In the matter of just a week, India went from a do-not-panic state to a state of complete lockdown. Coronavirus is spreading like wildfire and every day we see several cases rising at an alarming speed. 

As per a news report by Reuters, India could face between around 100,000 and 1.3 million confirmed cases of the disease caused by the new coronavirus by mid-May if it continues to spread at its current pace, according to a team of scientists based mainly in the United States.

While people are locked inside their houses for safety concerns, the markets has witnessed record falls and businesses are on a downward spiral. Furthermore, country-wide quarantines, travel restrictions, and social-distancing measures have to lead to a sharp fall in consumer and business spending producing a recession. So during such testing times, there are several financial and legal aspects that all businesses should bear in mind to mitigate risks and cut down on their losses. 

To understand what can and can not be done at this difficult situation, We try to gather some information from experts who shed light on what should be done next:

  1. Protect & Protocol- Protect your employees and follow government orders. 
  2. Liquidity & Plan- Companies should ensure adequate liquidity to weather the corona-storm. Vital questions to ask your team are – whether we can withstand some more poor quarters if the economy sinks? Do we have contingency plans? Alongside answering these questions, companies should focus on timely payment of statutory taxes and dues along with employee salaries and thereafter model their cash flow, P&L, balance sheet and identify triggers that might significantly impair liquidity.
  3. Pay Your Taxes – “March-ending” is just around the corner. This implies timely payment of taxes and meticulous tax planning for the coming months to avoid penalties. 
  4. Force Majeure Clause- Companies are worried about the consequences of the non-fulfillment of their contractual obligations. A provision that protects companies from such defaults is the – force majeure clause – which defines event/s that excuse the non-performance of a party. A contract may either explicitly list all qualifying events, or generally define a force majeure event as “an event beyond the parties’ control”, leaving room for interpretation. Thus, companies must look for examples of relevant language such as “disease,” “epidemic,” “pandemic,” “quarantine,” or “acts of government,” which may be interpreted to include the COVID-19 outbreak and excuse its non-performance.
  5.  Review The Contract- Read the fine print of all your contracts, revisit and renegotiate the terms of engagement keeping in mind unforeseen events and its impact on provisions of – engagement, termination, defaults, to name a few. Parties should also carefully review their subcontracts to determine their rights, obligations, and potential for recovery. 
  6. Logistic & Supply Chain- Looking at the current scenario stabilization of inventory levels and logistics may not be immediately achievable. But businesses should then turn their attention to pre-booking rail and air freight capacity and using after-sales stock as a bridge thereby ensuring resilience in their supply chain network. In doing so, companies should carefully review their rights and obligations under these agreements, as well as any risks associated with the consequences and potential for recovery of additional costs or a price adjustment as a result of a work delay or stoppage.
  7. Luring The Market- Offering incentives and discounts to customers will help the business stay relevant in the current market and remain closer to customers.

Doing Right By Business, Law, Customers, Employees & Stakeholders

This is the time when understanding the gravity of tuition matters. Follows the rules laid down by the government. Trying tobypass the advisories, rest assured we will find regulators at our doorstep. 

5 Fundamental Questions To Ask During Crisis

Most businessmen work with a survival mentality, this setback further impacts the economy. Ask following 5 fundamental questions to yourself.

  1. How my business will grow with the clarity of one single most important factor that will impact the business
  2. What are the apparent and contingent risk in my business, and what I do about it
  3. Do I have an adequate resource for the growth and if not where, and how I reach out to get them so my business creates value for the long term.
  4. How I review my business in terms of performance and what I do to make it more execution-oriented
  5. How do I engage my people to take ownership

This global crisis will change a lot; however, it is simply about staying safe and making the best of the resources. 


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