The best way for businesses to deal with the impact of Coronavirus is by maintaining a wait-and-watch approach, stated Prataap Snacks’ managing director and CEO, Amit Kumat. In a telephonic interview, Kumat spoke to Jescilia Karayamparambil about the impact of Covid 2019 on consumer durable segments and his company.
How has Coronavirus impacted business?
The impact of Coronavirus on business is already visible. In March alone, the company has seen a 10-15 per cent drop in sales.
We have seen an impact in Maharashtra especially Pune and Delhi. Now slowly and gradually, it is expanding to other geographies as well. In two weeks’ time, we will know which direction the business will move based on the spread of the virus.
With schools shutting down and the movement of kids restricted, the decline in demand is already seen. We hope that in the next 15-20 days, the demand revives.
How has COVID 2019 hurt your FY 19-20 targets?
In the month of March, we have already fallen short of our target by 10-15 per cent. Overall, we are close to the target.
What strategy did you adopt at the time when there was an economic slowdown? And what plans do you have at times of Covid 2019?
The economy of the country has not been doing well for the last one year and the market has seen a slowdown. But during that time, we have been expanding into existing geographies — going deeper and strengthening our distribution. We expanded our reach in Uttar Pradesh and strengthened our presence in South India.
As far as growth is concerned, the month of March will be bad because of Coronavirus. Due to the virus, it is difficult to expand right now. I am hoping the impact of CoronaVirus should end in the next 30-40 days’ time.
Have you evaluated the effect on production in case of lockdown?
Luckily, we have diversified manufacturing facilities throughout the country. From the 14 units, we can see the impact in only 2-3 units. In Indore, the government has asked all schools, colleges, malls, theatres, etc, to shut down.
At present, there is no notification to shut down any manufacturing units. If such a notification is announced, then we will have to shut down the factory for a few days.
If we shut down our Indore unit, the impact of the clampdown will be limited to Indore.
In terms of expansion, we have no plan in mind, we are following a wait-and-watch approach.
What would the right approach or policies be to get SMEs back in shape?
Once things cool down and people know the impact of CoronaVirus then you can take the right step. It will take at least one month to strategise. I advise everyone to go slow.
What were Prataap Snacks’ targets and investment this year?
We had an investment around Rs 60-70 crore. We had expected double digital growth and have almost achieved that.
Would we see the commodity supply hit due to Coronavirus?
Two months back, all commodity prices were high. Palm oil increased from Rs 63 to Rs 90 in one month’s time, but now we have seen commodity prices getting softer. I do not see any price escalation in commodities for the next few months.
Do you face any liquidity crunch?
As a company, we do not have a liquidity problem. We are a cash-rich company. But in the case of other industries, it will be a problem. We do not see any liquidity issues next year as well.
Are you planning to add more units?
We are planning to add two more units in different locations outside of Madhya Pradesh.