For India's businesses, partial lifting barely moves the needle

Mumbai | New Delhi: The business community reacted cautiously with many pointing out that the partial relaxation of the lockdown won’t be enough to repair the fractured supply chain. Industry leaders, however, said they understood the government’s predicament.“49 days of lockdown makes statistical sense. Complete opening before that duration could have been risky. This is just four days beyond 49 days. It is, in fact, a calibrated preamble or pre-opening strategy. So, this is better than I had hoped,” Mahindra Group chairman Anand Mahindra said.“But it won’t solve the supply chain problem in this pre-opening phase. Hence, I can only hope that the exit post-May 17 will indeed be pan-India and comprehensive,” he said.“Post May 17, red zones and containment zones should be by exception only and full interstate movement of people and workers should be opened up. That will ‘join the dots’ of the supply chain network. If sequential opening of different parts of the country continues then, as I have said earlier, industrial recovery will be painfully slow. In manufacturing, if even one feeder factory is still locked down, then the final product assembly will be stalled,” Mahindra told ET.Maruti Suzuki’s chairman RC Bhargava, empathising with the challenges before the government, said: “The reason why the disease is spreading is that people are not following government regulations. If the lockdown was not extended, even districts which are now orange and green may turn into red zones. Would you want that to happen?”Bhargava said the government has specified activities which can happen in certain zones and the company has to evaluate the new measures which have been announced. Others were not so hopeful. “There’s no point. They’re unable to accept their mistake. Instead, they claim victory and opt for partially opening when cases are higher than ever before,” an industrialist who did not want to be named said. Many fear that sequential opening of different parts of the country will not enable industrial activity to resume smoothly.But IT hardware companies say they had been requesting the government for such a move. “It is a good move,” said the India CEO of an MNC IT hardware firm without wanting to be named. He would not comment whether the firm would resume production saying he had not gone through the notification.Industry lobby groups have also been asking the government for a strong stimulus. “With restricted economic activities, the imperative for a quick and forceful economic support package for the industry is even more compelling now. CII has suggested instituting a government spending package equivalent to 3% of GDP which would add Rs 6 lakh crore to the available firepower. Enhanced debt to GDP ratio can be a way out for adding fiscal space at a time when the debt to GDP ratio is modest in India,” said Chandrajit Banerjee, Director General, CII. Mobile phone sellers are set to reopen stores as the government eases restrictions.“All standalone (single) shops, neighbourhood (colony) shops and shops in residential complexes are permitted to remain open in urban areas, without any distinction of essential and non-essential,” the ministry of home affairs said on Friday.

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Lockdown takes wind out of Amazon's sales

Bengaluru: Amazon cited restrictions on ecommerce deliveries imposed by India in the ongoing lockdown to stem the spread of Covid-19, as the reason for its business in the world’s fifth largest economy being the most impacted by the pandemic, even as the American giant recorded a sharp spike in its overall revenue for the first quarter of 2020.The Indian government’s mandate that ecommerce companies only fulfil orders of essential goods such as groceries during the past five weeks has led to Amazon cutting back on a lot of its offerings in the country, company executives told analysts on Thursday.“We’re in a bit of a holding pattern except for grocery in India,” said Brian Olsavsky, chief financial officer at Amazon, in a call with analysts after the company’s announcement of its earnings in the first quarter of 2020. “We’re now only fulfilling (orders) for essential goods...so that’s a cutback on a lot of our offering.” 75499707Pantry Services ExpandedMeanwhile, on Friday, ministry of home affairs revised its guidelines and said ecommerce firms would be allowed to resume full operations in parts of the country designated as green (virus-free) and orange ( with low levels of infection) zones starting from May 4. However, deliveries will continue to be limited only to essential items in red zones with high levels of infection, including the top metros — Mumbai, Delhi and Bengaluru.After getting off to a rocky start in delivering food and groceries in India — in large parts due to labour shortages and supply issues — Amazon has now expanded its Pantry service to 128 cities delivering pulses, packaged food and cleaning products. Normal deliveries of other essential items are up and running in 68 cities, the company said on its website.Despite the surge in volume and value of grocery deliveries over the past month, analysts and industry executives estimate that Amazon’s India business is operating at less than 10% of its gross merchandise value prior to the lockdown, which began on March 25.The Seattle-based company’s international sales, which accounts for all its businesses outside the US including India, posted an 18% growth to $19.1 billion in the first quarter, while losses more than quadrupled to $398 million compared to the year earlier period.Company executives said Amazon has grown its overall sales amid the pandemic, with revenues rising 26% to $75.5 billion. However, profits fell to $2.5 billion, down from $3.6 billion in the same quarter last year due to increased spending on its Covid-19 response. Meanwhile, experts are of the view that as India’s curbs on full-fledged ecommerce began only at the very end of the first quarter, the total impact is yet unknown.

