Due to Covid19 many Industries are Facing Big Problems
1. Airlines/Aerospace
With its rapid global spread, massive death toll and resultant lockdowns and border closures, Covid-19 has devastated demand for travel globally. Indeed, Covid-19 is a "perfect storm" for the travel sector due to a combination of changes in passenger behaviour, government restrictions on travel, and the broad economic downturn which it seems to have triggered globally.
These latest findings not only have implications for immediate travel, but for the long-term outlook for the sector, with significant ramifications for not only aviation but aerospace manufacturers, too. Indeed, with airlines applying for government bailouts, deferring new aircraft orders and curtailing aftermarket spending, the impact on the aerospace sector has already been significant.
Fundamental influencers for the shape of the recovery are (1) the level at which RPKs resume when the crisis ends, and (2) the ongoing growth in travel demand thereafter. These measures are influenced by 11 drivers – some traditional, some long-term trends which have been modified (accelerated or decelerated due to Covid-19), and some which are unique to the Covid-19 crisis.
What can aerospace suppliers do to thrive through the crisis?
Over the past few weeks and months, most suppliers have managed to secure liquidity, manage their workforce, and undergo an effective production ramp-down.
Next, while companies must of course continue managing the key operational basics – keeping an eye on cash flow, tracking demand signals (such as airline operation continuity announcements and order cancellations) to revise supply chain planning, supporting sub-tier suppliers to remain afloat – it is now time for
suppliers to re-think their strategy and ensure it is fit-for-purpose in the "new normal".
As an initial step, suppliers should ensure readiness to support their airline customers to ensure aircraft can return to service quickly as and when pockets of demand return – this is essential for the industry to recover and heal.
Another major avenue for aerospace suppliers to explore is whether they can influence local and central governments to incentivise faster aircraft retirements.
Further, after years of globalisation, Covid-19 is also true shock for the aerospace supply chain, which will offer major structural risks but also opportunities. Companies should thus re-evaluate their product portfolio, breadth of operational capabilities (engineering, service delivery, platform-specific expertise, etc), as well as their manufacturing footprint.
Conclusion
From an OE production demand perspective, how airlines choose to ground or retire their fleet is a critical driver. When grounding aircraft for the medium- or long-term, airlines consider how relevant the aircraft is for their long-term strategy, the value it could fetch on the secondary market, and the cost of retiring the aircraft versus the cost of grounding it. Today, there are two distinct behaviours we have seen in the market:
(A) airlines accelerating the retirement of older widebody aircraft which are relatively expensive to operate and don't fit well with their long-term fleet strategy, while delaying retirement for narrowbody aircraft by a few years, and
(B) airlines retiring aircraft based on age on a standard S-curve, in much the same way as before the crisis. It is not yet clear which of these two strategies will dominate the market, but the choice is highly sensitive for aircraft deliveries. We modelled both as variants on Scenario 3.
1. Tourism and hospitality
India’s Covid-19 lockdown may cause 38 million job losses in the travel and tourism industry
Ø The closing down of the iconic Taj Mahal last month is an evocative symbol of how India’s travel and tourism landscape has changed due to Covid-19. The country’s travel and tourism sector, more dependent than others on the free and confident movement of people, is staring at millions of disappearing jobs and a grey future.
Ø Reports and experts suggest possible job loss across tourism and allied industries due to standstill caused by the Covid-19 outbreak across the world. “The Indian tourism and hospitality industry is staring at a potential job loss of around 38 million, which is 70% of the total workforce,” due to Covid-19, a report by KPMG, a financial services and business advisory firm, said on April 1.
Ø As many as nine million jobs – six times the population of Goa – in the travel and tourism sector are at risk in India, according to the World Travel and Tourism Council, a global forum to raise awareness about the industry.
Ø If this trend continues as the Covid-19 crisis progresses, it will be a setback for national employment. The sector accounts for 12.75% of employment – 5.56% of it direct and 7.19% indirect. Over 87 million people were employed in the tourism industry in 2018-’19, according to the ministry of tourism’s annual report for 2019-’20.
