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Economy to take at least 2-3 quarters to recover
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SME Times News Bureau | 06 Apr, 2020
The situation during the ongoing COVID-19 will be grim and the recovery
thereafter will also take time as private equity experts fear that more
people will die from hunger than pandemic in India most people under
estimating the gravity and period of impact, which at the very least
will take two to three quarters.
At a private equity webinar,
Shailendra Singh, Managing Director at Sequoia Capital flagged that fear
that more people will die from hunger than pandemic in India.
He
added that most people are under estimating gravity and the period of
impact, which will be the at the very least two to three quarters.
Singh
said they are asking every portfolio co to re validate the 5 critical
assumptions their business hinges on. "You will be surprised that how
many of them have actually changed/ could change in long run (Zivame),"
he added. They have also advised companies to look at adjacent markets
or alternative business models.
Singh said that economic Recovery
will not start before Q3/Q4 of this financial year. Most countries will
move manufacturing towards domestic markets especially in healthcare
& R&D and reliance on China will go down.
Anuj Ranjan of
Brookfield said that cycles are inevitable, it will come back but will
take time. After 9/11, no-one thought they would ever get on a plane
again. But they did and it was much stronger than before, but in 22
months. Air travel started but the security changed forever.
Ranjan
added that the government right now is like an ICU doctor � keeping
the economy (patient) in induced coma, till cure is found (vaccine -- 2
years)
In terms of private equity it will be a will be a flight
back to US and North America. Since valuations will come off
significantly, PE will be less inclined to take emerging market/currency
risks, when returns are good there.
Hospitality will come back,
but will take time. Real estate investors will find good deals in six
months and the wedding season will drive this.
Ranjan said retail
will be badly hit and Brookfield expects significant bankruptcies in
SME retail/mom & pop/restaurants as 6 weeks of no revenue will
bankrupt them.
Consumption will come back, but in six months or
more. This event has given a big push to the existing trend to
e-commerce. Some malls in US died, but many are flourishing � the ones
that have turned to experience centres, he added.
Kunal Shroff
of Chryscapital said that risk has increased through the roof. The new
deals are on hold or slow. All exits are delayed, private equity funds
are focussing on portfolios just now to preserve liquidity, draw cash
lines, no capex and extend the cash burn.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
|
84.65 |
Euro
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78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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