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QBiz: India Inc Braces For More Pain; Power Demand At One-Fourth

The top business headlines of the day, curated just for you.

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1. After Dull Q4FY20, India Inc Braces For More Pain

Hindustan Unilever CMD Sanjiv Mehta’s observations, post the FMCG giant’s results announcement last Thursday, that there could be more disruption and it is difficult to say when the recovery will set in, pretty much sums up the mood in corporate India.

Grappling with uncertainty about how much damage the pandemic could do to demand, both at home and abroad, CEOs are simply waiting for more evidence before they put out any growth targets. As TCS MD and CEO Rajesh Gopinathan said the storm could get worse before it gets better. His comment to the effect that clients are stressed and looking to restructure and re-price contracts is a sign that realisations will be under pressure.

(Source: The Financial Express)

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2. Peak Power Demand Still Down One-Fourth At 134.7 GW

Peak power demand remained down by over 26 percent in May so far at 134.7 GW despite partial easing of the coronavirus lockdown.

In April too, the peak power demand was down by about one-fourth as compared to the corresponding month last year.

According to power ministry data, the peak power demand in May last year stood at 182.53 GW.

The peak power demand met was 131.40 GW on May 1 and 134.70 GW on 2 May 2020.

The peak power demand met is the highest energy supply during the day across the country.

(Source: Livemint)

3. Auto Industry May Cut R&D Spending, Exit Unprofitable Segments Due To Coronavirus Pandemic: Deloitte

The domestic automobile industry might resort to cuts in spending on research and development (R&D) and also exit unprofitable businesses and segments with the coronavirus pandemic taking a toll on companies' revenues and cash flows, according to a report by Deloitte.

The reduction in R&D activities may impact progress made in the alternative fuel technologies till now, the report noted.

"The COVID-19 lockdown has had a multiplier effect – the industry has been at a complete standstill since 24 March. A prolonged truncation of consumer demand due to the lockdown is significantly affecting auto sector revenues and cash flows," Deloitte India Partner and Automotive Sector Lead Rajeev Singh said.

(Source: Livemint)

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4. Moratorium: Banks May Give NBFCs A Break

Banks could review extending the moratorium to non-banking financial companies (NBFCs) after a meeting with the Reserve Bank of India (RBI) on Saturday, sources close to development told FE. RBI governor Shaktikanta Das held meetings with heads of major public and private sector banks in two separate sessions through a video conference, the regulator said in a release on Saturday.

The moratorium for NBFCs was discussed at the meeting, and the regulator is understood to have asked banks to consider a moratorium, at least, on a case-to-case basis. “We will review extending the moratorium to NBFCs at board level,” a banker told FE.

(Source: The Financial Express)

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5. Only Small Section Of Online Sellers May Start Selling Non-Essentials, Say Industry Executives

With many states yet to issue their guidelines for e-commerce companies and a large number of sellers being located in red zones, it is likely that only a small percentage of merchants on online platforms like Amazon and Flipkart will be able to start operations from 4 May and sell non-essential items, according to industry executives.

On Friday, the home ministry announced a two-week extension of lockdown but said there would be certain relaxations for orange and green zones. Under the latest rules, e-commerce activities in red zones, which cover large cities like Delhi, Mumbai, Bengaluru, Pune and Hyderabad, are permitted only for essential goods during the third phase of lockdown.

(Source: Livemint)

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6. Steel Output Slumps Percent In March Due To COVID-19, Steepest Fall In 8 Years

The country’s steel output tumbled 13 percent in March, its steepest fall during the past eight years. In the same month of last year, steel production had grown by 6.3 percent.

A study by CARE Ratings attributed the fall in steel production to the nationwide lockdown imposed in March this year to curb the spread of the COVID-19 pandemic. The lockdown threw economic activity off kilter, leading to a production halt in most industries absorbing steel, primarily automobiles and construction.

However, for the whole of FY20, steel output moved up by 4.2 percent, registering the best performance among eight core sectors, the others being coal, crude oil, natural gas, refinery products, fertilisers, cement and electricity. However, there has been sustained decline in the steel production since FY17 as muted construction activities on account of delayed monsoons, high real estate inventories and slowdown in the automobile sector lowering demand for steel led to lower production in this segment.

(Source: The Business Standard)

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7. E-Commerce Firms Gearing Up For Businesses, To Make Products Available

E-commerce companies say they are witnessing a steady growth in traffic after the home ministry on Friday extended a national lockdown but allowed the online sales of essential and non-essential products in zones that have almost controlled the coronavirus outbreak.

While there was doubt about the new guidelines announced for e-commerce, government sources clarified Saturday that e-commerce players will be allowed to deliver essentials and non-essential items in designated Orange and Green zones for the next two weeks, the time for which lockdown has been extended.

(Source: The Business Standard)

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8. COVID-19 Impact: Office Space Demand May See Sharp Fall In Coming Years

Demand for office space could fall sharply over the next two years as the economy remains in slow gear and more companies ask employees to work from home. What’s more, rentals too could see a dip, as businesses look to conserve cash. Foreign firms, especially US-based IT/ITeS companies, are among the biggest occupiers of office space with a share of almost 45 percent. Experts say their strategies would have a big bearing on the trend in rentals.

Anarock Property Consultants projects the space rented could fall by anywhere between 17 and 34% in 2020 which means about 28-35 million sq ft of space could go abegging. Before the outbreak of the pandemic, Anarock had estimated demand could be in the region of 42.3 msf, compared with about 40 msf in 2019.

(Source: The Financial Express)

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9. Despite Easing Of Lockdown, Logistics Remains A Pain Point For FMCG Firms

The movement of goods continues to be the pain point for FMCG companies that have drawn up plans to improve operations this month once the easing of the lockdown comes into force.

According to the Federation of West Bengal Truck Operators’ Association (FWBTOA), truck availability has improved only marginally, at around 10 percent out of a total vehicle count of nine million pan-India. When the lockdown had kicked in, truck availability was eight percent.

“The availability of trucks is improving with each passing day, but it is still a struggle given the continued shortage of drivers and vehicles,” said Shahrukh Khan, executive director-operations at Dabur India Ltd.

(Source: The Business Standard)

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