Most retailers suffer losses, some have shutdown
By ZAHID H JAVALI
Most businesspersons in HSR Layout have blamed demonetisation and GST for their losses in the last one year. Some say their turnover came down drastically for the first few months after demonetisation. The others contend that their profitability has suffered, and forecast that it may take another year or two for things to stabilise. The residents are unhappy with GST because the prices went up even before GST and went up even further after the legislation came into effect.
‘BUSINESS IS DOWN BY 60%’
“The compliance is too much,” says Kavitha Reddy who runs an outdoor sports firm. “I used to go to the auditor only once a year, but now GST filing is mandatory every month. It’s hell and the cost has gone up.” What about demonetisation? “GST killed the ease of doing business and demo killed the volumes, bringing down my revenues by 60%. People are not spending like before.”
‘NET MARGINS DOWN BY 9%’
John Thomas, the manufacturer of Herbal Strategi range of insect repellants, floor cleaners and pet-care products is hit by the double whammy of GST and demo. “Cash sales from supermarkets were hit during demo and distributors refused to take fresh stocks during GST implementation. We lost three months of primary sales. We are particularly affected by GST as tax rates have gone up and our net margins are down by 9%,” he says. “Much of our business operates on cash, just like other manufacturers, so we have stopped advertising for now. We were paying 5% earlier, but now under GST, it’s 18%. Post GST, the MRP of our products is up,” he says. “The sales are not affected though our profitability is slightly down. I am just hoping that GST will be good in the long run.”
’BUSINESSES HAVE SHUT DOWN’
S Imran is unaffected by demo and GST, as his customers are overseas. “But I know people in HSR whose businesses have folded up, like furniture stores who were not able to pay the rent and shut down,” he says. “Other businesses have recorded fewer sales. Under this mad government, saving expenses = earning.”
’VOLUMES HAVE COME DOWN’
Restaurateur Chethan Reddy says his high-value customers are now spending and tipping a lot less, leading to an overall dip in business, thanks to demonetisation. “Now, the business is recovering gradually,” he says. “GST is progressive but was implemented in haste. Not many people are aware of it, and compliance is an issue.” Echoes retailer Gangatharan: “GST has increased the cost slightly.” Agrees printer Kshemendra Sharma: “I was paying 5.5% tax earlier, but now it’s 18%, thanks to GST. And my volumes are down drastically because of demonetisation.”
’WE SHOULD FACE IT AND MOVE ON’
Retailer Suraj Lulla is perhaps the only person who is in favour of demonetisation and GST. He says business is going on as usual after the initial cash-crunch caused by demonetisation. “GST and demo are some of the best and boldest moves by the Indian government in the last decade that I have seen,” he says. “Business is as usual and I don’t think I can pass on the market status blame to these two legislations. I am very confident that they will be a boon in the future. There will be ups and downs like any other new initiative. We just need to face the reality and move on.”
‘BENEFITTED BECAUSE OF GST’
Thanks to GST, the prices of watches and India-made luggage have come down by 3-4%, according to Suraj. “Every state can grow with GST,” he says. “Both the manufacturing state and the consuming state will be benefitted. It will take five years for the real results to show once development takes place and suitable infrastructure comes up.” Branded retailers like Suraj benefitted because of GST as the brands are re-pricing the products by a markdown of approximately 7%. Suraj does admit that footfalls are down by 12-15% but he continues to engage with his customers and shore up his revenues through initiatives like organising drawing competitions, celebrating store anniversaries and so on. No wonder, 48% of his customers are repeats.
’WILL BENEFIT IN THE LONG RUN’
SM Thamar who runs a garment factory is suffering from a 40% downturn in business. “About 30-40% people have stopped or postponed their garment purchase,” he says. “Demonetisation is a good idea that was badly implemented. The rich people never stood in line to deposit their cash, because the bankers were more than willing to do it for them. It’s the poor and the middle class that suffered the most.” About GST, Thamar says, “It will take time since it’s a country of billions of people. I think GST will benefit in the long term.”
HEALTHCARE ISN’T AFFECTED
Doctors running clinics and businessmen running hospitals were unaffected by GST. The healthcare industry is exempted from GST. However, the prices of life-saving drugs soared by 12%. Which is bad for the consumers. We are talking about high-value drugs used to treat rare diseases like bone marrow transplant, Hodgkin Lymphoma, Crohn’s disease and melanoma. About seven crore people could be affected by this hike which was nil before July. However, the tax increase of 2.29% on general drugs will have no impact on the consumers as the Indian companies have decided to absorb the cost and not pass it on to the patients.
CORPORATES UNAFFECTED TOO
Corporates and educational institutions are unaffected by demonetisation and GST too. Atleast those who were always using wire transfers and paying service tax.
’SMALL BUSINESSES WORST AFFECTED’
Retailer Christopher is mighty affected by both demo and GST. “My businesses have totally gone to dogs,” he says. “There is no sign of improvement in the last one year and I don’t see any chance of improvement in the next six months. Only the lifestyle stores have benefitted. The middle class business community is the most hit.”