Ø Travel industry paralysed
Officials of travel and tourism companies tell a uniformly dismal story of cancelled bookings from February 2020 leading to “complete paralysis” by mid-to-late March 2020. “The industry has come to a standstill as the crisis has hit its nerve centres – the airlines and railways,” Ajay Bali, managing director of the Mumbai-based BCD Travel India, the Indian arm of the Dutch corporate travel.
management firm, told IndiaSpend. “And in the next 45 days, we do not even know if there will be recovery.”
This is one of the worst crises to hit the tourism industry and it has impacted all its segments –inbound, outbound and domestic, and leisure, cruise, adventure, corporate meetings, conference, and exhibitions,” said Unmesh Vaidya, currently business head at Iqomi Travel Services, a Mumbai-based startup specialising in corporate services such as meetings, incentive trips and conferences.
Meanwhile, the current lockdown extends the curbs imposed on Kashmir in August 2019, hitting the livelihoods of 144,500 Kashmiris employed in the tourism and handicrafts sector, as India Spend had reported on January 28.
Medium and small enterprises dominating the tourism and hospitality sector are likely to be severely impacted by the pandemic, at least till the month of June, according to Mridula Tangirala, head of tourism at Tata Trusts. “July to September have always been lean for tourism in India except for a few select pockets. The rate of revival after the month of October cannot be predicted right now as the full impact of the crisis is still unknown,” she told IndiaSpend.
Ø Foreign travel
The nationwide 21-day lockdown from March 25 suspended domestic flights, trains and inter-state buses, and instructed all Indians to stay at home. The government had already restricted foreign arrivals earlier in March, first suspending tourist visas and visa-free travel for those holding Overseas Citizen of India cards, then prohibiting arrivals from Covid-19 hotspots, and finally cancelling all international flight landings from March 22 – about 700 a week.
The United States and the United Kingdom together accounted for 24% of India’s foreign tourist arrivals in February. These two countries are among the worst affected by Covid-19, reporting over 600,000 cases, according to data from Johns Hopkins University.
Domestic tourist visits numbered 1.8 billion in 2018, a 12% increase from 2017, the tourism ministry’s 2019 report said. With the lockdown, this too has come to a standstill. The shutting down of the iconic Taj Mahal on March 17, which attracted over seven million visitors – both domestic and foreign – in 2018-’19, was an evocative symbol of the dramatically altered tourism picture. The lockdown has also led to the closure of pilgrimage sites and temples across states, affecting local businesses and employment thriving around them.
Ø Hotels and restaurants
The revenue losses in the travel and tourism sector would run into multiple quarters, Pavethra Ponniah, Vice President at ICRA, estimated: “Several hotels have already let go of all contractual labour. While there are discussions on pay cuts, we are not hearing of permanent labour cuts yet. A prolonged downcycle could, however, lead to those also being pruned.”
1. Telecommunications
A health ministry statement said the measures taken by the officials and the staff of the municipal corporations for the management of Covid-19 cases were reviewed during the meeting and they were informed about fresh guidelines on the management of the disease in urban settlements.
A presentation was made on the present status of Covid-19 infections in the districts while highlighting the high-risk factors, indices such as confirmation rate, fatality rate, doubling rate, tests per million etc.
The officials were advised the area should be appropriately defined by the district administration or local urban body with technical inputs from the local level. Along with the containment zones, the buffer zone around the containment zone also must be demarcated to break the chain of transmission.
The kin of the deceased alleged negligence on part of the hospital — a charge denied by the hospital. Hospital medical superintendent Professor SK Mathur said the patient was admitted to the emergency of the SSL hospital on August 16 due to some mental illness. During treatment, his sample was sent for Covid-19 test on August 19 and his report came positive on August 22 following which he was moved to a Covid-19 ward the same day.
2. Real estate
Real estate sector faces serious setback due to Covid-19: Report
The real estate sector which saw some revival during the last quarter of 2019 received a serious setback with the outbreak of coronavirus and subsequent lockdown. The current sentiment of real estate stakeholders in India dropped to an all-time low of 31 in the first quarter (January to March) 2020.
