May 20, 2020
Only time will tell the impact of the fiscal stimulus whose zeros are still difficult to count, and the repercussions yet to be deciphered
While the US $ is slipping consistently and the worst recession is about to hit the world economy, India is going the self-reliant way.
Coronavirus crisis has put the decision-makers on a fast track, and the latest fiscal stimulus is like a shot in the arm.
Almost 10% of the nation’s GDP, the industry players across the sectors have applauded the measures taken, but are they “too little, too late”, only time will tell.
The ease of doing business in China is being looked upon with skepticism, India is poised to cash in on the opportunity with an investor-friendly environment. COVID 19 severely impacted economies worldwide, and most companies are finding their balance sheets stretched as cash flows are drying up.
This has resulted in significant erosion in the stock prices of some of them. The risk-averse stance of banking sectors had made it even more difficult for companies to raise capital. There doesn’t belie the fact that investors worldwide are flush with liquidity, and are willing to bet on the companies provided they fit the right benchmarks. A strong crisis management plan and a new improved business model can bring in investors.
If companies can convince investors about their growth story, competitive advantage, the reason for raising capital as well as the need for it, investors would not mind looking at the picking up a stake in exchange for capital.
The rating downgrades of certain erstwhile market leaders have proved once again that markets have always rewarded companies that plan to raise growth capital provided their capital structure is balanced, they have low leverage and arrange liquidity fast.
Perform or perish!
As the markets are going into a stabilizing zone, there will definitely be a strong appetite for fresh capital as well as profitable investment avenues. While there will be a surge in capital raising activities in the country, we will definitely witness an influx of funds. Investors would now be ready to go beyond due diligence and the fund-raising models which have relied on numbers will definitely consider reading between the lines.
In a nutshell, only those companies will attract the most capital which has strong fundamentals, a great crisis management plan, a transparent and future-forward business model, and a brand narrative that can help them overcome the doom and gloom of the past 6 months. Now is our chance to divert the cautious optimism of investors in our favour.
Click here to understand how social media can help your company come out of the crisis.
About the author:
Shiv Shankar – He is the Executive Director & Founder of K2 Communications. Under his astute leadership, K2 Communications has developed into a frontrunner among PR agencies that incessantly delivers excellent regional and national PR support to clients belonging to various sectors including government, IT, education, consumer, and healthcare.