The extended lockdown and zero sales for nearly two months have impacted the finances of Vivo, the country’s second largest smartphone firm by volume market share, which is now struggling to pay salaries to its staff.

For instance, Joinmay Electronics — a Vivo group entity that operates in western India — informed its employees, through an internal letter, that the lockdown extension had severely impaired its ability to pay salaries. Director Ding Zhijie said the firm was forced to implement “pay cuts for all employees beginning May 2020. Accordingly, for the month, employees will draw a salary equivalent to 50 per cent of their gross monthly salary”.

“With the announcement to continue the lockdown in May and a probability of further extension, means there will be no sales or collection in May too. Under these extreme circumstances, the [survival] of the company is critical because, if the company survives, our jobs survive,” Zhijie told employees through the letter.

While it managed to tide over the challenges in March and April, when despite “negligible sales and collections”, it paid 100 per cent salary to employees. Now, “it is impossible for our company to survive this crisis without sacrifices from each and every one of us,” he said.

In 2018-19, Joinmay – the Vivo group firm – raked in Rs 2,609 crore in sales, while its net income stood at Rs 47 crore. Unlike now, a good business environment had helped it post a whopping 49 per cent jump in sales, year-on-year, filings at Registrar of Companies show. It contributes around 16 per cent towards Vivo India’s Rs 17,000 crore revenue.

Joinmay is not alone. With the lockdown’s end nowhere in sight, several other subsidiaries and group firms are being forced to cut costs. Sources said, apart from salary cuts, many firms have postponed incentives by months and delayed appraisals indefinitely.

When contacted, a Vivo India spokesperson said the letter was prepared as an internal memo and was not intended for circulation. “There is no final decision that has been taken yet,” he said, quoting Zhijie.

According to Gfk data, sourced from the industry, the smartphone market lost about Rs 5,000 crore in sales in March, while it saw a complete washout in April, compared to sales of Rs 10,700 crore a year ago.

And with lockdown continuing at least till May 17, around Rs 7,000 crore of losses are estimated to have been added. Analysts suggest, loss of business for any leading player like Vivo will be in line with their respective market share.

The partial lifting of the lockdown in green and orange zones didn’t help most consumer electronic players like Vivo. Estimates suggest, since all major metro markets continue to be classified as red zones, only about 20 per cent of the market is open for retail activities — including e-commerce deliveries of electronics items.