‘We need govt’s help to avoid pay cuts, layoffs’3 min read . Updated: 12 Apr 2020, 09:55 PM IST
- ‘Even if malls and high street outlets reopen in the coming months, retail spending may take time to revive fully’
- 'We are staring at a possible slump in the economy, but it is still too soon to say'
Bata India, India’s top footwear retailer, is grappling with zero revenues and fixed costs such as rentals and salaries as it had to close its factories and sales operations because of the lockdown. The company, which has a network of 1,400 branded stores and thousands of multi-brand outlets, wants a government stimulus while it gears up for tough times ahead as consumer spending will likely take a while to recover fully even after the covid-19 crisis gets over, said Sandeep Kataria, the company’s chief executive officer. Edited excerpts of an interview:
What is the short- and medium-term outlook for Bata India in view of the current crisis?
In line with Union government and state guidelines, we have closed both our retail and online stores, as well as our factories, because of which we are looking at a zero-revenue situation for the entire lockdown period. In the short run, revenues will be impacted. However, we should be able to recuperate slowly once the markets are allowed to open. In case the lockdown continues for longer, we certainly have testing times ahead of us. We have major fixed costs to take care of, be they rentals or the salaries we pay to our employees. We need a government stimulus for multiple stakeholders soon, otherwise this could end up being a grave crisis and managing it will be an uphill task.
What kind of a stimulus package are you looking at?
As requested by the Prime Minister, we have refrained from layoffs and are ensuring salaries are being credited on time. We cannot continue to do so for an indefinite period. We are seeking support from our landlords and mall owners, but we do understand that they also have their own problems. Our request from the government is to allow them moratorium on their debts in the short term. This will help the landlords pass on some relief to us.
Our second request is of wage subsidy. The leather and footwear industry directly employs approximately 4.5 million people, and a lot of them are from the less privileged sections of the society, with 30% of them being women. We want to make sure that there is no job loss as a consequence of the crisis. We are seeking job support subsidy at 50% of the minimum wages from the government for at least four months. It will be impossible for us to continue our fight without government support and the fallout could be severe.
Additionally, relaxation of statuary payments such as goods and services tax, provident fund and income tax is something that we have sought as an industry.
We have started manufacturing masks and face shields in our Batanagar factory in Kolkata and donated these to local hospitals, Kolkata Police, local communities and employees of our factory. In addition, we have a washable range of shoes that can help essential services staff stay safe.
We request the policymakers to classify footwear in the essential category of items and allow us to operate our e-commerce delivery and also high street stores for at least some limited hours to begin with.
Are you looking for loan moratoriums beyond the three months suggested by the Reserve Bank of India?
The economy has suffered a major blow because of the crisis. It is certainly going to take more than the stipulated three months for the economy to fully recover. As of now, most public sector banks have adopted an opt-out strategy, which automatically offers moratorium to customers. Private banks, however, are asking customers to send in requests for moratorium, which will then be examined by them.
Do you think the country is staring at a recession?
This is a very trying period for retailers across the globe. We are staring at a possible slump in the economy, but it is still too soon to say. A lot will depend on the duration of the lockdown and how soon normal business resumes. Even if the malls and high street outlets reopen in the coming months, retail spending may take time to revive fully.
What is the total manpower at Bata? Are you looking at either salary or job cuts?
We employ more than 10,000 people. Our employees are like family to us and we want to be there for them during this crisis. Salary cuts and layoffs are certainly something that we are looking to avoid. However, this is where we will need the government’s support to make sure it does not come to that.