will still be resilient versus many other sectors, the fact remains that recovery in terms of demand will take time,” says Mohit Malhotra, CEO, Dabur
India. “The FMCG
market was seeing a slowdown before the pandemic, the lockdown has exacerbated the situation,” he says.
Most companies from Hindustan Unilever (HUL) to ITC, Dabur, Nestle, Marico, Godrej Consumer, Coca-Cola as well as electronic and appliances firms have either scaled down or temporarily halted operations in view of the lockdown. While the government has permitted transportation of both essential and non-essential goods, companies admit that challenges remain and a recovery in terms of operations is at least two quarters away.
“April-June is a washout and we do expect demand to be back in this period. The festive season could see some uptick, but that is two quarters away,” says Kamal Nandi, business head and executive vice president, Godrej Appliances.
For the retail market, the challenges are even more because people remain fearful of stepping out and congregating at shops and retail establishments for fear of catching the virus. The government has been strict in enforcing the lockdown, permitting only grocery retailers to operate across with strictures to maintain hygiene standards and ensure crowd management.
With malls, multiplexes and shopping centres shut, categories such as lifestyle, fashion, electronics and fast-food retail have also seen big hit on their business. Estimates are these categories will take at least six to eight months to recover since concerns of local transmission of the virus remain high.
From invoking the force majeure clause to putting all expansion plans on hold, retailers say the situation remains grim as they grapple with no sales, limited workforce and nervous consumers.
They are now seeking urgent relief measures from the government and banks. This includes an extension of the loan moratorium to 270 days, providing additional working capital to tide over the cash crunch, making available easy credit lines to pay wages and salaries and relaxing share pricing norms for qualified institutional placements and preferential share allotments.
“Since most stores are shut, retailers have zero revenue. At the same time, they have to pay overheads such as salaries, electricity and rentals. An extension of the moratorium will provide some relief,” Kumar Rajagopalan, CEO, Retailers Association of India, said.
Devangshu Dutta, CEO, Third Eyesight, says retailers will liquidate their stocks at a discount once the lockdown is lifted in phases. He also says that sale periods could extend for longer durations and newer inventory could take time to get into stores.