Industry & Lockdown

‘It will take 18 mths for hospitality business to come back on track’

The Tribune Interview

‘It will take 18 mths for hospitality business to come back on track’

Sonica Malhotra Kandhari, Joint Managing Director, MBD Group

in an interaction with Deepkamal Kaur, Sonica Malhotra Kandhari, joint managing director, MBD Group, shares challenges they will have to face due to the lockdown. Here are the excerpts:

How has the lockdown impacted the MBD group?

We are into multiple industry right from education to hospitality and retail. Each segment has suffered in a different way. Since the hotel industry is tourism dependent, it will face the deepest dent and for the longest period of time, which could even be 18 months. Since our retail business is dependent on domestic usage, we expect to start reviving it in the next three-six months depending on product categories we are dealing with. Of course, consumption of people is getting shrunk because of fall in overall per capita income. Our third segment — education — will come back to shape within a month of opening of schools.

Do you expect any of your businesses to start running in near future?

Since hotels and malls are in the no-no list of the government, we might be able to open our education vertical from May 3 if the lockdown is lifted. Telangana will be an exception as it already has announced the lockdown till May 7. Whenever it opens, we will get 30 per cent of manpower to work, including our editors and sub-editors (who are all currently working from home) and supply chain people.

How are you dealing with the wages part?

We have total staff strength of 4,000 employees at 62 locations. We have about 2,500 team members in education and 1,500 in malls and hotels. We do not want the lower rung staff to go through any pain. We are already giving them full pay, though our cash collections and recovery is nil these days. The very senior people, who already have good pay packages, will face 30 per cent deferral of pay. This deferral will be covered once the business resumes and we are in a comfortable position.

What is the share of online education in your overall education segment?

Our hard books business is 90 per cent. We had picked the online education as it is the demand of all students and teachers. They have wanted a mix of both. All those publishers who did not foray into online education have diminished. Thankfully, we picked it up. Recently, we have given access to 1,500 online books for Classes I to XII free of cost to teachers and students so that we are able to support them when they need us the most. This has given as a lot of enrollments in our app.

Have any of your major investments got deferred because of the lockdown?

Along with German company Steigenberger Hotels, we had started the construction of a hotel and development of commercial office space in Bengaluru, which has got stopped. The launch time was three years from now. But we can now foresee a further delay of six to eight months. But this is a hunky dory situation for us as we are already expecting hotel business will face the longest impact of 18 months or so.

What are the lessons you have learnt from lockdown as a businesswoman?

There are two main lessons that I have learnt from the situation. One is that growth cannot come with a lot of debt. Only those companies will survive the lockdown which have less amount of debt to repay. Even if deferrals come from banks, those with high level of debts to repay will face the toughest time. Even my dad, founder of the company, used to say the same. The second is that the fixed costs should be kept as low as possible and the companies should have a good amount of cash reserves and surpluses to take care of its people, even if the lockdown continues for the next two-three months.

Do you consider the current crisis as a challenge or an opportunity?

Of course, it is a challenge since we are into the hotel business. But it is an opportunity too as lots of our competitors will face failures and will not be able to survive. But we will be among those who remain in the hospitality business.

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