APN News

  • Friday, September, 2020| Today's Market | Current Time: 11:43:58
  • At the outset, we want to express our gratitude to the steps taken by the Government of India to reduce the spread of Covid-19.  While the industry is committed to ensuring safety of billions of people, some challenges are faced in the recent times. Due to mandatory closure of Retail Stores across India, retailers face imminent financial crisis/insolvency in view of the COVID-19. Millions of Jobs in Retail are at risk. Against this backdrop, the retail industry seeks support from the Government of India to save one of the most important & critical services industry in the country that contributes 10% the national GDP.

    1. Indian Retail is one of the largest employers in the country:
    2. Indian Retail Industry has more than 15 million retailers including big and small, traditional and modern trade. Retail employs 40-50 million Indians directly of which Modern trade employs more than 6 million Indians equaling to almost 12% of the total Retail consumption of the country.
    3. Retail contributes to approx. 40% of India’s Consumption.

    1. COVID-N19 has deeply affected retail trade:
    2. Most stores, except those selling Essential Food & Grocery, have been asked to shut down across the country. These include Garments, Saris, Electronics, Mobile Phones, Furniture, Hardware etc.— all stores selling non-essential items are closed.
    3. Non-Grocery/Food Retailers are reporting 80% to 100% reduction in sales
    4. Economists predict that the impact on consumption post lifting of lock-down will be lower by up to 25-30% for 6-9 months after lifting of lockdown.

    1. Retail Industry will find it difficult to survive the current crisis due to:
    2. High fixed costs
    3.       Nearly 60%-70% of costs are fixed costs. This, along with low margins, leaves businesses with limited flexibility. Rents and salaries to employees make a large part of this cost.
    4.       Current situation will lead to downscaling or shutting down operations widely
    5. Large working capital need
    6.       Large capital is invested as working capital as it is a long lead time industry.
    7.       As most of this is borrowed capital, retailers are already finding themselves in a deep liquidity crisis.

    1. Closure of retail businesses will affect large sections of society:
    2. Retail is a people intensive industry. 90% of Retail employees work at the stores, earning minimum wages and living a hand-to-mouth existence.
    3. With extended closures, these employees are at risk of being retrenched.

    1. It will also impact jobs and income for an even larger unorganized ecosystem:
    2. With closedown and projected slowdown of retail consumption, the entire supply chain will be under stress.
    3. Distributors, C&F, Manufacturers, Raw Material suppliers, the entire value chain will suffer from order cancellation and loss of income.

    In the light of the above, we seek relief to save the retail industry and commerce of India:

    1. Special support required from RBI/Banking industry
    2. Due to high inventory positions and low demand that will continue for months beyond the lockdown period the industry will need long-term support to survive. Banks must be mandated to extend the moratorium to 270 days for payment of installments & interest of term loans, short-term loans, corporate loans, securitized loans, Bonds, mortgages, Debentures, general purpose loans effective from 15th March 2020 to 31st December 2020.
    3. Moratorium of 270 days for all Interest payments of Cash Credit Lines up to 31st December 2020.
    4. Non-fund sources such as bill discounting, letters of credit must be included in the moratorium
    5. Banks must MANDATORILY provide 25% additional Working Capital credit lines, to tide over the shortfall due to no-revenues. This is critical for companies to pay their salaries and wages on time.
    6. Additional Working Capital Credit lines to be made available till 31st December 2020. Additional working capital credit lines to be paid back in 3 installments between 1st Jan 2021 and 31st March 2021.
    7. RBI should recommend SEBI to relax share pricing norms for QIP and preferential allotment to help companies raise capital. Significant relaxation is also required for rights issue.

    1. Interest Subsidy & Default Relief
    2. Interest Rates on all loans to Retail Industry to be subsidized/reduced by 400 basis points from 15th March 2020 to 31st December 2020.
    3. Reserve Bank of India is requested to relax NPA reporting guidelines till 31st March 2021.

    1. Relaxation in Statutory Payments / Accounts
    2. Increase the period for depositing all statutory dues, like Income Tax, Advance Tax, GST, ESIC, PF etc. for payments due up to 31st July 2020 by 90 days.
    3. Extend the mandatory reporting/statutory filing days by 60 days to 31st July 2020 for financial accounts for year 2019-20.

    1. Employment Support:
    2. Industry needs fiscal support to ensure no job losses in the Retail Trade. Towards this, we request a 4 month (March 20 to June 20) job support subsidy at 50% of the Minimum Wages as cash support to encourage retailers to continue employment of staff during the extended lockdown and recovery period after the lockdown.

    We do hope that the Government of India will give adequate consideration to the concerns as highlighted in this representation to overcome probable adversities due to corona outbreak which may cause unprecedented hardship to the retail industry.

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