Daya Ram Pandey Paanwalas Profits Tumble

Saturday, 07 June 2008 15:55

Written by onion uttapam news

Daya Ram Pandey Paanwala, the five feet by seven feet paan-bidi shop at 90 ft cross lane, LBS Road, Mumbai has suffered a drastic reduction in profits for the fourth quarter. The first two months of the first quarter of the new financial year also haven't shown much improvement in sales.

It was the worst quarter since Mr Daya Ram opened the shop at the street corner in March 2003 and far below his family's expectations.

Inflation, global economic slowdown and weak consumer confidence hit sales of paans, gutkha & cigarettes between January & May, the Paanwala reported at the extraordinary general meeting held yesterday at the premises of the paan shop.

"We are looking at flat revenues verses the first quarter of the last financial year" said CEO, Daya Ram Pandey. "Global economic conditions are a cause of worry. Runaway inflation has hit our loyal consumers the hardest, resulting in decline of our top line."

Net sales for the fourth quarter fell by 43 percent to Rs. 75000 compared to the third quarter, while net income fell by 54 percent for the same period.

"There has been a rise in overhead costs which has affected our margins this year. Our rental costs increased last year due to booming real estate market. But inflation and changing consumer preferences have resulted in slowdown in sales" said Hariram Pandey, son of Daya Ram and managing director of the shop.

Daya Ram blamed the weaker sales on increased competition, lesser consumer spending and unfavorable government policies. "Two new paan-bidi shops have opened in last year - one on the opposite end of the street and other in the parallel lane adjoining our street. We have lost some of our customers due to it. Government policy has also been not too favorable to us. Health Minister Ramadoss's continued campaign against cigarette smoking has hit us hard and we have been unable to attract new consumers in the 15-19 age range as easily as we used to before" said Daya Ram

But the duo is confident that they will be able to ride over the crisis and reemerge stronger. "We are diversifying and increasing the range of our products to cater to a wider market. Despite general slowdown in consumer buying, sales of agarbattis have grown by 23 percent in the last quarter. We are encouraged by customer response to many of our initiatives and new product offerings that indicate we are well-positioned to serve our customers needs and wants"

""This is a transition period for Daya Ram Pandey Paanwala" Hariram said. "We are taking aggressive action to solidify the store foundation and reduce expenses in order to position the shop for long-term profitability and growth."