One of India's largest mall operators is prepping for a two-year coma

• Even as malls are open now, Phoenix Mills is ready for a long haul of recovery.
• The retail consumption at Phoenix stood at ₹13, 874 million for Q4 FY20 which was down 15% year-on-year.
• While Phoenix Mills is confident that slowly people will return to malls as they will be considered as safe spaces, it is also building a war chest – it’s raising ₹1200 crore through funds.

Phoenix Mills, one of the largest mall operators in India, has opened its doors in several cities, but is still reeling under the impact of coronavirus. During its earnings, the retail consumption at Phoenix stood at ₹13, 874 million for Q4 FY20 which was down 15% year-on-year. The malls were shut in early March, even before the lockdown.

But even while malls are open now, Phoenix Mills is ready for a long haul to recovery. “At least the current outlook is that FY22 should see normalcy, so we should be similar to the levels of FY19 if not FY20,” said Shishir Shrivastava, managing director of Phoenix Mills during an earnings call last week.


A ₹1200 crore war chest for uncertain times and possible acquisitions

While Phoenix Mills is confident that slowly people will return to malls as they will be considered as safe spaces, it is also building a war chest – it’s raising ₹1200 crore through funds.The company is raising the money even though it has a current liquidity of ₹770 crore and has also availed the six-month moratorium offered by the Reserve Bank of India, as shared during the call.

But the company is keeping the door open for acquisitions.

“We are seeing unprecedented times and there is no visibility to the end of the crisis, so it will help to have some kind of a war-chest to meet uncertain times to pay down debt to probably even if there is some spectacular distress opportunity that comes our way because we believe in the long-term potential of our business to be able to participate in such an acquisition opportunity,” said Shrivastava.


Capping the capex

The company has also resumed construction of new spaces but with limited labour force. But Phoenix Mills, which has taken a hit in the first quarter of the current financial year with the malls reopening in limited capacity only in the last month, is also capping its capital expenditures.

“It is roughly around ₹340 crore odd between now and by the end of 2.5-3 years but within this year again we don’t expect to spend more. Between now and end of the year FY21 this number would be closer to ₹50 crores,” said Shrivastava.

Limited income from rentals

Phoenix Mills had earlier said that it will defer the rentals for retailers who have shops in its malls. The deferment works in a way that retailers can pay the rent for April in July, May in August, June in September and so on.

However, the strategy is still evolving, while for some it is considering a relief on rentals, it is also preparing for an increase in revenue share.

“It may be for one to maximum of two quarters, it varies from contract to contract and while we may offer relief of some 20%-30% on the minimum guarantee rent, we are on the other side also negotiating with retailers for an increase in the revenue share percentage for this period,” he said.


SEE ALSO:
Air India pilots are angry over pay cuts⁠— want salaries to be reduced in a graded manner

IBM, Accenture, Morgan Stanley and others hiring software developers and big data engineers