Companies have found it quite difficult to estimate the real impact of the pandemic on their businesses. But after SEBI had insisted that companies issue a proper estimate to ensure transparency to investors, the companies have come out with their disclosures on how badly their financials were hit.
So far, most of these entities in the listed universe had only revealed suspension of operations due to the lockdown and such but never conveyed how their finances were squeezed due to the actions, quoting uncertainty about how the pandemic and lockdowns related slowdown will turn out.
Major companies like Titan, Cochin Shipyard, D-Mart, Leela Hotels, Trent, etc. have finally disclosed on the challenges that can emerge going forward with how the pandemic and other related issues are far from a conclusion.
Zero revenues during April-June was reported by Leela Hotels, they expect this trend would most likely extend to the 2nd and 3rd quarter of FY21.
Companies classified as essential services like Dmart had managed to remain operational but has reported a revenue slumping of a massive 45%.
As the days go by, more and more companies are expected to bring in more disclosures.
“The Company management is expected to communicate all the important business apprehensions in the normal course, in a very transparent manner, this is done to help all its stakeholders to assess risks rewards and to be in the know-how. Whatever may be the reason, in this case, COVID, it must be disclosed in its entirety. This initiative taken by Sebi has been applauded by stakeholders as this would enable them to understand the total impact of the crisis and take informed decisions accordingly,” co-founder and MD of stakeholder empowerment services, JN Gupta said.
On the 20th of May, Sebi had instructed all companies to notify investors about how badly COVID-19 has impacted their businesses. Listed companies must ensure that their investors have timely, adequate, and updated information.
Factors like the impact on capital and financial resources, liquidity, profitability, assets, ability to service debt and other financial liabilities, demand for products and services, internal financial controls, supply chain, existing contracts that are not in the process of being fulfilled and impacting the balance sheet of the company, and most notably, valuation of future impact on the business due to COVID-19 related stress must be disclosed.
TTK Healthcare has said that its foods business performed better than the rest of their undertakings, it saw 50% of normal average sales during April and this is expected to improve in May in its disclosure. Around 40-50% of average sales was seen in its pharmaceutical division. Trent, a Tata group company, disclosed that its non-food business has been hit severely due to the absence of sales, and it has undertaken a review of its financial impact.