The mood of the stakeholders as regards the overall economy and the real estate sector had been in the pessimistic zone in the second and third quarter of 2019 due to credit squeeze and overall economic slowdown.
Ø The lockdown will translate into a vicious sequence of stalled construction, delays in project deliveries, delays in loan repayments and debt servicing to banks and an overall slump in demand due to uncertainties in employment and salary cuts.
Ø All these factors have marred the future sentiment score of stakeholders.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, said the pandemic has created an unprecedented condition which is impacting global markets and societies. There is already a severe shortage of liquidity due to the complete standstill that most economies have come to.
Even while the government and the Reserve Bank of India have provided some stimulus measures, further support may be required to help the real estate sector .
and for the economy to stay afloat during the crisis. Managing liquidity and sustaining through the length of this pandemic will be critical for economic survival in the post-pandemic era, he said.
“The real estate segment specifically will have a long journey to make. This crisis has retracted the end-user confidence to its lowest levels ever, which will push any kind of real estate purchase decisions to the distant future. The already ailing real estate sector has been crippled with this pandemic, making it imperative for government support to bring it back on track,” said Baijal.
1. Pharma
Ø Initially, the hospital authorities had told staffers they were not accepting any Covid-19 patients. So Jose, who is eight months pregnant, thought she was not at risk. But when one of the doctors tested positive, all those on duty underwent tests, and several nurses turned out to have caught the viral infection.
Ø Healthcare workers across the country are also grappling with the shortage of personal protective equipment (PPE), even as the government claims supplies are adequate.
Ø The doctor, who is in his mid-20s, says he gets calls from his parents asking him to return home but that is not an option. “If I go, I will be a risk to them,” he says. This anxiety runs through family members of healthcare workers.
Ø In Bengaluru, Nagalakshmi V, one of the many ASHAs (Accredited Social Health Activists) carrying out door-to-door surveys to find people who might have Covid-19 symptoms or travelled to affected areas, says she is under pressure from her family to stop work ..
2. Banking
India: Covid-19 Response On Banking And Finance: Measures And Reliefs By RBI
Ø Post lockdown, in order to ensure normal business functioning by the entire banking sector, maximum relaxations were introduced by RBI on March 27, April 17, 2020 and May 22, 2020 vide different notifications. The first address by the RBI governor on March 27, 20202 introduced several measures including, grant of a three months moratorium on term loans and the infusion of liquidity by way of TLTRO scheme. The RBI Governor's address on April 17, 20203 was intended to introduce further measures to maintain adequate liquidity in the financial system by easing out the financial stress. The third address on May 22, 20204 extended deadlines, made changes in some previously announced measures5 and introduced new measures including limit on Group Exposures under the Large Exposures Framework and relaxation of guidelines for Consolidated Sinking Fund of State Governments. These relaxations have been discussed in the following five sets of measures:
(a) Liquidity Management Measures
(b) Financial Market Measures;
(c) Regulatory Measures;
(d) Measures to support Exports and Imports; and
(e) Debt Management Measures.
Liquidity Management Measures:
As banks are often evaluated on their liquidity, or their ability to meet cash and collateral obligations without incurring substantial losses, these measures had been introduced to ensure that adequate liquidity is available to all constituents so that COVID-19 related liquidity constraints are eased.
This will increase the availability of credit to end borrowers, hopefully at lower or more competitive interest rates. These timely measures taken by the government will benefit the financial market as NBFCs were suffering from a significant business impact and liquidity stress due to COVID-19.
Cash Reserve Ratio (CRR) is the percentage of total deposits that banks are required to keep in reserves either in the vaults or with RBI so that the same can be given to bank's customers if the need arises.
Financial Market Measures:
These measures are essentially developmental in nature, intended to improve depth and price discovery in the forex market segments. This measure assumes greater importance in the context of the increased fluctuation of the rupee caused by the impact of COVID-19 on currency markets.
Regulatory Measures:
These measures were introduced to mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 and to ensure the continuity of viable businesses.
Accordingly, the repayment schedule and the residual tenor may be shifted across the board by another three months. However, interest would continue to accrue on the outstanding portion of the term loans during the moratorium period. This measure will be extremely helpful in lowering the burden for various sectors including the developers as they will be able to focus on faster execution of projects and for those who are paying EMIs or using credit cards.
