‘10% of businesses will die without govt relief’

In an interaction with Mint, RPG Enterprises chairman Harsh Goenka talked about the impact of the covid-19 outbreak on Indian businesses, trends that will shape corporate India going ahead and the measures the government can take to help India Inc survive the crisis. Edited excerpts:

What is your view of the government response to the pandemic and the extension of the lockdown?

I am extremely happy with the response of the central government and more so with all the state governments. It’s fantastic to see how the governments have been able to cut down on the bureaucracy, take quick decisions for the good of the people. Extending the lockdown till 3 May is the right thing to do because I think if we keep it open, people’s lives may suffer and the pandemic may not come under control. But, on the other hand, you do need to see the economic engines moving, you do need to see how agriculture does not get impacted.

What impact do you see on India Inc?

The impact will be very different on various businesses. Some businesses, the essentials, FMCG (fast-moving consumer goods), agri business, e-commerce and education will do well in the future, while any discretionary items, capital goods, metals and mining, real estate will be badly affected. If no major relief is given, more than 10% of Indian businesses will collapse. We need to prepare ourselves for the new normal. So, we are spending our time looking at how business models will change in the future.

What relief should the government provide to India Inc?

Relief is needed in terms of ease in bank borrowings. The moratorium announced does not give interest relief. What will really benefit is interest relief over three months, because otherwise, where is the money going to come from? You are today bearing the fixed cost of people, etc, and your revenue is zero. So, how can you run businesses? In March, you lost the last days of sales, April will be a washout and by the time the economy sputters, May and June will go. So, the government will have no option but to print money. There is no other way they can get the funds, they cannot sell PSUs (public sector undertakings) at this point of time. They will also have to give some relief in terms of GST.

But I believe that most money should go to poorer sections of society and that will be good, because when you put money in their hands, you will create demand for consumer goods, etc. Our problem before the covid outbreak was also more demand-led than anything else.

Do you see the crisis leading to a shifting of manufacturing out of China? Will India be able to take advantage of that?

My belief is that through all of this, China will become much stronger. People believe that manufacturing will move out of China and India has a big opportunity to get some of that manufacturing here. I personally don’t think much is going to happen. Most countries will now want to secure their supply chains by having greater manufacturing happening in their own land. The US and Europe will become much more inward-looking.

What opportunities do you see coming out of this crisis?

There will be a greater consolidation of businesses. A lot of businesses that become unviable may decide to merge with others. Companies that are sitting on cash will see great deals, because there will be good companies that have to sell off because they don’t have the money. Businesses such as healthcare, diagnostics, pharmaceutical research and development, etc, will see major investments.

How is your group preparing to resume operations?

We are going into very minute details such as how to improve the safety at pick-up points, buses, locker room usage, staggered timings for canteen, sanitization in factories before and after shifts, thermal checks, etc. We are working on a formula as to who will work from home and for how many days. We have also set up a rapid task force group in each company to resolve any queries and they are available round the clock.