SEBI Asks Listed Companies To Disclose Financial Impact Of Covid-19 On Business

The Securities Exchange Board of India (SEBI) has advised listed companies to reevaluate the financial impact of Covid-19 on their business after reviewing reported disclosures.

In its circular, SEBI noted that many listed entities have made disclosures under LODR  Regulations, primarily intimating shutdown of operations owing to the pandemic and resultant lockdowns. “Some listed entities have provided information relating to actions taken towards sanitation, safety etc.; the number of entities that have disclosed the financial impact, however, is small,” it noted.

SEBI highlighted that global companies have been making disclosures regarding the impact of the pandemic, including that on financial condition and results of operations, future operations, capital and financial resources, liquidity, assets, internal financial control over financial reporting and disclosure controls and procedures, demand for products/services etc.

Hence, SEBI adviced Indian companies to also ensure that all investors have access to timely, adequate and updated information. The regulator said that companies are encouraged to evaluate the impact of the Covid-19 pandemic on their business, performance and financials,  both qualitatively and quantitatively,  to the extent possible and disseminate the same.

Though a few Indian startups have listed on stock exchanges, the listed biggies which regularly interact with the ecosystem include Times Internet, Info Edge, IndiaMART, Matrimony etc. Indian companies which are listed abroad include MakeMyTrip, Yatra etc. Mostly, the companies could tide through FY20 without much bearing of Covid-19 impact as India spread mostly began in mid-March.

The impact of Covid-19 on these companies is yet to be quantified. After starting 2020 on a positive note and with 10 Cr active users, B2B ecommerce company IndiaMART has been finding it hard to stay immune to the crisis any longer. Earlier CEO and cofounder Dinesh Agarwal told Inc42 that IndiaMART could lose between 10% and 20% of its 147K paying customer base every month under lockdown.

Further, for companies like MakeMyTrip and Yatra, which are among the most impacted businesses, the Q1 FY21 performance will be a major blow as the last year’s slowdown of aviation combined with Covid-19 pandemic is bound to have a negative impact.

Matrimony in its Q4 and overall FY20 performance said that it could achieve double-digit revenue growth in matchmaking and an increase in profitability in Q4. The company didn’t quantify the impact of Covid-19 but said its “robust” balance sheet will help tide through the crisis.

Currently, India’s financial markets are also under intense pressure with an impending slowdown and thus, investor clarity about the real impact of Covid-19 could be a much-needed understanding.