Come April 14 and it is going to be three weeks of lockdown. There are reports about how the government may re-allow economic activity albeit with conditions. It is going to be incumbent on industry to ensure the workers are safe.The government realises that factories need to restart operations even if it is at minimum capacity. What is your view?
The government is doing the right thing. We have opened a few factories in Jammu and in Sahibabad and Pant Nagar and Baddi with limited capacity. Production of essential items is taking place. We are working with the government to sanitise kirana stores. We are starting with 10,000 stores to start with, going up to 2 lakh stores. Other than sanitising, social distancing will also happen. Consumption will start seeing an upside and hopefully we will go back to normal in about three months’ time.
Normalcy in three months time! Whether we look at Dabur or your other venture Lite Bite — as an industry stalwart, you have fantastic insights when it comes to the demand and consumption story. You are talking about sanitising 10,000 kirana stores and reopening of factories. How bad is the situation?
When I say three months, I am trying to say that we will get at least 40-50% capacity in Dabur in terms of consumption. In terms of Lite Bite, the restaurant business will take much much longer. We have started deliveries and that is doing quite well but it will take more than six months to get people back to restaurants.
The government has come out with a circular that wages should not be cut, labour should not be let go off or fired. We have seen a couple of states make that a diktat, not all states. For example, in Maharashtra, it is an advisory. Be it Lite Bite or Dabur, industry is expected to continue to keep paying wages. With no income, how sustainable would that be?
I believe that in all my companies, the employee is the most valuable asset. We will continue to pay them and there will be no cut in jobs. I cannot say that we look forward to the government to help us in doing the same, but my philosophy is we will definitely keep paying our workers, our employees, our front line staff because this is the time to help them.
Dabur has an Ayurveda line. There has been a new launch in the form of Tulsi drops, a sanitizer. So, crisis brings opportunities as well. I personally know so many people who never used to take neem or tulsi are now popping these tablets, hoping to boost immunity. Have you seen a surge in sales on that?
Tulsi drops, Tulsi tablets business has been very good. Chyawanprash has seen a big jump in sales. We are also doing giloy tablets and Ashwagandha which is good for immunity. We are doing a lot of hand sanitizers from Jammu. That part of the business is doing well.
You have so many Lite Bite outlets across shopping malls in the country. You also have a presence in airports. Obviously with the lockdown, that business has taken a massive hit. How are you looking at the F&B industry?
It is going to take a little bit of time to bounce back. If there are 100 seats in a restaurant, it has to be 50 seats now with social distancing. Families would be happy to come in if that kind of thing is maintained. I still feel it will take a little bit of time for people to be convinced about going back to restaurants. We have over 200 outlets. Hopefully, even the airport ones will start running at 30-40% capacity within a month or so. We are getting ready.
What a challenge it is to recalibrate business plans, take tough decisions. How difficult has it been for industrialists like you not knowing what tomorrow holds as you are responsible for so many employees?
It has been challenging. There are two costs — the cost of employees and the rental costs. We are not paying the rental costs now as everything is closed but we are paying the employee cost. It has been challenging because the revenue is zero as such or minimal. But we have to sustain. This is something which has never happened in my lifetime but the best thing is to just keep on going, keep employees motivated, keep moving forward because there is no looking back.
When you said no rental cost, how has that gone on? Have you seen landlords, shopping malls, real estate developers understanding that there is no choice perhaps force majeure is going to be invoked? That this is an event which cannot be controlled and therefore rent would have to be deferred or a moratorium of sorts?
Most of the landlords understand that as the lockdown is there, no rent will be paid because we are not doing any business. Even when it opens up, we are discussing with them about a revenue share basis and not on fixed rent. They are happy to look at that because we are a long-term player. I do not think any landlord or mall owner will want us to exit because if somebody does exit, then it will probably take the mall or the landlord another six months to a year to get a new customer and I am sure they will not get a new person to come in at the same rental. We all have to bear the pain together. As business comes back to normal, we will make revenues and I am sure they will get a good share.
An upheaval like this is usually followed by inflation and a fall in disposable income. That is when the consumption sector is hurt most. The input costs go up and people’s discretionary spends go down. The next few months will be challenging. What kind of recalibration by industry will we see? Will it have to accept the fact that margins will have to be lower?
Yes, we will have to look at that. In terms of Dabur, we will make small packaging, have to reduce our margins some bit to get the consumption up. You are right. The inflation will go up and everybody will have to take a hit.
In the restaurant business, QSRs should be flourishing more. Fine dining, casual dining will take a little bit of a longer time to come up but it is a question of time. We will have to bear it together. But it is not that it is going to sustain. In the longer term, normalcy should return and yes, we have to cut some margins. We have to take a hit in the short term but for the long term it will be good for us.
Crisis brings opportunity. We are all in a lockdown. A lot of people are addicted to smartphones, tablets and are looking for ways to spend time and newer avenues for entertainment. You have dabbled in sports in the past and you have a Poker Sports League. There were two seasons. Is that an opportunity for you individually as an entrepreneur? Have you had to recalibrate or have you seen a surge in traffic?
Things are really going up exponentially because people are staying home and are playing online poker a lot. We are just launching #poker which is two weeks away and that is going to be again an online platform for people to game. There will be a lot of free content on it. You can play free poker on it. Also, learn how to play poker.
We have already seen a surge of about 20% growth on a month-on-month for poker gaming and that is a huge opportunity right now.
Source: Thanks https://economictimes.indiatimes.com/markets/expert-view/consumer-biz-could-bounce-back-in-3-months-but-restaurant-business-to-take-longer-amit-burman/articleshow/75121251.cms