From pharmaceuticals to aviation: The impact of coronavirus crisis

A man wearing protective suit checks the temperature of people standing in a queue to get free food at IYC headquarters, during the nationwide COVID-19 lockdown, in New Delhi
India Ratings and Research (Ind-Ra) has, over the last four weeks, conducted a series of webinars and exclusive investor calls to share its views on sectors and its portfolio of ratings on account of the disruption emanating from the Covid-19 outbreak and the associated policy response. The rating and research agency is now coming out in public domain by communicating its assessments at various such engagements. Chart summarises first of such assessment.


Evaluated 16 companies. Although some China-centric pressures have started to ease, disruptions in the logistic network coupled with gradual relaxation of the restrictions in China are likely to result in continued supply risks over the near term


Indian airline operators and airports have been the first and the most adversely affected sector. Restrictions on the movement of the people have resulted in sharp drop of their cash flows. Players are heavily levered and consequently their debt servicing ability is expected to be severely affected.

Auto ancilliaries & original equipment manufacturers

Auto ancilliaries could face significant disruptions related to supply of key parts from China, Germany and south east Asian countries. Though China has resumed production, the lockdown in India has resulted in production cuts by major original equipment manufacturers and a sub par demand for new vehicles.


A fall in the global economic prospects woud impede both domestic and world demand. Consequently, steel prices are likely to remain under pressure. Although, global iron ore and coking coal prices are expected to be softer owing to the muted demand from China. Additionally, several firms have recently expanded their balance sheets which has increased their leverage levels. As a result, their credit buffers could experience some pressures over the near to medium term.


Hospitality has direct and immediate impact from the restrictions on the movement of people. Also, all modes of public transport are grounded. The impact will be more severe on the four-star and above categories since their occupants are business and foreign tourists and there is negligible demand from both. Hence, the occupancy rate could be 20-25 per cent for this category of hotels, while two-star and mid-scale hotels could witness occupancy rates of 30-40 per cent till May 2020.

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