COVID-19: Sports goods industry hit hard with lockdown at ‘peak season’
A complete shutdown is the last thing a business or industry would ever expect to deal with. Situation becomes grim when operations…
A complete shutdown is the last thing a business or industry would ever expect to deal with. Situation becomes grim when operations are stalled at the peak of business season. While all business enterprises are reeling under the loss of opportunities and financial impact as the world has come to a standstill, sports goods industry in India is among the worst hit.
The business is shut at a time when sports activities and the business volume hit the peak. Sports lovers sentiments hit the peak in India with the Indian Premier League. The fact time and again is ascertained by broadcast audience ratings and sports business reports by top evaluators. On ground March-April is the time when a new crop of aspiring sportspersons joins sports academies. This is the new consumer base that adds to the year on year business growth of sports business industry.
Both the opportunities are lost. Add to that the clampdown on all exports and higher cost of raw material due to shortage of supplies. Impact on the industry’s growth will be hard to mitigate.
A Research & Markets report has predicted Indian spots sector to grow at a compound annual growth rate (CAGR) of 9% during the 2019-204 cycle. The lockdown, the industry veterans, fear is going to have a long-term effect on these predictions.
“No time is good to shut a business. But for sports industry there couldn’t have been a worst time. In March alone 10%-15% of the business volume is lost. We were hoping for some excitement. This is the time when young kids join academies. Not just cricket, but across all sports. That creates the best business opportunity for the products in the beginners segment. Think of a sport like swimming which has a very limited season in India,” says Paras Anand, Marketing Director, SG Cricket.
“Entire supply line has come to a standstill. In time to come there won’t be enough sports gear.
As majority of the businesses and the Government in India follow the April 1-March 31 fiscal year. Thus it was also the time for closing accounts. This is the time when the suppliers to the Government sector realise their outstanding dues from State-owned departments.
India’s leading sportswear manufacturer and top supplier to the Sports Authority of India and national sports federations Shiv Naresh Sports is dealing with a duel blow. Production and orders are halted and expected payments from the Government sector are deferred indefinitely, severely hurting the company’s fund flows.
“This is a duel blow for the industry that primarily deals with the Government sector,” Shiv Prakash Singh, Managing Director, Shiv Naresh Sports, told InsideSport.co.
“As the financial year in India closes on March 31, this was the time when all our accounts are settled. This results in the best cash flows for the company.
“There is also an opportunity loss. There will be fresh orders. Assembly line is deserted and the orders which are already despatched are held in transit. All revenue is halted, but as a responsible entrepreneur you cannot hold back all your expenses.
“We cannot blame anyone for this situation. Nor can we stop the salaries of our employees, daily wage workers and hundreds of other people who work for us. There are fixed expenses. An entrepreneur will have to bear that.”
While both the sports business entrepreneurs show commitment to honour the commitments to their workers, they also expect the Government to have a more considerable approach.
“These are testing times. The only priority for the State right now is to check the Coronavirus menace. We are with the nation in this fight. We will though expect the Government to be considerate and provide a conducive atmosphere to the companies and help them contribute to the entire eco-system,” adds Anand, while Singh echoes the sentiment.
For now supporting all their associates financially remains the top priority and concern for both the entrepreneurs.