With zero revenues due to the lockdown, fashion retailers on Friday asked the government to devise a mechanism to allow companies to get some cash flows stating that they are headed for a “very challenging time” while also seeking support in co-sharing of workers wages, waiver of rentals and GST reduction.
According to a PTI report: Heads of Tommy Hilfiger Apparels, Calvin Klein India & Arrow; Bestseller Retail India that sells brands like Jack & Jones, Junarose, and Mamalicious; Vedant Fashions which retails under Manyavar brand and Ritika Pvt Ltd which sells designer Ritu Kumar label, felt that it would take up to 15 months for normalcy to return to the sector after the lockdown.
The companies also said they have decided against job cuts during the period of lockdown and instead are focussing on upskilling their employees to ensure that they protect the livelihoods of their staff as long as they can.
“Cash flows are really challenged, there is no revenue. Unlike Europe and other parts of the world where online was allowed and some operational revenue was coming in, we are not seeing any revenue coming in as even e-commerce is not allowed,” Vineet Gautam, Country Head, Bestseller Retail was quoted by PTI as saying.
Speaking at a webinar on ‘Impact of COVID-19 on Fashion Business’ he said: “The government needs to work on some mechanism to allow companies to get some cash flows in, otherwise we are heading towards a very challenging time in business, where there is no cash coming in but there is continuous cash outflow in the business. Yes, we have responsibility to our people and we are ensuring that in the best way we can.”
Expressing similar views, Shailesh Charutvedi, Managing Director and CEO, Tommy Hilfiger Apparels, Arrow and Calvin Klein India said in the last one month “we have zero sale and zero collection” and there has been only cash outflow in terms of fixed cost, including salaries of employees.
Dalpat Jain, CFO, Vedant Fashions said any help from the government to help the industry in having liquidity would be appreciated.”In various countries across the world, governments have supported industries one way or the other.
In Singapore, the government has waived off lease costs on properties which were in their control plus issued advisories to property owners,” he said adding India could also explore similar ways in discussion with mall owners and landlords so that their business is also not affected.
On the wage front, Jain said India could also look at “co-sharing” like Bangladesh has done by having loans which are available to industries only with 2 percent interest that too on moratorium and in installments.
To ensure that consumer demand comes in a big way, he further said GST relief must be provided on apparels which currently range between 12-18 percent.
Post the health crisis, he said consumers will move to small ticket items and if there is GST relief which could be passed on to them, then it will help in demand creation, Jain added.
“The hangover of this corona is going to remain for sometime after the lifting of the lockdown. I foresee this continuing at least 12-15 months till the time the vaccine is discovered and in this period the way we service our consumers is going to change,” he said.
On job cuts, Gautam said Bestseller Retail India is “keeping everyone currently on rolls now. We have not let go of a single person. I think our first responsibility is to protect jobs till the time we can manage to. That’s what we are trying to do so that the least impact comes to our people.”
Similarly, Jain also said as a matter of principle, Manyavar “has taken a stand that we will safeguard our workers, we will ensure that livelihood is not impacted in this period”.
On how soon the industry can come back to normal, Amrish Kumar, Managing Director, Ritika Pvt Ltd said: “Once we do start up there will be a gradual start up, it will take time for normalcy to return.”
Giving a more specific timeline, Gautam said: “As the lockdown opens up we don’t foresee demand coming up immediately. I foresee 9-12 months for normalcy to return. That’s how we are trying to see.”
On the other hand, Jain said: “The hangover of this corona is going to remain for sometime after the lifting of the lockdown. I foresee this continuing at least 12-15 months till the time vaccine is discovered. And in this period the way we service our consumers is going to change.”