Most important worry for the industry is the cash flow: MS Unnikrishnan, MD and CEO, Thermax

Demand for commodities from FMCG to white goods will not come back to pre-Covid stage till there is confidence that life is going to be as usual.

As Covid-19 poses challenges to business continuity, MS Unnikrishnan, managing director and CEO, Thermax, tells Shubhra Tandon on how the company is dealing with it and the way forward for businesses. Edited excerpts:

How is the company maintaining business continuity in times of Covid-19?
In the beginning of March, much before the lockdown was implemented we did a survey of our IT-preparedness for work-from-home. We recognised that there might be people whose work can be done from home, but they may not have compatible computers. So, we had to organise lot of hardware. Some we had to lease and some we bought. Then, we upgraded our internal systems such that all servers can be kept live and remote access could be given to people for work from home, and also trained people to manage the workflow. Also, great amounts of firewalls were created to keep the systems safe. Accounting, finance, design and proposals function, fairly large portion of project management and part of procurement is also being done remotely.

What has been the impact on business?
The lockdown has impacted our top line. For capital goods companies, a good part — around 20-25% of the turnover — happens only in the last month. That is the normal practisce because customers get depreciation for buying the equipment. Normally, many of them prepare their cash flows, and take deliveries only in the month of March. Similarly, in projects when they want to exhaust their budgets, they want to buy equipments. So, our industry that way is telescopic in nature where the good part of sale happens in the month of March and that, too, in the second half.

How has the supply chain been impacted and what is Thermax doing to mitigate that?
Most of the factories in India are totally shut down, so even if I were to produce, where is the raw material? Also, transportation of the material produced is a challenge. Another challenge is that a good number of MSMEs and smaller suppliers have seen their labour migrating back. For the same reason, restarting work in many sites will be an issue. Also, as our customers would find it hard to restart factories again, service demands on companies like us will be very high. We are preparing ourselves and encouraging e-learning to gear up our workforce and trying to find mechanisms to shorten normal restart time from, say a week to maybe two days. We are looking at whether highly-automated equipment can be restarted remotely.

Will this epidemic change the way businesses are done in India?
It will. Most important worry for the industry is the cash flow. Receipts of payments will depend a lot on cash flow situation. In such times, how to collect money from contractors or customers will require some recalibration and also how we execute orders, going forward.

Do you foresee job losses in the near future?
There will be a temporary impact with demand coming down. I am predicting that the demand is not going to come back to the same level for the next 6-9 months. During this time, there will be job losses. But job creation is what I feel will suffer more because only capacity creation can create more jobs, which will take a back seat for some time.

Is the business climate going to be different and if so, how, once the uncertainty settles down?
Yes, as much as companies will be preserving cash, human beings will also be worried while this is going on. Spending power, its need and willingness will come down. Demand for commodities from FMCG to white goods will not come back to pre-Covid stage till there is confidence that life is going to be as usual. So, first and foremost everybody will look at balance sheet stability rather than valuation. Having more cash and less debt. Second thing, we will learn is to face these kind of situations and devise innovative ways to reduce costs. Innovations will flourish in the country and new ways of conducting business will emerge.

Will the changed scenario mean adoption of more digital services, remote working, etc, by Thermax even after the uncertainty comes down?
Absolutely. We will now be accelerating servicing and maintenance functions for our equipments. There is an initiative already for remote servicing ability. We believe that a similar crisis can also erupt in future, so we should be prepared. In a situation like this, if all my equipments around the globe are connected through net, then, we will be able to predict the health and servicing of the equipment that we have supplied. Also, our engineers will be able to attend to a problem online itself sitting anywhere in the world. We already have a chief digitisation officer who we appointed more than a year and a half back to spearhead this work.