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View: Extension of lockdown uncalled for

The government is making a hash of loosening restrictions while extending the lockdown. Its guidelines are a bureaucrat’s delight and an administrator’s nightmare. Enforcing the complex guidelines will create the difficulties the guidelines seek to remove, by seeking to resume work in quite a few sectors and geographies.The guidelines bring in a new category, the containment zone: a locality that poses a threat of spreading Covid-19 and amenable to containment, a single building or a cluster of homes, as the case may be. This is most sensible. The logical corollary would be to divide the country into containment zones and non-containment zones, and allow economic activity to resume in the non-containment zones. Instead, the government has introduced additional shades to Red and Orange, while categorising zones in terms of Covid-19 risk, and allowing differentiated kinds of activity in each shade.This is bureaucratic self-indulgence, not policy that helps either public health or the economy.

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Cooking oil demand from big buyers to fall 30-35%

NEW DELHI: Retail cooking oil sales have started increasing but demand from big buyers such as hotels, bakeries and caterers remains weak, said industry executives.Demand from big buyers is likely to fall 30-35% this year, said Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association (IVPA), an apex organisation of vegetable oil producers in the country.Sale to households is likely to rise, though, said Desai. “With restaurant and hotels closed, consumers are cooking at home and procuring more oil,” he said.Household consumption in the past month, when the country was under a lockdown triggered by Covid-19, increased 10-15%, according to Angshu Mallick, deputy chief executive officer at Adani Wilmar.“The situation is slowly improving and once the green and orange zones are opened, then we can expect, by May 15, distribution and sales to further pick up,” said Mallick. In the past month, sale of packed oil in the country was 1.2 million tonnes, out of which 60% was sold to households and the rest to big buyers. Sales to big buyers halved during this period, said Mallick. The bakery sector has resumed 40% of its orders while institutional sales may start once factories and companies open, said Mallick.

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Nil: Local sales shown by auto companies in April

New Delhi: Indian automakers reported zero sales in the local market in April with factories and dealerships shut in compliance with government orders to check the spread of the Covid-19 pandemic.The country’s largest carmaker Maruti Suzuki (MSIL) did not sell a single unit in the domestic market, including sales to OEM (original equipment manufacturers), in April 2020. “This was because in compliance with the government orders all production facilities were closed,” the company said in a filing to the BSE. Maruti Suzuki had sold 1,31,385 passenger vehicles in the domestic market in April 2019.“Domestic sales stood at nil amid nationwide lockdown due to pandemic Covid-19,” said Hyundai Motor India. The company had sold 42,005 units in April 2019. Automakers in the country report wholesale dispatches from factories and not retail sales made to customers.Maruti Suzuki did receive permission from the Gurugram administration to restart production at its facility in Manesar on a single-shift basis late last month, but chairman RC Bhargava said operations will resume only when it can be done in a sustainable manner.Veejay Nakra, chief executive officer, automotive division, Mahindra & Mahindra (M&M) said, “At Mahindra, we are working hand-in-hand with all stakeholders, especially our dealer and supplier partners, to get our ecosystem started, once the lockdown is lifted.” Mahindra is hopeful that the company’s dealerships will open soon and has stocks to cover the first few weeks of sale. Mahindra sold zero units last month compared to sales of 19,966 units registered in the year-ago period. Toyota Kirloskar Motor (TKM), too, posted zero sales last month as against 10,112 units sold last April. “Restart of the entire value chain cycle and its restoration will be gradual as the industry is faced with the challenges of low consumer sentiments and rebuilding of disrupted supply chains,” said Naveen Soni, senior vice-president (sales & services) at TKM. MG Motor India, which reports only retail sales figures, also recorded zero sales .Meanwhile, following the resumption of port operations, Maruti Suzuki said the first export shipment of 632 vehicles was undertaken from the Mundra port. Hyundai exported 1,341 vehicles and Mahindra 733 in April.

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As India marched to stock up, stores saw bumper sales

