An analysis of the latest-quarter results of listed firms shows that the government's ambitious exercise of withdrawing old Rs 500 and Rs 1,000 notes led to an adverse impact on businesses across the sectors, though not many have publicly-criticised the move and the likes of industrialist Rajiv Bajaj are only an exception.
The companies having acknowledged the negative impact of the government's demonetisation move in their financial statements for the October-December quarter - although mostly by expecting it to be a positive game changer and a 'new normal' in the very next sentence - include giants from groups like the Ambanis, the Tatas, the Birlas, the Mahindras, ITC, Hindustan Unilever, Dabur and Bajaj. (Also read: What's a bad bank? Here's what you need to know)
"Pace of domestic demand growth slowed down due to demonetisation of old currency notes during the quarter. However, demand is expected to revive as the effects of demonetisation are absorbed and the economy readjusts to the new normal," said Reliance Industries Ltd (RIL), led by billionaire Mukesh Ambani.
Regarding its Reliance Retail unit, RIL said the demonetisation led to cautious buying by customers for a short period, though some segments actually saw faster growth during that time - a trend largely attributed to digital payments.
At petro outlets also, there was a tepid growth in sales on a quarter-on-quarter basis, which the company said, was due to demonetisation since Reliance petro outlets were not allowed to accept demonetised currency unlike PSU outlets.
In an investor presentation, Aditya Birla Group's UltraTech described the note ban as "short-term pain and long-term gain" and listed a number of short-term adverse impact such as "acute liquidity crunch", reduction in purchase volumes as also impact on GDP and currency rates.
However, for long term, it expected a number of benefits such as fall in inflation and interest rates, increase in public spending and strengthening of organised sector.
UltraTech said the segments most impacted immediately included daily wage earners, transporters, households and retail sales, while for cement sector in particular it expected demand to be impacted due to cash squeeze in system.
Tata Group firm Titan Company, in a quarterly update for third fiscal quarter, said all its consumer-facing businesses witnessed a "drastic slowdown for a few days".
While the sale in modern retail and dedicated retail channels recovered soon after, "the sale in the trade channel in watches (the multi-brand outlets) has taken a hit and is yet to recover as most transactions in these outlets have been on cash basis," Titan said last month.
On November 8, 2016, post-demonetisation announcement by the Prime Minister, many Tanishq stores experienced a huge rush of buyers and sales were abnormally high. After that, there was a brief period of lull post which Tanishq's average daily sales were close to the average daily sales pre-demonetisation, the company added.
Mahindra and Mahindra said the auto industry was impacted due to demonetisation in the third quarter, with all segments of auto and tractor industry showing substantial drop in demand during November and December 2016, while the impact was more on rural sales than in the urban areas.
Bajaj Auto said the demonetisation move had an "adverse impact on the industry and on the performance of the company".
Its managing director Rajiv Bajaj, last week, became one of the most vocal industrialists to criticise the move by saying the idea of demonetisation was itself "wrong" and it is incorrect to blame only the execution side of it.
"If the solution or the idea is right, it will go like a hot knife through butter...if the idea is not working, for example demonetisation, don't blame execution. I think your idea itself is wrong," he said.
The two-wheeler sales are yet to recover from the impact of demonetisation and industry data releases over the last two months have been showing a slump. The industry is looking forward to better sales on hopes of good monsoon and acceleration in rural growth.
ITC Ltd also said that its results were impacted by lower consumer offtake and reduction trade pipelines in the wake of cash crunch during the quarter.
"The operating environment was extremely challenging during the quarter. FMCG sales were adversely impacted... in the immediate aftermath of the government's decision to withdraw specified high denomination currency notes."
"While the impact was felt across all operating segments, sales of biscuits, snacks, noodles, personal care products and branded apparel was impacted the most in the initial phase," it said.
HUL said the market growth was severely impacted during the quarter due to demonetisation, while input costs also continued to remain inflated. The company saw its sales volumes decline, though net profit was higher due to one-time gains. It expects the recovery to be gradual going ahead.
Microfinance giant Ujjivan Financial said its collections took a hit post the note-ban, even as it found the customers to have "every intention to repay".
In a conference call, Ujjivan officials told analysts it was "a period of high stress both for our customers and for us and we have to go through this with patience and we feel wherever people have become impatient, there are reports in areas where some of the MFIs got impatient and become aggressive".
"The customers have reacted very aggressively because there is already a lot of frustration which has been built up. So, it is a question of patience and how do you handle this cold situation with great care because the customers are definitely willing to repay, but they need some time to repay the loans," its MD and CEO Samit Ghosh had said.
Dabur India said note ban led to "severe liquidity crunch, impacting FMCG in third quarter", while the growth for personal care items like shampoo, hair oil and toothpaste decelerated in December to almost half of November levels.
Some banks also reported that their business was impacted and credit growth was muted as the focus was mainly on dealing with the demonetisation move and the subsequent remonetisation process, which also led to increased costs.
Coffee Day Enterprises, which runs popular Cafe Coffee Day stores, said it saw some impact on its cafe sales for two weeks after the announcement but sales recovered subsequently.
Burnpur Cement saw its account with the lenders becoming "irregular due to non-payment of scheduled payment on account of cash flow mismatch as a result of demonetisation and depressed market".
A number of other companies from various sectors, including Godrej Consumer, Jyoti Labs, Adlabs Entertainment, Talwalkars, Bharat Financial Inclusion, India Cements, Magma Fincorp, Crompton Greaves, Deepak Nitrite, Gujarat NRE Coke, DFM Foods and Sutlej Textiles also reported adverse impact of the demonetisation move, at least for a short period.