India File

Going, going, gone...

Nandana James Forum Gandhi | Updated on June 30, 2020 Published on June 16, 2020

The Confederation of Indian Industry expects more than half of the hospitality industry to go sick, impacting nearly 20 million jobs as a fallout of the lockdown   -  Neustockimages

Done in by the coronavirus-induced lockdown, restaurants, travel agencies and small businesses have shut shop, killing dreams and jobs. BusinessLine reports

Nathan’s* dream entrepreneurial venture, a restaurant he founded when he was 24, was named after a Malayalam word for ‘delicious’ — just what his grandfather would exclaim post a good meal. He had customers visiting his restaurant in Kalyan from all parts of Mumbai, even amid raging monsoons. Nathan was looking forward to celebrating the third year of his venture this December. But then, it took a virus outbreak to nip his dreams in the bud. He was forced to close the business. “I considered every option,” he says, his calm voice betraying the helplessness that underpinned his decision. It being a standalone restaurant, it was all the more difficult, he explains. He did not wish to disclose the name of the restaurant. Business failure, after all, is a taboo in India.

He is not alone. Many businesses, across sectors, have faced the axe due to the coronavirus-induced lockdown.

Most businesses — barring those falling under ‘essential services’ — faced an abrupt clampdown on operations and were left groping in the dark to figure out ways to stay afloat. Some, especially the small ones, were forced to shut down.

For Rohit Kapoor, his tech start-up dealing in online jewellery had started looking up. A graduate of BITS Pilani, he had always aspired to be an entrepreneur. After a stint with Amazon, he decided to start a venture, an online marketplace for exotic jewellery. He and his co-founder raised capital from well-wishers and the business was steady for a couple of years. However, things started changing in November 2019. “Despite Diwali, demand for jewellery was so low compared to previous years and it was straining my finances,” he says.

With the onset of Covid-19, he decided early April to shut his business, as he didn't see demand picking up post-Covid. The jewellery business had a small team of nine professionals and most of them were software engineers. “We had become a close-knit family and now I’m settling their dues slowly,” says Kapoor.

Others are close to shutting shop, but still holding on. Loveleen Multani Arun, who started Panache World, a travel company, in Bengaluru, says the situation is taking a mental toll on her as her company is on the verge of closing down. “Young employees call asking, ‘What’s the difference between a furlough and sabbatical’, because our company is giving us these two choices. What can one answer?” she poses.

“We are just somehow holding on. I hate getting calls from credit card companies and clients who we still owe refunds to. I feel like a criminal for no fault of ours,” Loveleen laments.

Travel sector has been one of the worst hit due to the lockdown.

Shweta*, a 42-year-old employee at a travel-focussed manpower consultancy company in Kochi, was told by her manager that the company, along with its head office in Mumbai, will be shutting down for at least six months. “Let’s hope things turn out well,” she says, stoically. While this consultancy has four employees in Kochi, the Mumbai one has over 40.

Shweta has no complaints, even as she knows how grim it’s going to get. “But we can’t blame the management. It’s not like they are getting anything and they aren’t letting us have it — no one is earning. It’s pointless to talk about it. People aren’t even enquiring about their passports which are stuck with us,” she says, with a wry laugh.

Like Nathan, it was the uncertainties wrought by the pandemic that made Divya Chugh, 42, founder of a Delhi-based jewellery studio, down the shutters of the business she had founded at 27. Jewellery by Divya Chugh, her venture, had ten employees.

“The money cycle is running. The minute the lockdown happened, obviously it all stopped, there is no revenue at all. To keep sustaining a space and to keep sustaining employees aimlessly and endlessly for how long...it was a tough call,” she explains. She also couldn’t figure out how production at the clusters in old Delhi could be resumed without putting her employees at risk. “Now I am calm in my head because I have made the decision. But if you had called me two weeks ago, I would have been crying and unable to talk,” she says.

2020 had seemed promising with the year starting on a good note in terms of sales, as the luxury market in the country was just picking up post demonetisation.“You know, the whole thought of 2020 sounded like such a big deal, the start of a new decade and all that. It really has turned out to be something unimaginable. I guess it’s a year to just survive and to remain careful and healthy. I want my employees also to be safe first,” she says.

