Responding to COVID-19 threat, 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 other locations. And mall operators are apprehensive of a prolonged troubled period even if normalcy is restored in a few weeks from now.
“The impact of the shut-down of the Shopping Centres across various cities has been beyond comprehension,” says Abhishek Bansal, Executive Director, Pacific Malls. “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.
Shibu Philips, Business Head, Lulu Mall says, “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”.
SCAI (Shopping Centers Association of India) has now sought government’s support by way of a moratorium period during continuation of Pandemic, in repayment of bank loans, interest, EMI, etc. without levy of any penalties including penal interest. It has also demanded to avail short-term financing options for a period of 6 to 12 months, at lower interest rates to meet the increased working capital requirements.
(representational image used)