A dozen companies declare financial impact of covid-19 after a rap from Sebi

MUMBAI: After a rap by Securities and Exchange Board of India (Sebi), a dozen odd companies have disclosed the financial hit from the covid-19 crisis.

Most entities in the listed universe so far had been disclosing suspension of operations because of the lockdown but did not report on the financial impact of the actions, citing uncertainty about how the pandemic and the related slowdown will pan out.

Companies such as D-Mart, Trent, Cochin Shipyard, Titan, Leela Hotels have now disclosed the challenges that could emerge going ahead given the pandemic and related issues are far from over.

Leela Hotels has acknowledged that it saw zero revenues during April-June, a trend which could likely extend to the second and third quarter of FY21.

Dmart, which had managed to continue operations as it was classified as essential services, reported revenue slumping 45%.

There may be more disclosures in the days to come.

"In normal course, company management must communicate all important business concerns in a transparent manner to all its stakeholders enabling stakeholders to evaluate risks rewards and be generally aware. Same thing holds true for covid impact...Step taken by Sebi is appreciated as stakeholders would be able to understand the impact of crisis and take informed decision," said JN Gupta, co-founder and MD of stakeholder empowerment services, a proxy advisory firm.

Sebi on 20 May had directed companies to inform investors about the impact of covid-19 on their businesses. Listed entities should endeavour to ensure that all investors have access to timely, adequate and updated information, the markets regulator had said.

Disclosures now need to cover the impact on capital and financial resources, profitability, liquidity, ability to service debt and other financial liabilities, assets, internal financial controls, supply chain, demand for products and services, existing contracts that are not being fulfilled and impacting the balance sheet of the company, and most importantly, assessment of future impact on the business due to covid-19.

For instance, TTK Healthcare, in its disclosure, has said its foods business performed better of the lot, with 50% of normal average sales during April and this would better in May. Its pharmaceutical division saw 40-50% of average sales. Trent, a Tata group company, said while its non-food business has been severely hit due to no sales, it has undertaken review of financial impact.