Dev Chandwani is business development director at Deceuninck India, subsidiary of Belgium-based uPVC door and window systems specialist Deceuninck NV. He talks to Sourcing Hardware about how his company is dealing with the corona crisis, and the impact of COVID-19 pandemic on the domestic fenestration industry and the Indian economy.
How has COVID-19 affected your industry? What may be the mid-term impact of this assault?
The PVC (polyvinyl chloride) window industry has two markets: new buildings in the residential and commercial space encompassing hotels, hospitals, and institutions; the other one is replacements or renovations by individual homeowners. The new building construction slowed down drastically in the last two years, and with the lockdown, everything has come to a standstill. From initial reports based on discussions with many developers across the country, the situation is very grim. We are looking at a loss of production of 3-4 months in a few regions and more in some parts of the country. Also, the onset of monsoon will delay construction by another 2-3 months. The windows come in almost at the end of the construction work, and if the building construction is postponed by 3 months, window production, supplies and installation will be delayed by 6 months easily. A 40% downturn in sales in March and zero sales in April is a big hit. The industry estimates a 50% overall loss of revenue in 2020-21.
Crisis management is a critical element of leadership. What initiatives did your strategy team take to safeguard your stakeholders?
The morale of the team during such a global crisis is very important. Our top management is doing everything possible to keep the team positively motivated and occupied during this lockdown period, with innovative competitions and knowledge sharing sessions. Health and safety are equally important. All employees are currently working from home and following local government regulations. Everyday health reporting is done to ensure that everyone is safe. Commercially it is a crisis which is still being analysed. Certain measures for reducing fixed costs, by discussing with vendors and sub-contractors, are being taken to keep everyone afloat. Reassuring customers on supplies once lockdown is revoked is another essential component to keep the business alive. The collections are a big issue. The credit risk analysis and discussion with customers is important. The transparency and conservative attitude is necessary, but we should not go overboard and create panic.
How do you assess the economic management by the government? What more can be done? To what extent will the stimulus help your industry recover and revive?
Currently, the Government of India, like many others, is focused on the health and safety of the citizens. Economically, the measures taken are not enough, but when all the businesses are closed, daily wage earners are the most hit. The first requirement was to ensure they get some money and food for the remaining period of the lockdown. This has been done to a certain extent. Given the size of the country, population and un-organised sectors, this is not enough. Reducing interest rates is a good move, but when businesses are closed, buying also stops. The moratorium on EMIs is just postponing the debt to a later date. If a person loses his job, how is he going to pay after 3 months? As the crisis has hit all industries, the government needs to analyse the total loss and work out strategies to support all industries. Some of the steps could be:
- Reduce corporate taxes for 2 -3 years.
- Compare the stock, GST collections on sales last year to this year and tax paid in 2019-20, and come out with special schemes for every individual company. I think one plan for all is not going to work, as every company has different situations.
- Remove income tax on individuals. People are worried about their jobs or will be forced to take pay cuts. Under these circumstances, income tax would be an additional burden.
- Create more government projects – PMAY (Pradhan Mantri Awas Yojna) can be extended to MIG too. This will spur a lot of construction jobs and business. As work-from-home will be the new norm, the commute will not be a major issue
In your opinion, how will the COVID-19 crisis play out in the coming months and years?
The human spirit is always resilient and will definitely overcome this crisis. With a couple of companies announcing that they are moving towards human trials for the vaccine, the situation could be completely different in the next 12 months. Most important would be the next 4-6 months, when companies will struggle to get their sales and operations back on track. With lower interest rates and liquidity in the market, investments would start coming in. A couple of companies are already talking about moving their investments from China to Vietnam or India. It could become a reality if the Centre and state governments work together and create world-class infrastructure. Industrial or mechanised farming and packaging industry are bound to rise. Frozen foods and the ready-to-eat market could also increase. The lockdown has changed a lot of habits of people and we could see new industries cropping up to cater to the same. Consumer durables/electronics, with special focus on work-from-home, could be the next big revolution. Television has to evolve into something smarter than SMART TV.
Every crisis has a silver lining. What market changes and demand drivers do you visualise, which may open new fronts for your company?
Work-from-home could cause a spurt in the renovation market. Thermal efficient and energy-saving windows would become a necessity. We see a possibility in the increase of window air purifier systems. Closed rooms would need air exchange systems to avoid mould formation and dampness on walls.