On Tuesday, in a desperate attempt to explain the plight of thousands of employees working in the Naturals Salon and Spa chain in India, the founder CK Kumaravel took to Twitter. Bemoaning the losses they are forced to endure due to the current lockdown in the fight against the pandemic, Kumaravel declared that his business is collapsing in front of his eyes.
I need to pay salary to 10,000 people.
— CK Kumaravel (@ckknaturals) May 5, 2020
The business we built passionately for 20 years is collapsing in front of our eyes.
We paid 50 crores GST last year, can Govt refund 50% so that we can pay salary for 6 months.
This is the time we need GOVT help @nitin_gadkari @sang1983 https://t.co/tmrTQwYVx4
His tweet on the economic repercussions of COVID-19 highlights the plight of small and large entrepreneurs across the state who depend on daily earnings to pay salaries, rent, and handle other costs. Naturals has over 500 salons in the country, all of which are now closed down.
Why is your business at the ‘brink of collapsing’?
I’ve been receiving desperate calls from franchise partners and staff over the last week. They are being forced to pledge their jewellery to pay their staff for the month of May. This is not how I envisioned my business at this stage. We’ve been doing extremely well and are a well-oiled machine and now suddenly, the parlour staff are hungry on one end and the franchise owners are pledging their gold and personal items to pay basic salaries. If we don’t give them salaries, the staff’s suffering will only grow.
Why do you not have reserves or a cushion to fall back on for emergencies?
Our business model is such that for the first 25 days we pay salaries, electricity, rent and other expenses with whatever money we earn and in the last 5 days I share profits made with the franchise owners. This meant that our profits collapsed in March (curfew was announced on March 23) but this was expected and we could manage. But for the month of April, we could do no business at all and have made no money to pay salaries.
We approached banks for loans but they have been avoiding us with very lame excuses. Around mid-April they claimed that they would discuss the option after the festival time. Then they claimed to be working with lean staff and that they needed approval from higher authorities, so it couldn’t be done now. I then approached Non-Banking Financial Companies (NBFC) for loans but they said I have to give a guarantee for loans taken by all franchise partners and that the interest rate will be between 24-30%. I agreed to their terms to help the business survive, but they said the loan will only be released after the lockdown ends.
We approached informal sources too, but the interest is between 45-70%. That is impossible to pay back.
What can the government do to help businesses such as yours?
Please allow us to start work again. That is my request. No politicians or bureaucrats have been giving us solutions. If TASMAC (government run liquor shops) can be reopened, why not hair salons? If we can’t open in Chennai or other red zones, let us at least open in states and districts where it is safe. Allow us to begin services.
But is it sensible to open salons now, when it involves a high level of human contact?
I agree with you. Then, in that case we need financial assistance. Help us give salaries to our staff by providing soft loans or directly give us the salary amount per person. If they give us a soft loan, we can manage salaries for 10,000 people by giving them Rs 5,000 each. We’re taking care of rent and food for them as of now but we don’t know how long we can manage this.
Plus, the government is now allowing migrants to go back to their own districts and states. They should have sent them before the first lockdown or before the second one was announced. They are sending them during the third lockdown when businesses are partially opening. Even if we open the salon next week, who will we work with?
But considering the hardship guest workers are facing, why would you stop them from leaving?
From the migrants’ point of view, they are absolutely right. I sympathise and empathise with them. I’m not holding them back. But on the flip side, I don’t know when we will open our salons, and if we do who we will open it with?
How do you see the future for salons after the lockdown?
Our future is very bright. At Naturals, we have wonderful plans and think we will do very well. The customer is no longer going to look for specific stylists or nearby salons. They will look for the safest salon. And at Naturals, we’re more prepared than anyone else. Right from when the customer comes into the establishment, we have a plan.
L’Oreal has sent us a map to understand what China is doing after the coronavirus crisis. We have modelled our work structure based on that. When a customer walks in, we will consider him/her and the employee working on the client as asymptomatic coronavirus patients. We will ensure both of them are safe. Earlier we worked with 17 people but now we will work with 8 per day to ensure physical distancing. Right from shoe cover to gloves, personal protective gear will be provided to everyone in the parlour. We will also introduce personal single use kits for customers. We will offer sterilised equipment or tell them they can buy their own. Quite a few have asked for their own personal kit which is a business opportunity for us.
What will a personal kit have?
It will have a complete pedicure kit, scissors, trimmer and other equipment based on whatever service the customer is availing. We are thinking of avoiding shaving though. We want the face – nose and mouth – to be covered at all times inside the parlour.
A barber in Chennai took his own life on Wednesday because of financial constraints due to the lockdown.
This is the last thing we want, it is unacceptable and especially from my own community. This should not happen to any businessman or trader. I think the health pandemic is becoming an economic pandemic which can turn into a social pandemic. The government needs to act faster to prevent such events. Politicians and bureaucrats need to provide relief to entrepreneurs to help us sustain.