How COVID-19 has impacted corporate results of India Inc

Amidst the disruption caused by COVID-19, adjacent to March 2020 quarter reporting timelines, most companies sailed through this storm one way or the other. In August 2020, our Financial Accounting Advisory Services (FAAS) practice published Early impacts of the COVID-19 pandemic on Indian corporate reporting. The report carried research of March 2020 quarter reporting of 159 listed Indian companies, who were likely to declare their results by 5 June 2020 and 115 global companies spanning across 13 sectors. It also evaluated early signs of the impact of the pandemic on their economic performance based on their financial results for the quarter ended March 2020.

In this edition, we analyze quarterly results of top BSE 200 companies and evaluated the comparative impact of COVID-19 disruptions on their reporting calendars, profitability, disclosures and other key parameters for the June 2020 quarter compared to the March 2020 quarter.

A significant period of the June 2020 quarter was standstill due to nationwide and regional lockdown which led to significant profitability issues and turnover impact for most companies compared to the March 2020 quarter. Based on quarterly results published by companies (excluding BFSI sector), on average, there is a decline of approximately 30% in revenue during the quarter ended 30 June 2020 in comparison to the quarter ended 31 March 2020.

It is notable that most of the companies have implemented cost conservation measures, wherever possible, to commensurate revenue loss to minimize impact on profitability. The sectors having more variable and agile cost structures could successfully implement these measures well, while those with more fixed cost bases have continued to struggle to maintain their profitability.

We also observed a significant shift in investor communication strategies that several companies adopted to provide non-financial disclosures around the ability to restart or continue operations and the potential future impact of COVID-19 disruptions on businesses and response, thereof.

As corporates around the world continue to ride along with this unexpected wave of COVID-19, resulting into remote and fragmented working, it is encouraging that the world is opening and trying to regain the momentum it had before the pandemic. Albeit, the world has changed in many ways and financial reporting is not an exception. Due to the pandemic, the involuntary positive impact of the environment is also driving a shift and larger focus towards sustainable organizations and reporting around the same.

The publication showcases a high-level analysis of the overall sectoral level and does not attempt to provide in-depth exhaustive analysis or conclusive views on the impacts of the outbreak. Our analysis is based solely on publicly available information.