Pursuant to declaration of COVID-19 as a ‘Pandemic’ by the World Health Organisation (WHO), Government of India (GOI) has invoked the provisions of section 2 of the Epidemic Disease Act, 1897 in order to curb the spread of COVID-19. Further, as a precautionary measure, as required to arrest the spread, various State Governments have ordered complete shut-down of shopping centres, malls, multiplexes/cinema halls etc. until March 31, 2020, in major metros like Mumbai, Pune, Banaglore, Chennai, Gurgaon and others following suit.
Welcoming the move, Amitabh Taneja, Founder Chairman, Shopping Centres Association of India (SCAI) says that the Shoppers are obviously extremely cautious so is the shopping centre industry. “The fact that fears itself is contagious; it becomes a very tricky situation for all. The utmost priority is safety of people”. About measures undertaken by the industry, he says, "Today most of our malls are equipped to handle emergency situations and go through end number of audits and checks. Our members are personally making rounds of operational malls driving special sanitisation and cleanliness programs and ensure that we set benchmarks and assure all stakeholders of our commitment to fight the challenge in hand. We hope that the situation stabilizes and normalcy is restored at the soonest".
Talking about the uncertainty about to what extent and duration the malls may face the closure, Tanjea says that there is a possibility of further extension, as exact time frame for controlling this Pandemic can’t be defined. Nearly around 700 to a 1000 malls across India may be asked to close down till further notice.
“The impact of the shut-down of the Shopping Centres across various cities has been beyond comprehension,” says Abhishek Bansal, Executive Director, Pacific Malls. “Monetary losses would of course be huge. Sales are already down anywhere between 25 to 50 per cent for retailers. Fashion is seasonal so spring merchandise will suffer badly. Cinema, entertainment and restaurant businesses are already bleeding. Rumours, lack of clarity and awareness and fear of uncertainties add to the shoppers' confusion”, he adds.
“The cash flow is the biggest challenge for the malls as the only source of income of these centres”, says Bansal. “The rental income has come down to zero since the closure of malls. With expenses remaining constant their debt serving and interest payment obligations remain. Unlike all other businesses, they do not have any goods or merchandise to sell or reduce inventory holding or other such measures, which other industries can take. Their Collections have completely dried up during this period, while they continue to bear a high fixed cost towards Personnel, Utilities and ongoing routine expenses”, he adds.
Resonating the same thoughts, Shibu Philips, Business Head, Lulu Mall says, “Shopping Centre is a very capital-intensive business and large portion of the capital is funded thru Banks / Financial Institutions to construct and run their operations, which has a very large interest and principal outflow on a monthly basis. In fact this is their largest expense head. This abrupt closure of Malls has a cascading impact wherein not only the Mall owner, but all other related down the line businesses face the probability of Banks Loans going under default due to prolonged shut-down”.
“It is relevant to note that even after the SC/ Mall open up in the due course of time – there will be many challenges in the Near term which will include: Low footfalls and hence low Sales at the Malls; Revenue and collections will take time to streamline; GST and other statutory payments will get impacted as well”.
“Also, upcoming malls under construction will suffer delays due to slow/shut down in countries like US, UK ,Italy and China. Manpower at sites have also drastically fallen due to this outbreak. All this will cause a delay in opening the new malls. So, the need of the hour is a moratorium in delaying the repayment of loans and extending the period for taking the benefit of loans granted for the projects”, adds Philips.
Commenting on the operational centres, Dalip Sehgal, CEO of Nexus malls says, “pursuant to enforcement of stringent measures, which is the need of the hour, shopping centres housing occupants from industries like hospitality, retail, tourism etc. are worst affected due to lock-down. Scarce footfalls are resulting in lower sales but coverheads have increased for deploying specially trained personnel, extensive sanitization, increased customer frisking etc. This has resulted in a huge pressure on viability of shopping centres due to delay in collection of license fees /rents from the retailers/ outlets. To add to the woes, the current situation has also adversely impacted the employment and livelihood of the employees (direct and indirect – approximately 3500 to 5000 at each establishment/mall) at every level".
Thus, overall working capital cycle has been adversely impacted and hence, in order to sustain the mall business and the employment of the individuals as stated above during these unprecedent and testing times, the Shopping Centres of India (SCAI) on behalf of its members and also non member malls has already made representation regarding the finance, regulatory and other major issues faced to the office of the Prime Minister and Finance Minister of India and also the Governor and Executive Director of RBI.
The association has also sought appointments for personal meetings with concerned authorities to discuss following measures to help shopping centres sail through this challenging phase:
“The implementation of these measures can immensely help the shopping centres and industries referred hereinabove, which are already stressed due to the prevailing financial conditions, in mitigating the effects of this unforeseen and presently untreatable Pandemic.
