Family businesses: Time to stand up

This article was first published in Business Standard on March 31, 2020. Co-author: Nandil Bhatia; https://www.business-standard.com/article/opinion/family-businesses-time-to-stand-up-120033101878_1.html

Taking care of people and communities in times of crisis can offer a brand or company many long-term benefits

The likely impact of the spread of coronavirus in a densely populated country like India has sent the country into an unprecedented state of lockdown. The economy was in the doldrums even before the virus struck. As things stand, the financial markets have been hit hard: The BSE Sensex has fallen close to 38 per cent from its peak of 41,952 points on January 14 to 26,055 points on March 24 eroding billions of dollars in investor wealth. Most "casual” workers, who form a third of India’s workforce, are forced to sit at home with no income. Domestic demand of most products and services, except essential items, has crashed. Self-employed people, who comprise half of India’s workforce, suddenly find their shops shut. Many of these small business owners will find it difficult to tide over the next few months when the demand will likely pick up.

It is in such times that business leaders must come to the forefront and lead the fight against the anticipated social and economic challenges. Business families in the country have always contributed and willingly given back to the society -- through their companies or in their personal capacity, long before the provisions related to the mandatory CSR spending under the Companies Act, 2013, came into force.

Some of India’s most prominent business houses have already announced relief plans. Tata Sons and Tata Trusts have committed Rs1,500 crore; Anand Mahindra, chairman of Mahindra Group, recently announced he would explore how his firm could turn some of Mahindra’s factories into facilities where ventilators could be manufactured to help take care of critically ill Covid-19 patients. Mahindra also offered to turn some of the resorts under the Mahindra Holidays brand into quarantine facilities in case the country falls short of space, given its inadequate public health system. Anil Agarwal of the Vedanta Group has set up a Rs 100 crore fund to assist communities and individuals most severely affected by the coronavirus-led slowdown and promised not to fire any temporary staff going forward. Agarwal also mentioned that there would be individual one-time insurance for Vedanta employees in case they or their family members get infected.

India's largest bicycle maker Hero Cycles has set up a Rs 100 crore contingency fund to tackle the virus. The group has said it was reaching out to different state governments to offer all possible help.

Reliance Industries has set up medical facilities dedicated to supporting the government in the treatment and isolation of Covid-19 patients. Continuation of pay for temporary workers, sanctioning meals for daily-wage laborers affected by the stoppage of work and ensuring support in providing essentials (such as grocery and hygiene products) through its retail chains are some of the other actions undertaken by the business house to mitigate the disruption faced by people. Many other business houses have also announced monetary contributions or offered help in other ways.

In the early days of the pandemic the Godrej Group and other FMCG players like Hindustan Unilever and Patanjali had said they were reducing the prices of soaps and hygiene products. They are also ramping up production of such items to fulfil the growing demand for such items.

However, for a country of the size of India which is facing a threat that most likely expose the weaknesses of its public health care systems, measures by a handful is not going to be enough. The government has also attempted to motivate the private sector to help out in this situation of despair. The recent order from the Ministry of Corporate Affairs allowing companies to attribute funds utilised to combat coronavirus as part of the mandatory CSR spending under the Companies Act 2013.

Beyond CSR, research has shown that taking care of people and communities in times of crisis can give a brand/company long-term benefits like employee loyalty, improved relationships with value-chain stakeholders such as suppliers.

Given the scale of impact this pandemic is going to have on India and globally, it is essential to acknowledge that all hands on deck is the need of the hour. Family firms are one of the major stakeholders in the Indian economy and their actions could make the ride less painful for many.

A View from South Asia: This Time Is Different

This article was first published in the GARP, Risk Intelligence on March 27, 2020; The author would like to thank Priyansh Hetamsaria for his inputs. The views expressed are personal.

https://www.garp.org/#!/risk-intelligence/operational/people/a1Z1W000005C1cAUAS

India’s pivotal ‘Xennial’ generation has lived through a lot, but nothing like the pandemic.

Countries around the world are struggling to keep up with the pandemic coronavirus. Global stock markets are on a downward spiral due to fears of recession, massive drops in demand, disruptions in supply chains and job losses amidst the rush towards virtual lockdowns. While companies have been asking employees to work from home, there are many sectors where such work arrangements are not possible – banking, tourism, retail shopping, agriculture, transportation and many more. The alternative could be to close the business.

