Nearly 80% businesses expect post-Covid recovery by June 2021: PwC India survey

India Inc is optimistic about economic revival despite near-term challenges on both demand and supply due to the Covid-19 pandemic, a PwC India survey has revealed.

Nearly 80 per cent of the 225 respondents to its ‘Value Conservation to Value Creation Survey’, which explores Corporate India’s journey through the Covid-19 crisis, expect their businesses to recover by June 2021, with early signs expected to be visible from September 2020.

They attribute this resilience to operational flexibility, robust crisis management and process/product innovation. For many, this is a result of work done in the pre-Covid era.

Sanjeev Krishan, Partner and Leader Deals, PwC India, said: “Business leaders have adapted well to this unprecedented situation and are optimistic of recovery. We noticed a pragmatic progression in the steps taken by CXOs from ‘repair’ to ‘rethink’ to ‘reconfigure’ in future. In this tougher business environment, digital enablement has become key for remaining competitive and resilient.

He added: “We also expect a higher level of collaborations across the value chain. Value creation has become even more critical and deal-making is going to be an important lever. The crisis has brought resilience to the fore and we expect boardrooms to take due cognisance of it.”

The 225 survey respondents were a mix of CXOs and senior management from various industries in India.

Revenue expectations

As for the impact on revenue, 73 per cent expect a decline in revenues in FY21. However, only 15 per cent see the decline extending to FY22. The remaining 27 per cent of organisations expect to see similar or higher revenues in the current fiscal.

The sectors that are most resilient amid the Covid-19 crisis are pharma, consumer essentials, ITeS, telecom and utilities. The most impacted sectors are infrastructure and real estate, industrials, retail, hospitality and media and entertainment.

An overwhelming 77 per cent of the respondents would like to accelerate digital enablement. Other significant interventions anticipated by the respondents include localisation of manufacturing/supply chains; development of newer logistics models; collaboration to add capabilities and navigate bottlenecks; and development of newer products and services centred around emerging themes and affordability.

Forty-five per cent of the respondents are keen to consider acquisitions, whereas 20 per cent are considering divesting non-core businesses. Twenty-six per cent of the respondents would be looking to raise funds.

The survey indicates that the ‘repair’ and ‘rethink’ phases would last until mid-2021, post which the ‘reconfigure’ phase is likely to commence.

While it is encouraging that a very large percentage of the respondents expect to recover over the next 9-12 months, according to the International Monetary Fund estimates, Covid-19 is likely to shrink global and Indian economies by 4.9 per cent and 4.5 per cent respectively in 2020. The anticipated de-growth in Indian economy could be attributed to the sluggishness of the past and further delay in the revival of the capital investment cycle.

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