Chairman, Bata) mentioned that the crisis has the potential to evolve into something much deeper than what we currently foresee and in his opinion this is partly because of a lack or a dearth of strong interventions from our financial institutions including the RBI, vis-à-vis our western counterparts. He is concerned that without adequate financing it would be difficult to manage the economic fallouts, in case of a prolonged crisis. He also stated that it is imperative for the government to ensure that there is enough liquidity in the market.

According to Uday another major issue from an India context is that about 80% of our work-force is in the informal sector, and if there’s no financial aid provided to them, the current supply problem of the organized sector will morph into a total lack of demand.

Vishal, raised an interesting point that though the government has completely grasped the problem and their policies are well intentioned, the MHA guidelines are such that there’s some degree of difference with regards to their interpretation at the Central and State (local) level, he cited a recent incident with regards to opening up a warehouse for one of their Healthcare customers.


Key Takeaways and the Road Ahead

Shedding light on the evolution of leadership traits and organizations in general in the COVID era, K Sudarshan (Regional Chair & Managing Director, EMA Partners), spoke about the Leader’s Dilemma, wherein many a times the leaders find themselves in the confines of their home, while their frontline is battling the virus, while catering to their clients and customers. He also spoke about how in these challenging times a leader needs to worry about his or her health, their family’s health and also the health and wellbeing of the larger organization.

Sudarshan mentioned that in his recent conversations with colleagues and clients in the region, one key theme which emerged was a gradual change in mindset from global to local. He is of the opinion that there would be a definitive change in thought process of people seeking global careers in the post COVID world. He also believes that the current situation gives organization the right opportunity to evaluate efficiency of some of the roles and also re-think their investments in office infrastructure.

Talking about positives, Ashwani Maheshwari spoke about how often there are new heroes which emerge at the face of a crisis; he spoke of a seat-stitching plant for two wheelers at Varroc, which has now come up with cloth masks to cater to the health risks of COVID 19, and are currently in the process of supplying 30,000 such masks. Ashwani also foresees technology adoptionand low-cost automation in plants and assembly lines to go up significantly, as the new norms of social distancing kick in. Technology adoption he believes would also be critical in maintaining status quo in productivity levels.

Vishal too spoke about positive changes in their business, he mentioned that whereas traditionally their business focused on 3Cs – Colleagues, Customers and Cash, however going forward the focus will also be on a fourth C – Community; by which he referred to the extended supply chain eco-system, to ensure solvency of MSMEs and vendor networks dependent on them.

On food and grocery industry and a potential change in consumption behaviour in general, Mohit eloquently opined that what consumers essentially buy is the manifestation of their confidence in certain brands. Hence though there is a likely change in their buying behaviour wherein buyers would focus more on consumer essentials, however in the long run he expects this to normalise post the crisis period.

Mr. Dadoo spoke on the huge opportunity that lies beyond the crisis for industries like Pharma which already exports in the range of USD 40 – 50Bn today. With regards to the waning globalization euphoria he was confident that India could very well rise up to the occasion as most global organizations will look for a manufacturing hub, beyond China post the epidemic. As a nation, he claimed India has a precedence of bouncing back stronger than before from various crises in the past, and this time too he believes it would be no different.

Uday too emphasised that optimism is the right mindset to have in these situations. He strongly suggested that under these circumstances one should not wait for things to happen and should look to make things happen and though he has no doubts on the potential of our country to bounce back from this crisis, he claimed that it is also essential for governing bodies to create an enabling environment to realize that potential.


EMA Partners’ Viewpoint

Despite conversations around eroding profits, hits on revenue and a difficult lock-down induced business environment, there was a sense of optimism in the discussion. Re-starting business operations, restoring normalcy and leaving the worst of crisis behind is something which is on every leader’s mind. While some businesses, roles and policies would be re-engineered, and we will return to some form of normalcy, it would be crucial for us not to forget the lessons learnt in these tough times.

Lastly, there was a broad consensus that it would take us anywhere between 6 – 12mths to witness a full recovery.