Page 134 - Connect 2 Impact Souvenir Flip Book

Member Articles

Disruption, Inflation And Margin

Sustainability

CA Rahul Agarwal well-being. Historical benchmarks may not be
representative of future overheads base, particularly
if there were salary reductions/freeze during Covid-19,
Disruption is the new normal. Add to that - inflation which need to unwind now;
and rising interest rates. Together, it is a very complex 3. The supply chain disruption (due to the ongoing war,
scenario, particularly in terms of assessing a business logistics bottlenecks, ESG compliance, spiraling crude
in the context of an M&A transaction. A careful, thought prices, etc.) is causing massive inflation in input costs
through Due diligence and value creation in Deals has - sustainability of supplier base and the customary,
never been more important. informal, extended credit terms needs to be assessed

While the dynamics would differ for each company, carefully - given rising interest rates.
consider this: Finally, how will consumers’ spending shift in response
1. Are companies building up inventories to manage to a pressure on their disposable income, as mortgage
rising input prices? This implies earnings may be lower costs shoot up by the year end? Certain sectors are
next year after these low-cost inventories are liquidated likely to be more impacted than others - travel, F&B,
(unless inflation is passed through). The “normal” entertainment. Revenue and margin sustainability
working capital investment level could be higher both needs to be looked at with a closer lens.
in terms of volume and pricing (vs the last twelve
months)!

2. The war for talent has meant pressure on wages,
attrition and an increasing need to consider employee

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