Measures to Support Exports and Imports:
Due to COVID-19 the exporters have been facing genuine difficulties such as delay / postponement of orders, delay in realisation of bills, etc.
The RBI has decided to extend the time period for completion of outward remittances against normal imports (i.e. excluding import of gold/diamonds and precious stones/jewellery) into India from six months to twelve months from the date of shipment for such imports made on or before July 31, 2020. This is expected to provide importers liquidity support, extra time to manage their dues and greater flexibility in managing their operating cycles in a COVID-19 environment, thereby businesses will get a breather to deal with the crisis and not stress their ledgers.
Conclusion:
Though the measures adopted and implemented by RBI are temporary, so far these have been very effective to stabilize the volatile situation going on in the financial market. As COVID-19 continues to spread, both borrowers and lenders should be watchful of the compliance requirements which have not been relaxed and take appropriate steps to fulfil such obligations in a timely manner.
Although, all the previous measures introduced by RBI are already a part of the Relief Package announced by the Central Government, RBI may also need to consider a degree of prudential forbearance in terms of other policies as well, which could be on similar lines with the Relief Package. RBI may consider introducing the much talked COVID-19 bond consoles. Given the risk of using currency notes in times of pandemic, incentivizing digital payments further could be an effective solution in the current circumstances. Furthermore, the domestic economy is also expected to shrink to a great extent until the vaccine for COVID-19 is developed. In response to all this and assuming the effect of the pandemic will continue beyond May 31, 2020, it is expected that RBI would come up with more additional measures to contain the economic stress.
1. E-commerce
How e-commerce platforms are lending a new lease of life to offline retailers in the face of Covid-19
The Covid-19 pandemic has brought the business world to a standstill. The virulent disease has spread across the globe at a rapid pace, disrupting and debilitating entire industries in its wake. India too is witnessing its share of the viral onslaught and has since effectively imposed a nation-wide lockdown to arrest the further dissemination of the lethal disease.
Social e-commerce makes survival easy
Offline-to-online or social-commerce platforms like are emerging as facilitators in streamlining the transitional procedure from the analog to the digital. These platforms are responsible for empowering the country’s up-and-coming offline retail businesses carve a distinct and effortless online presence free of cost by optimizing the enormous potential of AI to digitize cataloging and their offline inventory listing.
Social commerce platforms are integrating certain buyer-seller behaviors of offline retailers rather than discomfortingly enforcing traditional businesses to adopt complete modern practices. By aiding those to obtain access to supplies directly from the manufacturers, instant credit services, and the necessary working capital these cutting – edge platforms are calibrating the offline sellers towards new business possibilities by cataloging products on their platforms and vending them only after.
Ø Offline retailers now have the power to forge their own customized and tailored web stores where they can take orders and assignments. They can even market their product offerings through trending social media platforms such as Facebook, WhatsApp, and TikTok, etc and can even correspond and hobnob with potential buyers before finalizing a purchase.
Ø Social media platforms are even focusing on hyper- local deliveries that are feasible and exempted from special permits to fulfill the challenge.
Ø Whereas the authorities are exercising every possible measure to curtail the spread of COVID-19, we can verily predict the virulent cataclysm to transform and revolutionize the way SMEs and family-owned independent businesses operate in the distant future.
1. IT AND ITES
Expert says India’s IT industry faces adverse operational impact due to coronavirus.
India’s information technology services sector is facing adverse impact on the operational front following the outbreak of coronavirus (COVID-19) in several countries, an IT industry expert said on Friday.
Ø People have been asked not to come to office and work from home. While the nature of the business allows people to work from home.
Ø it’s not as if 100%of work you can do from home. So, there are always different kinds of face-to-face interactions required, within the office.
Ø So, completely bypassing that will create some constraints.
According to him, global uncertainty, slowdown and fears of recession, as well as uncertainty with regards to the economic trajectory definitely have implications for investment and IT spends.
