How hygiene has opened up new avenues for Kent RO Systems
Dr Mahesh Gupta, Chairman & Managing Director, Kent RO Systems Ltd, speaks at length to Adgully about the economic scenario in India, how businesses need to tread the ground carefully and with strategic even as lockdown restrictions are being eased in phases.
Well entrenched in the water purification business, Kent RO Systems has big plans to make deep inroads into the air purification segment once the lockdown is lifted. At the same time, Gupta is in favour of extension of the lockdown till June. He stresses that the first priority should be finding a cure for the virus. ‘If there is life, then there is livelihood. First build confidence and then talk about doing business,” is what Gupta affirms.
What is your perspective on the current overall industry and economic situation? How badly has the industry been impacted? How has COVID-19 disrupted the consumer durables industry?
The situation is very uncertain at the moment and we are in the midst of a deep crisis. More than one month has passed since the lockdown and we are not seeing any major improvement in the number of COVID-19 cases per day. The number of cases is only climbing each day. Only when the situation improves can we expect businesses to open. Even when it opens, I have my serious doubts if it will be normal as the situation is very uncertain.
When it comes to consumer durables, we have to take it by each product. This is the summer season and it is the peak sales time for refrigerators, air conditioners and air coolers. The month of April has gone and there were no sales of ACs, refrigerators and air coolers. Perhaps television may pick up and you may expect some sales later, may be during the festive season, as people are and still will be watching television.
The COVID-19 impact has hit the overall industry and it is bad. All the industries are shut and the first quarter has gone for that matter. I am still surprised to hear from some economist that that the GDP will grow by 1 per cent instead of 5.5 per cent, if a quarter has gone, how can we expect to grow at all? The service sector and manufacturing are not functioning and only agriculture is producing, which in any case is a small portion of the economy.
While Pharma sector may not be that badly hit, which are the other sectors that you feel will have to bear most of the brunt now that lockdown restrictions are being gradually eased?
The data on pharma, which is just out, states that at present only the treatment for COVID-19 is in progress. Treatment for other ailments is not happening although people are sick. The pharma industry is down by 35-50 per cent. Lesser number of patients with other ailments are visiting hospitals amid the COVID-19 pandemic.
Consumer durables has not taken the major brunt, but within consumer durables, the seasonal products have borne the major brunt. Service industries like lawyers, chartered accountants, are not able to work during the lockdown and, therefore, there is no cash flow happening in the service sector; maybe they will cover this up later. People providing individual services such as electricians, plumbers, as well as retailers and daily wage workers have also taken the brunt and these people are not going to be paid during the lockdown period. In India, people in the organised sector are contributing only to 22 per cent of the jobs, while the remaining sectors like the unorganised sector, contractual labour, daily wage people and the construction industry, who contribute more, have taken the maximum brunt.
The lockdown has disrupted the industry, including distribution and supply chain. Post the lockdown, how do you plan to get them back on track? What role do you want the government to play here and what role does the industry have to play from the operations point?
First of all, we need to take control of the disease. Efforts should be put in the direction of conducting more tests and coming to that level where the disease is controlled and erase the fear in people’s minds. Today, people are scared to use public transport, or for that matter even the hail taxis, as there is fear because the disease has not been wiped out. Even if the factories are open, the attendance will be thin as the labour force has gone back to their native places and will be reluctant to return and join work immediately.
There are various issues in front of us and there is no simple solution that one can suggest. The confidence has to be built and the government is moving in the right direction with the lockdown to control the disease. I feel that the lockdown needs to be continued till June-end. Follow the Chinese model, let there be economic slowdown and losses, but first and foremost take control of the disease. We will have to come forward and support the people who cannot afford the essentials and provide then with some kind of financial package. Some industries will be hit, so for those sectors reduce the interest rates. We need to think out of box and come out with bold ideas to tackle this situation.
According to me, if there is life, then there is livelihood; but if there is no life, then there is no livelihood. First build confidence and then talk about doing business.
