Bengaluru to Patna, return of city lockdowns frustrates companies

With lockdowns reintroduced in an increasing number of large business zones across the country, businesses are staring at further loss of sales and disruption in their operations that were slowly moving back to normal.

From leading consumer goods companies to e-commerce giants, firms are again forced to divert their attention towards minimising obstacles. In past few days, lockdown has been reimposed in key markets such as Chennai, Bengaluru, Pune, Thane, Guwahati, Hyderabad, and Patna.

Movement of people and goods in several localities of Kolkata, Howrah, and Mumbai with high Covid-19 cases have been restricted, apart from a total lockdown for three days in the country’s largest state Uttar Pradesh. Odisha, Punjab, and Madhya Pradesh, too, have followed similar measures.

Such short notice lockdowns have not only strained the teams monitoring operations but has also disrupted short-term businesses plans. Consumer good firms, especially those operating in the non-essential space, have been at the receiving end.

Air conditioner makers, for example, are expecting a revival only in 2021. B Thiagarajan, managing director at Blue Star, said while the initial lockdown had washed out the key season for AC sales this year, the recent measures are impacting sales in key markets like Mumbai, Chennai, and north India. 

“Unlike cities like Patna, where AC season is over, we continue to witness traction in metros and North India. But with discretionary spends strained, localised lockdowns are wiping out any chances of a revival,” he said.

Another top executive from a consumer goods player said: “Just when everything seemed to be going back to normal, a new obstacle has come up. While initially we were tracking movements, now it has become tiring.”

E-commerce firms are facing roadblocks, too. Snapdeal, for example, has asked its delivery personnel to stay away from high-risk zones till authorities give a go-ahead and expects deliveries to get delayed until the lockdowns are lifted. Others, delivering essential items like consumer staples, are unable to access their warehouses that are housed inside a lockdown zone. 

“For example, in the Bhiwandi area of  Maharashtra, nobody can move around. If the warehouse is shut, supply would also end,” said an official at an e-commerce firm. “Though now the government realises it is dangerous for people to crowd shops, e-tailers are allowed to deliver only essentials in areas where lockdown has been implemented. That also depends if the warehouses in those areas are allowed to operate.”

Further, the sellers on Amazon and Flipkart are facing a tough time. With deliveries getting delayed, their working capital is stuck in the channel. 

“Many of the sellers have borrowed the money to buy the products and their inventory is now blocked at various warehouses because there is a sudden local lockdown. On top of that the GST (goods and services tax) compliance is hovering on their head,” said an e-commerce industry executive.

Fast moving consumer goods firms like Nestlé, Dabur, and Parle Products are, however, unfazed. Unlike earlier, both authorities and field officials now have a better clarity on the processes, they said. “Tethering issues like these are now part and parcel of the game. But what we are closely monitoring now is how sales pan out during July and August,” said Mayank Shah, category head, Parle Products.