V-Guard To Focus On Stabilizing Supply Chain This QuarterThe Kochi-headquartered company aims to increase its sales through e-commerce in the months to come

Coronavirus first started making headlines by the end of December 2019. Despite intense preparation to tackle this invisible enemy, the virus has spread now across countries world-over. The virus has not only claimed over 700,000 lives across the world but also thrown businesses into disarray.

Limited cash runaways and negligible revenue generation have shuttered thousands of businesses across sectors.

大流行甚至没有放过几十年的同情nies as they observed zero to negligible sales amidst months of stringent lockdowns. V-Guard, a 40-year old consumer electrical and electronics company in India, despite witnessing a significant plummet in terms of revenue has remained resilient.

In an interaction withEntrepreneur India,V. Ramachandran, chief operating officer, V-Guard said, "We were prepared for the lockdown weeks before it was announced. After seeing China and other European countries, we set up a cross-functional team that quickly shifted to online."

He said since V-Guard has invested heavily in contemporary technology, its employees were provided with laptops and other equipment to continue its operations at the comfort of home.

However, the stringent lockdowns halted the work in factories and there was a drop in revenue collection.

V-Guard generates significant revenue through its summer product lineups which range from fans to stabilizers. Before COVID, the company deeply invested in the raw materials and had noteworthy inventory in the pipeline.

Though over the years, V-Guard has increased its cash runaway, once the lockdown was lifted, the primary focus of the team was to recover the cash by liquidating its inventory.

"By the mid of July, we were able to recover a majority of the cash that was stuck," he added.

He said the second big challenge that the team faced was the work resumption in the factories across the country in the post-lockdown period. V-Guard, with the help of vendors, provided personal protective equipment (PPE), sanitizers and masks for its workers in warehouses and factories. The factories started functioning with a limited workforce by the end of May.

The company since June has been operating in a contactless working environment for its employees' safety.

According to Ramachandran, V-Guard is focusing on restoring the gross margin. "As our factories were non-operational for days and production started much later in June, there was a high non-operating cost which dented our gross margin for the last quarter," Ramachandran added.

V-Guard recorded a 42 per cent drop to INR 408 crore in terms of consolidated net revenue in the first quarter, when compared with last year. It saw a steep decline of 93 per cent in terms of consolidated profit after tax when compared to the corresponding period of the last year.

With the businesses resuming in the "Unlock' phase, V-Guard is putting efforts to stabilize the supply chain. According to Ramachandran, there has been an imbalance in the supply chain because of frequent lockdowns in the locality where factories and vendors are present, thus halting the entire operations. Apart from this, he also noted vendors were working at half capacity, resulting in output drop.

"So for the ongoing quarter, our main challenge would be to stabilize the supply chain," he added.

He believes that while all-weather products such as wire, switch, and chimney will see significant demand in days to come, summer products such as air-cooler will only see recovery in the summer of 2021.

Ramachandran said in the post lockdown phase, V-Guard has seen a significant rise in demand through the e-commerce platform. "Earlier if there were 100 orders through e-commerce, the number now has gone up to 140 orders due to the pandemic," he said.

The company through Amazon and Flipkart sells six per cent of its total production and hopes to achieve double digits in the next nine months.

The company has significantly expanded in the southern states over the last ten years but is now focusing to increase its presence in the northern parts of the country.

"We see a huge opportunity for us to penetrate deep and build a strong connection in north India with the help of our multiple product categories in the next four to five years period," he added.