Covid-19 pandemic: Big and organised companies escape unscathed

Several industries — such as paints, cement, steel, and tiles — witnessed contraction in volumes in 2020-21 amid the Covid-19 outbreak. But big and organised companies escaped unscathed.

On the contrary, they reported an increase in volumes, stealing the market share from small and unorganised players.

An analysis done by Edelweiss shows that listed paints, cement, steel, and tile companies managed to report volume growth, even as overall industry volumes have come down. For instance, listed paint companies saw a 50 per cent increase in volume growth, even as the overall paint industry volume was down 5 per cent during FY21.

“This divergence in growth rates can be attributed to tightening of lending standards for SMEs by banks, lack of raw material availability, labour shortages, etc. Larger players, by design, are better placed to cope with a supply shock than the smaller players,” the brokerage said in a note.

When looked at in isolation, volume growth reported by listed players may looks subdued. 

However, they have managed to weather the storm. Analysts say when industry growth bounces back over the next few years, listed players will be better positioned.