In industries such as airlines, tourism, hospitality and restaurants, retailing, entertainment including theme parks like Universal Studios and Disney, luxury goods, fashion and autos – business has nosedived. Billions of dollars of investor wealth have evaporated. The cost to the global economy could be $2.7 trillion, equivalent to the entire GDP of the U.K., and that is just one early estimate. As of now, there is no end or bottom in sight.

The outbreak started in Wuhan, China, in the late 2019 and turned into an epidemic when the COVID-19 virus spread across China. On March 11, the World Health Organization declared it a pandemic. The number of cases worldwide has climbed into hundreds of thousands, touching virtually every country, and can be tracked online. Even the most developed countries are struggling to fight the disease with existing medical facilities.

These are clearly unprecedented times. As I write this article from India, in the city of Hyderabad, we are in virtual lockdown, working from home, and scared. Interstate borders have been closed, all public and private transportation facilities have been suspended, all commercial establishments shall remain closed except those in essential services like medicines and groceries. Even government officials and bank employees are working on rotation with minimal staff.

As of March 25, the lockdown is nationwide.

I belong to the Xennial generation, a cohort born between 1977 and 1985 that doesn’t quite fit in the Generation X or Millennial category. We did not go to war. We did not struggle for independence. We have seen many things in our 40 or so years. But nothing like this.

War and terrorism: Xennials like me have been locked up at home during the curfew imposed when Indira Gandhi was assassinated, and the Bombay bombings of 1993. We were glued to our televisions watching the Mumbai attacks in 2008, the September 11, 2001 attacks on the World Trade Center, and the Paris attacks of November 2015. We have lived through the Kargil war, the Gulf War, the killing of Osama bin Laden and the Uri surgical strikes. We have seen the Berlin Wall come down and the cold war end, the dissolution of the Soviet Union, the formation of the European Union and Brexit.

Technology: We are the generation that saw storage evolve from 1.44mb floppy disks to CDs to DVDs to Blu-rays to Pen Drives to Cloud; televisions make their way into our households and now into our palms; telephones evolve from bulky devices to sleek iPhones, even with facial recognition. We who sat in anticipation for the weekly popular music programs Binanca geet mala on radio, and the Chitrahar on the government broadcast channel Doordarshan, were in awe at the Sony Walkman. I owned a Sony Discman with pride before it became outdated by iPods. And now, iTunes and gaana.com rule.

Economy and reforms: Reform by stealth in India – by way of telecommunications, information technology and biotechnology – began when this generation was coming into the world. Dr. Manmohan Singh unleashed full-fledged economic reforms in 1991, seen on our television sets, without us completely realizing the impact when we were between the ages of 6 and 14. But there was palpable excitement in our middle-class business family. We saw the dot-com bubble burst, the birth of National Stock Exchange of India, the Harshad Mehta and Ketan Parekh scams, the subprime crisis and demonetization.

Business: We followed the rags-to-riches story of Dhirubhai Ambani of Reliance Industries being taken forward by his son Mukesh Ambani, and the riches-to-rags decline of his younger son Anil Ambani. We saw the rise – and recent downfall – of Yes Bank. We felt pride at the Golden Peacock award for corporate governance that Satyam Computer Services won in 2008, and the shock of the collapse of governance just a few months later. And there was the rise of Apple, Facebook and Amazon.

Sports: We grew up watching sporting heroes Sachin Tendulkar, the greatest cricketer of all time; the tennis great Roger Federer; and Cristiano Ronaldo in football. The cricket 20 overs format and the Indian Premier League were born and gained prominence during our youth.

Movies and fashion: The rise of the Khans, the superstar acting trio of Shahrukh, Amir and Salman; the movies Dilwale dulhaniya le jayenge, Qayamat se Qayamat tak and Maine pyaar kiya, which broke all box office records, tugged at our heartstrings, and the trio captured our hearts. Sushmita Sen and Aishwarya Rai took India and Indian beauty to the global stage by winning the Miss Universe and Miss World crowns in the same year (1994), and became successes as Bollywood actresses.

Yes, we have seen a lot. But not this. COVID-19 has left us with a feeling of helplessness. What does tomorrow hold? For how long will we need to maintain social distance from family, friends and colleagues? Until when will our supplies last? How do we entertain our young kids? And for how long? Will we have a job tomorrow? That person who came to deliver the newspaper, did he infect the newspaper? I just coughed – have I contracted the virus?

There are many questions. No answers. All we can do is try and stay safe and have hope.