Kolkata | Bengaluru: India’s top food and grocery retail chains such as Future Group, More, Reliance Fresh, Spencer’s Retail and Nature’s Basket have reported their highest-ever sales in March, driven by panic buying of staples and food products before and during the lockdown.Three senior industry executives said these chains posted 15-20% higher sales than their previous best, which was during Diwali. Sequentially, growth was 25-30% more in March than February, they said.Even e-grocers such as Grofers and BigBasket joined the league with record sales in March and April despite disruptions due to lack of labour amid a surge in orders. The nationwide lockdown began on March 25 but people began hoarding before that. Spencer’s Retail and Nature’s Basket CEO Devendra Chawla said consumers advanced their April purchases to March as they bought more per shopping trip in the days ahead of the lockdown, leading to a higher average bill value than usual. “While non-essential sales like apparel and general merchandise were down given lockdown restrictions, the grocery business saw sales even higher than the Diwali month,” he said.Grofers cofounder Albinder Dhindsa said March sales exceeded that of Diwali as it got a lot of first-time online shoppers making purchases, clocking a gross merchandise value of Rs 415 crore. He said consumers are still buying in bulk and stocking up on a rotating basis.75499763Higher Average Value Per Order“Average value per order has increased by 48% in the first week of the lockdown and is continuing to remain significantly above normal,” said Dhindsa.Reliance Retail’s grocery sales in March helped it to grow in this segment by a record 44% with sales of Rs 10,043 crore in the January-March quarter. In January and February, the grocery business had grown 35%. The country’s largest retailer said in an analyst call on Thursday that the average bill value was at a historic high for the grocery business.Retailers said their smaller outlets led the trend in March with consumers preferring to buy from neighbourhood locations instead of traveling to malls.For instance, Future Group’s 1,000 or so smaller stores such as EasyDay, Nilgiris and Heritage increased sales by a record 70-100% in March. While Big Bazaar’s food business was up by over 20%, overall sales slowed due to the bar on non-essentials and lower footfall in mall outlets, an industry executive said. Future Group and More did not respond to queries.CHANGE IN SHOPPING BASKETThe shopping basket underwent a change, with consumers buying more of basic staples such as rice, flour and pulses in the first phase of the lockdown, said wholesaler Metro Cash & Carry India MD Arvind Mediratta. They are now purchasing more processed food such as readyto-make foods, noodles, pasta, snacks and condiments.Sales tracker Nielsen said almost a third of consumers in metros started purchasing fast-moving consumer goods (FMCG) from chain stores and ecommerce in the last quarter as compared to 27% in same period last year. This pushed up the national average of these two channels to 13.7% from 11.5%.Business has been growing month-on-month and sales in April exceeded the peak in March, said Seshu Kumar, national head, buying and merchandising, BigBasket. “We expect the momentum to continue because of change in buying habits of customers,” he said.

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Indians bet on online gaming to kill boredom

Mumbai | Kolkata: Online games involving exchange of money have caught on with Indians stuck at home due to the Covid-19 pandemic.Gaming firms have noted a sharp increase in customers looking to ward off boredom by indulging in games such as poker, rummy and bingo, and are placing bets even on simple games like ludo and Candy Crush.“More people are playing rummy during the lockdown,” said Prithvi Singh, founder of GamesKraft, which debuted with an Indian rummy cash game in 2017.He estimates a 10-15% increase in the number of registered users on his gaming platform since the lockdown started, up from about 2.5 million users in early March.75499614And what are the stakes? “The platform entry fee starts from Rs 25 and then ranges higher, depending on the stakes put in,” Singh said.Online gaming nights are one way of socialising and competition with money makes it more exciting, said an expert. If played via gaming platforms, money transfers can happen using e-wallets and tokens, which can be later encashed. But among family and friends, a few rounds of bingo or housie, played over video calls, are seeing online monetary transactions as well.Last weekend, for example, a group of friends based in Mumbai, Singapore, Sydney, London and elsewhere decided to make their weekly video calls more interesting by calling it a Bingo Night, one of the participants told ET. They charged Rs 100 per ticket and the pool was split into wins like Jaldi Five, Four Corners, Breakfast, Sandwich, Top Lines and two Full Houses.“That one hour was the best hour of the week,” said the person, who works at a research analyst firm and is currently staying in a flat with her family in Mumbai. “The money factor adds to the excitement. It is like entering a casino where you may not win, but carrying the chips is the fun part,” she said, adding she also won a Full House.There are websites and apps that allow users to play online games. They charge a fee per game and the stakes increase as it progresses. However, casual betting has also increased among family and friends where money is transferred directly to the winner or the moderator, who distributes it as per the rules of the game.Gaming companies Adda52 and Octro did not respond to ET's queries.Experts in human behaviour said online gambling helps divert the mind.“There is a whole lot of uncertainty right now. In such circumstances, this serves as a distraction,” Pune-based psychiatrist Dayal Mirchandani told ET. “Compared to playing chess, scrabble, etc., when you’re gambling and it’s fast-paced, the mind wanders less.”However, people can get easily hooked.“Players who are betting money initially for innocent fun can get addicted to making quick cash. That is a bit dangerous,” said Alok Kejriwal, cofounder and CEO of Games2win, a publisher of mobile games. “There are cases where a new player in poker may want to buy the virtual chips from another person using real money instead of grinding to earn it himself.”Games2win, which has 30 million users, has only casual mobile games on its platform.Gambling on online platforms can land people in legal trouble. “In India, gambling or betting is not allowed, except for certain exceptions in a few states, and a game which depends purely on luck is considered gambling but a game that involves substantial skills of the player is not considered gambling,” said Sumit Mangal, partner, L&L Partners-Law Offices.

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