How business can emerge stronger from COVID-19 - PwC India

By: Sanjeev Krishan, Chairperson, PwC in India

The COVID-19 pandemic has brought widespread disruption and significantly impacted businesses across sectors. Extended lockdowns and continued uncertainty around the larger health challenges have resulted in weakened demand, higher operating costs and an overall tougher business environment. The magnitude and unknown nature of the crisis are driving organisations to rethink and adapt to a new normal. The good news is that the crisis is providing a fillip to innovations across business value chains.

We surveyed senior executives across sectors to understand their challenges and path to recovery. Although 73% of the surveyed organisations expect a decline in FY21 revenues, more than 80% expect their businesses to recover to pre-COVID revenue run rates by June 2021, with early signs expected to be visible from September 2020. While all sectors are experiencing largely similar challenges of demand, costs and liquidity, the recovery trends differ. The anticipated de-growth in the Indian economy is directly impacting consumer-driven businesses, which in turn has a domino effect on B2B businesses. Coupled with a slow capital investment cycle, more B2B businesses are expecting the adverse impact of the current crisis to extend into FY22.

Two sectors that have remained resilient – and even benefited from the crisis tailwinds – are ITeS and Pharmaceuticals. Workplace restrictions and social distancing regulations have provided an impetus to technological interventions for sustaining operations across all industries. In turn, cyber security, automation and data analytics have become integral for survival and growth. From a position of strength, businesses in these sectors are favourably inclined to strategic acquisition opportunities and are looking to capitalise on suppressed valuations. In manufacturing-related sectors, increasing focus on self-reliance to counter supply chain disruptions and the recent geopolitical developments present opportunities to consolidate or explore other strategic partnerships.

Barring the essential segments, the Retail and consumer sector saw a significant dip in its revenues during the initial lockdown periods. The relaxation of the lockdown in several states has resulted in bursts of spends, driving a quicker recovery for the sector. Changing consumer compulsions have seen a shift to higher online sales and an increase in the hyperlocal segment. 

Interestingly, smaller organisations are displaying higher agility and innovation in adapting products and operations to the changing market requirements. Collaborating to augment capabilities is helping businesses enter segments which otherwise may have required large investments and longer cycles. In a crisis threatening irreversible damage, organisations are looking to de-risk their businesses through product extensions and operational partnerships.

Navigating this crisis requires organisations to search for holistic solutions to emerge stronger. As the focus shifts from survival to recovery, organisations will require agility and astute decisiveness to respond appropriately. Our ‘COVID-19: Path to recovery’ survey report discusses measures being taken by corporate India as it looks to ‘repair’ businesses from the aftermath of the pandemic, ‘rethink’ operations to conserve value, and ‘reconfigure’ to create longer term value and resilience.