Handling 'uncertainty of uncertainties'
Yesterday the Ministry of Home Affairs issued new guidelines for transport of stranded labour, students, pilgrims and other persons https://www.mha.gov.in/sites/default/files/MHAordernew_29042020.PDF. While it is just another order by the Ministry, I look at it as the beginning of relaxation of the severe clampdown on the economic activity in the country over the last one month. Government now has a very difficult choice to make - a choice between protecting a billion people and restarting the economy which has come to a grinding halt in the last one month.
The exceptional feat India has achieved
World is slowly taking note of the exceptional feat that we, as a country, have achieved. CNN recently published an article titled ‘How does India, a country of 1.3 billion people, have around 1,000 coronavirus deaths?’ https://edition.cnn.com/2020/04/28/india/india-coronavirus-outbreak-explained-intl-hnk/index.html. When I talk to CXOs every day, who interact with their counterparts in other countries on a daily basis, I get a similar feedback. One of them returned from France on 13 March and explained to me the rigour with which Indian doctors examined the passengers at Mumbai airport while at the Paris airport, when she boarded the flight, it was business as usual. Her health was monitored by Indian health authorities, post her return to India, for 20 days on daily basis through phone call. Exactly on the same day one of my relatives landed in New York and did not face any medical checking, nor any follow up. Perhaps, that tells the story of India’s success so far which we do not hear in the cacophony of news every day.
Uncertainties galore
But we cannot rest on past laurels. There is a fear of job losses and deaths if we are not able to bring the economy back on rails quickly. While the Government is working on that, you and I are absolutely uncertain on when the lockdown will be lifted in our areas and when can we start our commercial operations. We are not sure of how the future will be for our industry, for our product. CFO of an auto component company, with whom I had discussions early this week, mentioned that their projections for this year were really bad. While in another discussion another CFO felt the news item in the Bloomberg, which stated that in Wuhan, where the corona crisis originated, car sales have come back to the pre-November level, would also come true in India. While we are reading news of possible shutdowns of plants in India, we are getting to read in the last few days that companies are looking at India as an alternate destination. Check this latest news item of today. https://economictimes.indiatimes.com/news/international/business/us-supports-firms-weighing-india-as-alternative-to-china/articleshow/75437352.cms?from=mdr
What CXOs are doing
All this makes our life much complex. It is not just a case of mere uncertainties but ‘uncertainty of uncertainties’. How does one navigate through all this? I am giving below some of the actions that CXOs are taking when I asked them on how they are handling this situation :
- Continue doing your regular work that you can do from home including planning, strategizing, customer meetings, training, performance reviews, monitoring logistics, most of the finance related work like auditing, reporting, tax compliances, refund filing, AEO permissions etc
- Conduct a detailed liquidity analysis after talking to the top customers and vendors as well as bankers
- Prepare a complete plan for starting operations once the lock down is lifted, even though there is no certainty when it would happen. This includes preparing transport plan (personal transport is not allowed as per current instructions and buses would be required), buying sanitizing equipment, masks, gloves, thermometers etc., preparing list of employees who would attend on particular days etc.. Briefing employees on this plan
- Ensure goods, under assessment in customs, are cleared and transported to either warehouses at the port or closer to the factory or within factory premises. In case of one client, some critical consignments were held up at Customs which would be essential for the manufacture immediately after the lock down is lifted, while some non-urgent consignments were already cleared. They had to approach Customs for clearing these critical consignments which were stranded. It may therefore be necessary to have clear communication between logistics and operations on what is super critical and what is not
- Seeking permission for movement (for export) of goods already manufactured before 24 March -While the MHA guidelines allow free movement of essential as well non-essential goods without any permission, considering the fact that goods in this case were to move across 7-8 states, this company thought it necessary to get a written permission from the District Magistrate of the factory district to ensure smooth transport to the port of export
- Evaluating various Government schemes currently in existence, evaluate manufacture or trading of alternate products and keeping an eye on the economic package that Government may announce for the industry
- In these uncertain times, it always helps to listen to others (to get different perspectives and ideas). However one will have to take his/her decisions based on constraints, abilities and limitations of his/her organisation. If we keep enough flexibility in the plan, then recovery would be faster and very soon we can return to normalcy in the days of ‘uncertainty of uncertainties’.
(Views and opinions expressed herein are those of the author and do not reflect the views of KPMG in India.)