Once the country is free from the virus malls that have emerged as the most vibrant social spaces for Indians to celebrate their leisure time will play a critical role to bring back life and uplift sentiments of the masses. Hence, it is all the more important to ensure that necessary support is provided to the shopping centre industry to cope up with the challenge and be ready to welcome visitors once the restrictions are lifted”, concludes Taneja.
Additional quotes:
“The whole world is reeling under the effects of pandemic, we have to jointly face this challenge posed by Covid-19. Over 5000 families are dependent on each shopping center. Everyone has to absorb a bit of it and therefore, the government’s compassionate measures are going to be a major help in tiding over this Black Swan event.”
Yogeshwar Sharma, Executive Director & CEO, Select CityWalk
“Current situation is unprecedented and most of the industries have had to suffer business losses. Retail sector is no exception to it. On one hand we have to face closures and on the other the industry will have to fight negative sentiments to revive the demand as and we open the centers. The government has taken many actions and I am sure it will have positive impact. Need of the hours is to work with the government to minimize the impact and seek support for its revival.”
Mukesh Kumar, Senior VP, Infiniti Malls
About The Shopping Centre Association of India (SCAI)
The Shopping Centre Association of India (SCAI), a non-profit organisation, set up with the vision to engage and encourage development of shopping centres / malls in India has played an anchor’s role in evolution of Indian shopping centre industry, helping it to merge into larger society and he economy; and representing shopping centre industry in various national and international forums. The association has nearly 110 members mainly comprising of Mall Developers and Realtors across India.
The Shopping Centre Association of India (SCAI) over the years has helped bringing global best practices across mall operations and "Hygiene and Safety" are very basics of Mall operations. Some of the world's best designers and architects have been engaged in building malls in India and post their launch are maintained by professional mall management companies.
Importance of Shopping Centres in India
India didn’t have any spaces for recreational activities till the concepts of malls came up in India. In today's stressful life, people throng to malls not just for shopping but also more for having a good time with family and friends. Today’s malls are Experiential Centres. Malls provide hygienic and safe environment for fun, food, shopping and entertainment for the whole family.
Malls have not only catalysed the growth of modern retail in India but also helped pushed infrastructure growth, economic and social activities around their vicinities and adding to government’s revenue through various taxes. Several other industries have flourished in making and managing of some 1000 operational malls in India.
Welcoming the move, Amitabh Taneja, Founder Chairman, Shopping Centres Association of India (SCAI) says that the Shoppers are obviously extremely cautious so is the shopping centre industry. “The fact that fears itself is contagious; it becomes a very tricky situation for all. The utmost priority is safety of people”. About measures undertaken by the industry, he says, "Today most of our malls are equipped to handle emergency situations and go through end number of audits and checks. Our members are personally making rounds of operational malls driving special sanitisation and cleanliness programs and ensure that we set benchmarks and assure all stakeholders of our commitment to fight the challenge in hand. We hope that the situation stabilizes and normalcy is restored at the soonest".
Talking about the uncertainty about to what extent and duration the malls may face the closure, Tanjea says that there is a possibility of further extension, as exact time frame for controlling this Pandemic can’t be defined. Nearly around 700 to a 1000 malls across India may be asked to close down till further notice.
“The impact of the shut-down of the Shopping Centres across various cities has been beyond comprehension,” says Abhishek Bansal, Executive Director, Pacific Malls. “Monetary losses would of course be huge. Sales are already down anywhere between 25 to 50 per cent for retailers. Fashion is seasonal so spring merchandise will suffer badly. Cinema, entertainment and restaurant businesses are already bleeding. Rumours, lack of clarity and awareness and fear of uncertainties add to the shoppers' confusion”, he adds.
“The cash flow is the biggest challenge for the malls as the only source of income of these centres”, says Bansal. “The rental income has come down to zero since the closure of malls. With expenses remaining constant their debt serving and interest payment obligations remain. Unlike all other businesses, they do not have any goods or merchandise to sell or reduce inventory holding or other such measures, which other industries can take. Their Collections have completely dried up during this period, while they continue to bear a high fixed cost towards Personnel, Utilities and ongoing routine expenses”, he adds.
Resonating the same thoughts, Shibu Philips, Business Head, Lulu Mall says, “Shopping Centre is a very capital-intensive business and large portion of the capital is funded thru Banks / Financial Institutions to construct and run their operations, which has a very large interest and principal outflow on a monthly basis. In fact this is their largest expense head. This abrupt closure of Malls has a cascading impact wherein not only the Mall owner, but all other related down the line businesses face the probability of Banks Loans going under default due to prolonged shut-down”.
“It is relevant to note that even after the SC/ Mall open up in the due course of time – there will be many challenges in the Near term which will include: Low footfalls and hence low Sales at the Malls; Revenue and collections will take time to streamline; GST and other statutory payments will get impacted as well”.
“Also, upcoming malls under construction will suffer delays due to slow/shut down in countries like US, UK ,Italy and China. Manpower at sites have also drastically fallen due to this outbreak. All this will cause a delay in opening the new malls. So, the need of the hour is a moratorium in delaying the repayment of loans and extending the period for taking the benefit of loans granted for the projects”, adds Philips.
