The post-Covid-19 situation is expected to be a major opportunity for organized companies to increase market share

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Mumbai, May 27, 2020, Wednesday

Covid-19 could lead to more consolidation in the organized sector in the country. Earlier, the organized sector benefited from the impact of demonetisation and implementation of GST on the unorganized sector. The market share of organized sectors had increased significantly. A report by Bank of America Merrill Lynch said that the spread of Covid-19 has benefited the organized sector as unorganized players are currently fleeing the market.

The bank recently conducted an analysis of 1125 listed companies in sectors including consumer, financial, energy, real estate in the country. The market share of the top five companies in each sector, which was less than 60 per cent before 2016, has now risen to 62 per cent and market share is likely to increase due to renewed disruption due to Covid-19.

Once the effect of Covid-19 is alleviated, the products of organized players will have a good chance in the market. The availability of funds and technology in the organized sector will be a positive factor for them as compared to unorganized or small players. These factors will continue to support the organized sector in terms of cost.

Not only is it difficult for unorganized companies to raise low-cost funds, but the shortage of workers will also be a major issue after the end of Covid-19. In addition, enforcement, taxation and regulatory issues can interfere with the work of the unorganized sector. Cash shortages have severely affected unorganized companies. The report also notes that it is easier for large companies to get funding from banks while banks do not provide money to small companies quickly.

Organized sectors also have a lot of scope to gain market share.

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