Pandemic Impact on Retail & Leisure Segment

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Realty+ in conversation with Mahim Singh, VP - Vice President - Retail operations, The Great India Place Mall and Gardens Galleria Mall and Bhaskar Joshi, GM- Theme Parks, Worlds of Wonder, Noida discusses the Coronavirus pandemic's impact on the retail sector of real estate. Government Initiatives Required To Ease The Financial Pains Of Retail & Leisure Sector Players Though something concrete and financial stimulus directly aimed at relieving off the pain from retail and leisure sector players is yet to be announced by the government, it has announced a host of measures like a package of Rs.1.7 trillion announced by the finance minister addressing the immediate requirement of the poor and most vulnerable sections of the society only. Furthermore, the liquidity boost provided by the Reserve Bank of India, along with 3-month moratorium on interest and principal on Bank debt will certainly provide some cushion to corporates in adjusting to the scenario of resuming operations post lockdown. Recently, more than dozen public sector banks announced Covid-19 Emergency Credit Line to provide funds up to Rs.200 Crore, available till 30th June 2020 to deal with hardship faced by various sectors of the economy. However, we believe, as of now it’s only for existing MSME, agriculture and other business segment borrowers to meet temporary liquidity mismatch in operating cycle. We have approached our lenders but, hitherto, they have not received any such communication in this regard for large corporate borrowers and are waiting for clear directions and guidelines from their competent authorities. Non- food credit growth had been collapsing even before covid-19 outbreak, which has worsened thereafter. Though, RBI announced a series of measures like, second round of long term repo operations of Rs.50,000 Crore and reduction in reverse repo rate by another 25bps to 3.75%, to encourage banks to lend; yet considering the prevailing uncertainty and high levels bad loan, banks are preferring to park their funds with RBI even though at lower rate of interest and are reluctant to lend to businesses. As most of the businesses have dried up with their working capital, some concrete and direct steps aimed at assisting the businesses tide over this pandemic crisis need to be taken by the government and the RBI instantaneously, else it will be very difficult for businesses to survive which may have repercussions in the form of massive forced shutdowns of business, job losses etc. We have also written to our lenders apprising them about the adverse impact of Covid-19 it and have requested for a facility in line with the Covid-19 Emergency Credit Line Facility announced by other banks, to which we are yet to receive any affirmative response. How Are You Gearing Up To Meet Health Compliances Post Lock Down? Safety of our patrons is our foremost duty and we are strived at leaving no stone unturned for the wellbeing of our guests and that is the reason we have been raking in highest footfalls. We follow the highest globally accepted safety standards of DIN-Deutshes Institute Für Normung (European Safety Standards) for our “Worlds of Wonder” amusement park and water-park. We have methodically and meticulously laid out SOPs in place for testing of rides and operation of our parks which are religiously and stringently followed. We are monitoring the situation closely and are in regular contact with local authorities so we may respond swiftly to any developments. Our team and our retailers are prepared and equipped to commence operations post removal of this lockdown. We have introduced additional precautionary measures in our entire property like setting up of sanitizing tunnels at all entry points. Retailers are also prepared to step up their cleaning, hygiene and sanitizing procedures, heightened attention to store cleaning, increasing frequency of cleaning food prep equipment, counters, as well as other high-touch surfaces throughout the stores, disinfect constantly their shopping trolleys and baskets etc. Once reopened, for ride operations, we have decided to deploy sufficient measures to endorse social distancing, such as initially we will operate the parks at 25-30% of its capacity, keeping sufficient seats empty on the rides. We will review the situation in consonance with government guidelines and take a call on operating at full capacity. Will The Company Recover Costs Of Health Compliance From Tenants? Success of any business lies in togetherness. As of today, to a certain extent, we don’t envisage to pass on the weight of health and regulatory compliance from tenants. Provision of hygienic facilities like sanitization tunnels, hand sanitizers etc. at the entry and exit points shall be borne by us. In case it goes beyond our horizons or if there are any government levies in regard to it, we will be discuss it with our business partners to share the weight. As of the moment, we are going into details and are in continual discussion with our business partners regarding the enhancement of sanitization and hygiene norms in the property. What would be the most important steps towards recovery? Prevailing pandemic has engendered a wave of fear of public places. All businesses in our industry are deprived of any revenue whereas being responsible to bear the fixed costs like payroll, maintenance and ongoing routine expenses besides meeting their debt obligations. Some concrete financial assistance measures from the government aimed particularly to sail out the businesses which are at the helm of existential crisis owing to this unanticipated and unprecedented havoc are crucial to stay afloat. Further, consumers may become wary of discretionary spending and social distancing norms also would be everywhere which may make consumers reluctant to venture out. Post covid-19, eradication of this fear from the hearts of the people and enhancement of willingness for discretionary spending would be key to recovery.