Commenting on the operational centres, Dalip Sehgal, CEO of Nexus malls says, “pursuant to enforcement of stringent measures, which is the need of the hour, shopping centres housing occupants from industries like hospitality, retail, tourism etc. are worst affected due to lock-down. Scarce footfalls are resulting in lower sales but coverheads have increased for deploying specially trained personnel, extensive sanitization, increased customer frisking etc. This has resulted in a huge pressure on viability of shopping centres due to delay in collection of license fees /rents from the retailers/ outlets. To add to the woes, the current situation has also adversely impacted the employment and livelihood of the employees (direct and indirect – approximately 3500 to 5000 at each establishment/mall) at every level".
Thus, overall working capital cycle has been adversely impacted and hence, in order to sustain the mall business and the employment of the individuals as stated above during these unprecedent and testing times, the Shopping Centres of India (SCAI) on behalf of its members and also non member malls has already made representation regarding the finance, regulatory and other major issues faced to the office of the Prime Minister and Finance Minister of India and also the Governor and Executive Director of RBI.
The association has also sought appointments for personal meetings with concerned authorities to discuss following measures to help shopping centres sail through this challenging phase:
- Allow a moratorium period during continuation of Pandemic, in repayment of bank loans, interest, EMI, etc. without levy of any penalties including penal interest. Further, one-time loan restructuring with lower rates of interest may be permitted for shopping centres.
- Provide short-term financing option for a period of 6 to 12 months, at lower interest rates to meet the increased working capital requirements.
- Grant GST rebates to offset the losses on account of and for the period of closure of business and/or in the alternative permit flexibility in deposit of Goods and Services Tax (GST) since GST needs to be deposited immediately upon raising of invoice, however, corresponding payments are likely to be delayed, resulting in an additional cash flow burden on shopping centres.
- Provide relief so that credit rating of shopping centres is not adversely affected due to delays in repayment of bank loans, interest, EMI, etc.
- Issue appropriate directions to the Insurance Regulatory and Development Authority (IRDA) to include insurance against loss of profits on account of epidemic – which is not currently included in the policies.
- Any other relief which may be deemed fit in the present scenario.
“The implementation of these measures can immensely help the shopping centres and industries referred hereinabove, which are already stressed due to the prevailing financial conditions, in mitigating the effects of this unforeseen and presently untreatable Pandemic.
Once the country is free from the virus malls that have emerged as the most vibrant social spaces for Indians to celebrate their leisure time will play a critical role to bring back life and uplift sentiments of the masses. Hence, it is all the more important to ensure that necessary support is provided to the shopping centre industry to cope up with the challenge and be ready to welcome visitors once the restrictions are lifted”, concludes Taneja.
Additional quotes:
“The whole world is reeling under the effects of pandemic, we have to jointly face this challenge posed by Covid-19. Over 5000 families are dependent on each shopping center. Everyone has to absorb a bit of it and therefore, the government’s compassionate measures are going to be a major help in tiding over this Black Swan event.”
Yogeshwar Sharma, Executive Director & CEO, Select CityWalk
“Current situation is unprecedented and most of the industries have had to suffer business losses. Retail sector is no exception to it. On one hand we have to face closures and on the other the industry will have to fight negative sentiments to revive the demand as and we open the centers. The government has taken many actions and I am sure it will have positive impact. Need of the hours is to work with the government to minimize the impact and seek support for its revival.”
Mukesh Kumar, Senior VP, Infiniti Malls
About The Shopping Centre Association of India (SCAI)
The Shopping Centre Association of India (SCAI), a non-profit organisation, set up with the vision to engage and encourage development of shopping centres / malls in India has played an anchor’s role in evolution of Indian shopping centre industry, helping it to merge into larger society and he economy; and representing shopping centre industry in various national and international forums. The association has nearly 110 members mainly comprising of Mall Developers and Realtors across India.
The Shopping Centre Association of India (SCAI) over the years has helped bringing global best practices across mall operations and "Hygiene and Safety" are very basics of Mall operations. Some of the world's best designers and architects have been engaged in building malls in India and post their launch are maintained by professional mall management companies.
Importance of Shopping Centres in India
India didn’t have any spaces for recreational activities till the concepts of malls came up in India. In today's stressful life, people throng to malls not just for shopping but also more for having a good time with family and friends. Today’s malls are Experiential Centres. Malls provide hygienic and safe environment for fun, food, shopping and entertainment for the whole family.
Malls have not only catalysed the growth of modern retail in India but also helped pushed infrastructure growth, economic and social activities around their vicinities and adding to government’s revenue through various taxes. Several other industries have flourished in making and managing of some 1000 operational malls in India.
IndianWeb2.com is an independent digital media platform for business, entrepreneurship, science, technology, startups, gadgets and climate change news & reviews.
