Goldman Sachs Group Inc is telling clients in India to fortify their balance sheets to prepare for the uncertainty brought by the coronavirus pandemic.

Currently, liquidity is the biggest theme among Indian businesses, and we are advising our clients to raise capital, Sonjoy Chatterjee, the bank's chairman and chief executive officer (CEO) for India, said in a phone interview.

The Wall Street bank has arranged some of India’s biggest equity offerings this year, according to data compiled by Bloomberg. The share sales include telecommunications carrier Bharti Airtel Ltd as well as lender Kotak Mahindra Ltd, controlled by Asia’s richest banker Uday Kotak.

Some of those funds will be needed to outlast the inevitable downturn. The International Monetary Fund is forecasting that India’s economy will contract by 4.5 per cent in the fiscal year through March 2021 as one of the worlds biggest and strictest lockdowns from the end of March takes its toll.

The longer-term question is how companies should think about investing for growth, when it returns.

The impact of the pandemic is pressuring Indias’ sprawling corporates to refine their priorities, Chatterjee said.

Covid-19 is driving Indian conglomerate structures to optimise and monetize by identifying what is core and non-core, he said.

In that light, Mukesh Ambani’s campaign to transform Reliance Industries Ltd into a dominant player in e-commerce, with technical expertise from Facebook Inc and $15.2 billion in external funding, arguably looks like the future.

The biggest challenge is capital allocation, and hence, more than before, they may be willing to unlock value through partnerships, he said.

The string of deals tied up by Ambani to sell stakes in Reliance’s digital unit accounts for almost 50 per cent of global investments into telecom companies this year, according to data compiled by Bloomberg.

Private equity funds and strategic investors are keen to buy into India, specifically in sectors including consumer and technology, Chatterjee said.

A long-term shift is underway in the country toward emerging dominant omni-channel digital platforms, driving digital transactions and shifting consumer buying behaviour online, he said.

To emerge as the victor, technology companies will push to consolidate, he said.

Published on June 29, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill.

In these difficult times, we, at BusinessLine, are trying our best to ensure the newspaper reaches your hands every day. You can also access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all our readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. You can help us by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section.

Our subscriptions start as low as Rs 199/- per month. A yearly package costs just Rs. 999 – a mere Rs 2.75 per day, less than a third the price of a cup of roadside chai..

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism