Whitepapers

Valuations in the time of COVID-19

The COVID 19 crisis continues to heavily affect the global economic, social, and political perspectives. An immediate and visible tangible impact has been the significant, though varying, decline in capital markets across the world (which have been extremely volatile in recent times). Such volatility in addition to market related technical factors may be related to significant uncertainty experienced by investors as regards the perceived higher risk attached to future cash flows of businesses as also their tempered expectations as regards the quantum of such flows. While some of the risks may be temporary and muted, other risks would be more heightened reflecting expectations of severe/permanent disruptions in these businesses and the sectors in which they operate.

Increasing importance of supplier due diligence during the COVID-19 pandemic

The pandemic continues to spread across countries. Many countries, including India implemented a nationwide ‘lockdown’ that is now being lifted in phases.Various disruptions that businesses have faced in H1 2020 (due to the pandemic) are bound to bring radical shifts in global supply chains. Companies seeking to maintain or restore production and enter into new business lines to capitalise on COVID-19 related opportunities or even just pivot business models to survive, will need to work with new suppliers (due to the inability of existing suppliers to either meet demand or new products, services or technology required during production).

Read our latest report to know more.

Addressing business disruptions due to COVID-19 - Insurance considerations

The COVID-19 pandemic has led to major disruptions in business operations. Businesses must estimate the financial impact of the pandemic and develop strategies to recover the resultant business losses.

An important tool of loss recovery could be insurance reimbursements. Insurance coverage not being available, corporates may seek other potential sources of recovery, such as relief funds or government programmes. The issues and impact may vary within industries and type of insurance.

Read our latest report to know more.

Considerations for undertaking fraud and misconduct investigations remotely

The disruption brought about by the COVID-19 pandemic has forced us to rethink our business processes and relook at how we perform certain activities. While the lockdown may slowly be removed, precautions will continue and remote working in some form may remain ‘the new normal’.

In the current environment, internal investigation teams are facing more pressure due to realigned business priorities, changes in business operations, and cost considerations. It is not uncommon for past incidents of fraud and misconduct to surface during a downturn and new fraud instances to emerge (as a result of performance pressure on businesses and individuals). Thus, the workload of internal investigation teams is likely to increase.

How prepared are internal investigation teams to tackle fraud in this new environment? While assessing new fraud risks and putting in place added controls is one aspect, preparing appropriate response protocols and procedures to deal with an incident/allegation is also important.

Against this background we have created a white paper – ‘Considerations for undertaking fraud and misconduct investigations remotely’. This document explores some key challenges that investigation professionals may encounter in the current scenario and suggests some considerations to deal with these circumstances.

COVID-19 impact : IT due diligence considerations and technology enablement for the future

The COVID-19 crisis has affected organisations across the globe and in India; several organisations are struggling to maintain a steady top line and manage with lower working capital. Employees’ health and safety have been given utmost importance and with reduced travel across sectors meant that organisations have to adopt new ways of working including working from home.

However, once the lockdowns are relaxed and economic activity starts gathering some momentum, businesses are likely to gain traction. In this context, the importance of IT diligence will increase.

Against this background, we have created a white paper on ‘IT due diligence considerations and technology enablement for the future’ which is based on our gained from multiple IT due diligences, IT separation support, and IT post-merger integration projects. The paper also discusses our findings from focused interviews conducted with PE professionals, senior corporates, and CIOs, across sectors in India. The objectives of these interviews were to understand technology’s role in maintaining the continuity of business operations amid the COVID-19 crisis and key learnings therefrom.

Let’s just say it never happened: Considerations for faster economic recovery – what banks, companies and regulators can do

Businesses across industry sectors are likely to go through an extended, though finite, period of reduced revenues and continuing fixed costs. A complete halt in all business operations has already led to a strain on the cash position and working capital. Businesses are likely to require additional liquidity support to restart once the situation normalises and operations reach optimal levels. The liquidity crunch may also shift downstream to the vendors in their supply-chain, the customers, and their related ecosystems.

The industry is apprehensive of the following sequence of events, as a result of impaired operations during the period of lockdown and resultant abnormal losses:

• Breach of lending covenants—financial ratios and business metrics—agreed in lending covenants
• Downgrade of ratings, potentially triggering accelerated redemptions on instruments not under the RBI moratorium
• Increase in cost of incremental debt from existing lenders due to lower ratings, as well as liquidity challenges as lenders may be averse to lending below certain thresholds

Businesses which otherwise are sustainable in the long term, may also choke and default. The government, RBI, and banks need to collectively take measures to ensure that businesses do not collapse together and in turn, push banks into a systemic lockdown/failure.

The risk of financial statement fraud in the wake of COVID-19

The spread of COVID-19 has resulted in an abrupt halt in the global economic activity. The impact of this forced lockdown is expected to result in a severe economic downturn with the contraction of global economy by 3 percent in 2020 and a low growth rate forecast of 0.8 percent for the Indian economy for the current fiscal year 2020–21.

Managing the risk of organisational fraud in the wake of COVID-19

As companies operate on an unstable ground with changes in business modalities, relaxed controls, and new ways of working, they will also deal with new and increased vulnerabilities in certain avenues as a result of the new operating model and a stressed global economy. Organisations, and resultantly employees, are under pressure—the pressure of survival for businesses and performance for executives, financial pressure from accumulated debt and uncertain earning, anxiety and disgruntlement at possible pay cuts and job loss, and so on. 

Resilient leadership in the face of COVID-19: A checklist for organisations operating in India

The rapid global spread of COVID-19 has quickly eclipsed other recent epidemics in terms of both size and scale. In addition to causing disruption to billions of lives, the pandemic has led to significant and far-reaching economic damage. Business leaders are concerned about how their companies will be affected and what they have to do next.