“Therefore, the overall slowdown in terms of IT projects, IT spends is quite likely in the short-term, (but) it does not affect India’s relative position,” Chandrashekhar, a former Secretary of the Department of Telecommunication, said.
2. Media and entertainment
Media and entertainment post COVID-19: The best and worst of times.
The pandemic has triggered layoffs in certain M&E segments such as print and television media as advertisers scale back spending. As monetization, particularly ad-spend, comes under pressure, cash management and profit protection with greater technology integration are likely to gain strategic significance for M&E companies.
Even once the crisis passes, the psychological overhang from the virus might mean it would take some time for consumers to embrace external consumptions models again, especially in areas that have been the worst affected by this crisis. Here, the recovery in consumption of outdoor M&E could lag other areas of India that could have been relatively less impacted. This could pave the way for innovation and outreach solutions wherein consumers turn to virtual live events and new delivery models to connect. Technological advancements could play a pivotal role in bringing outdoor entertainment and outreach directly to the consumer in such erstwhile virus hotspots.
The future is digital: In our M&E report last year, we had projected that India would have a billion digital users by 2030[1]. We now expect this ‘digital billlion’ trajectory to accelerate significantly by virtue of the lockdown with not just the addition of new users but also increasing comfort and confidence of the existing digital citizenry. Online gaming consumption will likely become even more popular with younger populations, while older people will likely favour traditional TV content delivered through a digital ecosystem.
Challenge of monetization: While digital media consumption is increasing, monetization will likely remain a challenge. With the economy already under stress, key ad-spend sectors have seen significant traction. Most media outlets derive a significant percentage of their revenue from advertising, and the current pandemic has brought advertising to a standstill in many sectors including fast-moving consumer goods (FMCG), financial services, automotive, and e-commerce.
1. Metals and mining
COVID-19: Navigating impact in mining and metals.
The rapid spread of COVID-19 is disrupting lives and operations across industries, and mining and metals are no exception. The pandemic is affecting the entire value chain, as organizations limit access to offices, mine sites and manufacturing facilities, and restrictions on transportation and shipping increase. The industries face potential shortages of materials, such as chemicals and machine components, from upstream suppliers who are experiencing their own disruptions from the pandemic. And the crisis has shaken the confidence of investors around the globe.
In short, the mining and metals industries have been thrust into a period of change and uncertainty that requires action. To move forward, companies must maintain a dual focus, tackling an array of short-term critical issues while keeping an eye on the longer term, and reshaping their operations to recover, adapt and thrive in the coming years.
The actions that companies take in this crisis will not only determine how well they fare in the short term—they will also define their culture and brand for some time to come. To mitigate near-term operational risks and protect people, the following actions should be taken now:
Maintain/Establish the response governance team
Continue to maintain the response room of senior leaders and establish cross-functional teams to deal with emerging challenges, giving consideration to the needs of workers, vendors and communities.
Ensure that people are safeManage and continue to innovate the recently deployed strategies to protect your people such as the use of remote operating centers and mobile technology to reduce the need for on-site personnel.
Conduct financial due diligence
Assess the company’s current financial position, update strategic assumptions, and be ready to aggressively mitigate risk and identify opportunities to benefit from market volatility.
Reduce operational exposure
Address potential supply chain disruptions; validate business continuity plans; engage suppliers, unions, communities and others; and engage the workforce in finding ways to reduce the impact of the crisis on operations.
Monitor and report
Keep track of the health of the workforce and the sentiment of stakeholders across the value chain. Develop a risk assessment process and update it regularly.
The crisis has brought significant challenges to the mining and metals industries, but it has also created an opportunity to reset for the future. Beyond their immediate responses to the crisis, companies can build the capabilities that over time will help them recover from today’s crisis and successfully navigate through tomorrow’s disruptions.
Shilpa Biju
Fintech Manager
Due to Covid19, many Industries are Facing Big Problems
https://aerosoftin.blogspot.com/2020/08/due-to-covid19-many-industries-are.html
https://aerosoftin.blogspot.com/2020/08/due-to-covid19-many-industries-are.html
@Shilpa Biju Fintech Manager
No comments:
Post a Comment