Sri Lanka’s biggest apparel exporter Brandix Lanka Ltd. (BLL) has announced a series of cost-cutting moves, including pay cuts as high as 60% for executive cadre, and Board members foregoing compensation, as internal measures to manage the impact from COVID-19 pandemic.
In a memo to the staff, Brandix CEO Ashroff Omar has said over the past few days, the Board worked around the clock to preserve cash and protect the company.
“Without committed revenues, we are compelled to take difficult actions and are required to cut significant costs out of our business,” he added.
Some of the decisions made include: BLL Board and CEO foregoing compensation for the next six months effective immediately; all executive cadre salaries being cut between 5% and 60% depending on salary levels; all capital expenditure frozen; all new contractors and consultants put on hold, and temporary staff discontinued; and all discretionary expenses deferred.
“We are also mindful of the fact that our staff and associates will be considerably impacted on account of reduction in earnings in the form of allowances and overtime,” Omar said in his memo, adding the company will be making more critical decisions over the next few days, and staff will be informed. Brandix Group has a staff of around 60,000.
Omar said while companies all over the world are in crisis mode, the situation in Brandix customer markets indicate that the world has not yet seen the full impact of COVID-19. “Thanks to the Government’s early actions, the situation in Sri Lanka hasn’t escalated yet. I hope and pray that we will be spared the experience that New York and other Western countries are going through at this time. My thoughts are with our colleagues and customers who are in the US, India, Bangladesh, Haiti, UK, Cambodia, Tokyo, Shanghai and Hong Kong,” Omar said.
Noting that he is in constant contact with Brandix key customers, Omar said the situation is dire. “They have cancelled all future orders and have in fact requested that we not ship what has already been manufactured. Some buyers have even requested discounts on top of cancellations. These actions are unlike anything we have seen before, and this has placed unprecedented financial stress on our company. The inability to generate revenue has placed our economy, our company, and our individual welfare at grave risk,” Omar told the Brandix team.
“However, we must and will come through this. Our industry must remain strong to lead Sri Lanka’s recovery,” he said, adding “We are optimistic that the Government will do what is right for our industry and our country.”
He reminded the Brandix team that over the years, many colleagues have journeyed with him through several turbulent storms. “Although we have not seen or experienced anything as serious as this, we have always come out stronger because of our commitment to our values and culture. Further, the changes we made in our organisation structure and the functionalisation of our business has placed us in a far stronger position today to ride through this storm.”
“Despite the despondency today, I am confident that no matter what we will prevail. This dark cloud too will present us a silver lining. It will give us the opportunity to unlearn and relearn, and to emerge as an agile and focused unit ready to face the realities of a new tomorrow. We will need patience, sacrifice, determination and above all, belief in yourselves and your own Brandix team,” Omar said, adding “We will get through this!”