How long do you think this entire impact is going to last? During these tough times, especially for the consumer durables industry, is there any kind of contingency plans and measures that are being put in place?
Every industry has to draw out its own plans and work on an optimistic plan and a pessimistic plan. Every industry has to come up with its own firefighting equipment and fight it out. From the government side, you cannot expect much as they don’t generate any revenue and they have no funding. Our foreign remittance has come down as people overseas are not working now. Even the exports have taken a hit as every country is not in a good shape. On the import front, at present no one will import from us. The only silver lining is the huge dip in crude oil prices and we can import that at lower price. I can only quote what the economists are saying as I am not an expert and according to them, the impact will last for two years.
The consumer sentiments are very low. We are seeing change in their behaviour and there will be more changes as we go further. Post the lockdown, people will focus more on the basic needs, so how do you plan to revive and boost the consumer sentiments and revive the demand?
Firstly, the consumers should have enough disposable income in their hands. Secondly, he or she must have a need and thirdly, there should be an urge to purchase, only then it will translate into business. Many consumers don’t have the need and they have enough things in the stock. They might have two phones, but they would still want to buy a third phone because new technology has come and they are flushed with money and there is an urge to buy. These things will help boost the demand. But ultimately, it all boils down to how much money there is in the consumers’ pockets. Similarly, when the farmers sell their produce and when they earn, they go shopping, otherwise they will also not venture out to shop. Indian consumers are very conservative, they will buy only when they have money in hand and not just take a loan to make purchases. Our banks and financial institutions do not have that kind of muscle power to sanction consumer loans as our economy has still not evolved to the level of the developed countries.
How do you plan to revive demand in the water purifier and air purifier categories? Health and hygiene is the uppermost in people’s minds. Will that give you an advantage?
Clean water is essential for people as the concept of hygiene has shot up and people will certainly look for water purifiers. The demand for water purifiers will not come down, although there is a perception that river water is getting cleaner as there is less pollution now. But there is no guarantee that this river water will remain clean even after lockdown. As far as water purifiers are concerned, I don’t see much of loss that will happen. Whatever surplus has got supressed during this period will get sold in the next four months’ time. People will get money in their hands and if they don’t get it, they will manage to raise money.
Air purifier is a comparatively smaller segment when compared with water purifier. People normally go for air purifiers once they come across visibility issue and when they see extreme pollution. We expect that in the air space there will be some new requirement, which is sanitation, where people will like to spray to kill bacteria; I would call this as a disinfectant. Very soon people will demand disinfection of their homes and which is where we are preparing ourselves to take care of those demands, because we are in the business of air purification.
Within air purifiers, we have two types of requirements. While one will remove the air particulates, the other will help as a disinfectant. We are making a product which is known to kill bacteria and virus in the atmosphere. And soon we will also make some more products which will be able to disinfect the closed indoor spaces. We have two variants here, one is for particulate matter removal, which cleans dust and dirt particles; then we the Ozone air purifier, which had less demand earlier and which takes cares of bugs in the air. We have still not launched our air purifiers because we cannot sell them currently and hence, we are not advertising. We also have product to clean vegetables, which we have not promoted. Once we promote them, there will be immediate demand and we can push all these products once the lockdown ends.
When it comes to marketing and campaigns, in the post lockdown period will your focus shift more towards digital?
You need to build a good marketing strategy, which will be further divided into different media. Television will continue to occupy its space, followed by print – as they say, old habits die hard, so people still have the habit of reading the newspaper as it provides credible and authentic information. Meanwhile, spending time on digital has also gone up. We won’t see people partying or visiting multiplexes and other public places any time soon. So, whatever free time one gets after office, they will be glued to various media channels. The consumption of digital media has shot up by 100 per cent. And today, we are in dichotomic situation where I will get noticed in the media as there are no brands that are advertised, but on the other hand, we have no money to spend. On the new products front, we will explore more on the disinfectant space besides that we have plans to introduce new products in the appliances space, like dough maker and bread maker, which will be useful to households as maids are still not allowed into homes. Finally, we will keep exploring in the hygienic space by innovating with more new products.