Restaurants worst hit

Restaurants seem to be the worst hit. Mirchi and Mime, a concept restaurant, which tied up with local NGOs to employ hearing-challenged people as staff, is also shutting its outlet in Indore and shifting out a branch from Powai. “Our biggest regret is that we had to train the staff so much, and we were providing employment to those in need,” says Ranjan Chakraborty, director and chief operating officer at Squaremeal Foods, the parent company of the restaurant. Right now, he is figuring out whether to shift the restaurants to new locations. “The problem is that it’s not like people will start coming out to eat at the restaurants right after the lockdown. It is a wait and watch moment for us,” he says.

The majority of the hotels in the country are unbranded and fall under alternate accommodation, including guesthouses and homestays, thereby offering entrepreneurial opportunities to small-scale business owners. The Confederation of Indian Industry expects more than half of the hospitality industry to go sick, impacting nearly 20 million jobs as a fallout of the lockdown.

Thirty-year-old Abhijeet Deshmukh, MD of the hotel chain Bizzgrow Hotels and BizzGrow Service Ltd, had to shut three of his six hotels, with two more close to shutting shop. “The worst part is not that we don’t have a business, the worst part is that a brilliant team like ours will be broken and our employees will lose their jobs,” he says. His hotel chain had 156 employees at all the six hotels together, clocking a turnover of ₹10 crore. Apart from closing down two hotels, he had to let go of over 130 employees.

Just two months prior to the lockdown, he had taken two hotels on lease for five years, one at Mumbai airport and the other at Phoenix Mall, Pune. Both being upmarket hotels, the business prospects seemed good. “We paid ₹10-15 lakh each month as rent per hotel. I don’t think that post the lockdown I can make a business of that calibre to be able to pay the rent, let alone pay the employees their salary. We had to cut short our contract with them and let it go by paying up the penalty.”

Athasri Swapnil, 30, owner of Cupcake Nation, a studio-cum-cafe in Bengaluru, is yet another restaurateur who had no choice but to bid goodbye to her five-year-old venture. Just a month prior to the lockdown, the business, which employed five people, had invested money towards upgrading its cafe interior. She had also rented a huge space for the studio recently, which was to be utilised for baking workshops as well as the cafe. She would have never seen this decision to shut shop coming, she says.

“We don’t know when a vaccine will be available, when people will feel safe eating out again, if there will be a second or third wave. Given this lack of visibility, I think taking a new loan would not have been the best option,” adds Swapnil.

Nathan strongly feels like there was a need for better and clearer guidelines, not just for restaurants, but for the entire lockdown implementation. “There were countries that did a lockdown but there was a system to it, you can’t just keep people locked at home — economies don’t work that way,” he opines.

Hard times for start-ups

Kapoor feels that if they had an emergency fund to withdraw from, which could be repaid over a specified time, that could have helped. His views are echoed by industry body Nasscom which, in a recent report, said that start-ups are seeking access to working capital and easing of compliances. “Survival of the industry is at stake,” said Debjani Ghosh, President, Nasscom.

Bizzgrow Hotels and BizzGrow Service’s Deshmukh had ensured that his employees could use the company credit card at least as a means to their meals until the limit on it ran out too. He has assured them that if and when he’s able to restart operations, they will be the first priority.

“The government wanted us to keep everyone employed, unfortunately, we are not in a position to do so because our vendors have not paid the money, plus the rooms are not sold at all. Start-ups like us, which have been around for just a few years, make do with the support of bank loans and our EMIs are extremely heavy. Banks have started calling us, and they are unwilling to cooperate...The government did have policies, but they didn’t consider the businesses at all,” he says.

Swapnil had high hopes from the government. Her State (Karnataka) had also announced a waiver of fixed electricity charges for two months. “Even that doesn't seem to have been implemented and we are having to pay the full amount to the landlord,” she points out.

Meanwhile, there are still companies that are teetering on the brink but refusing to give up just yet. As Nathan puts it, “I know that there are a lot of businesses thriving on optimism, but I think it’s only that much they can go ahead with. Especially when you have staff and suppliers to answer to — it’s a different thing altogether. That optimism can run out.”

* Names changed to protect identity

With inputs from Venkatesh Ganesh

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Published on June 16, 2020
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