LPG price hike: Hoteliers fight for survival as cylinder cost cuts into income
As the price of the commercial LPG prices cross Rs 2,500 mark in Chennai, future looks grim for the hoteliers.
“If you can’t pay for the LPG cylinder, why do you run this hotel? Close it and go to your home town,” a gas delivery agent shouted at an eatery owner at Pallavaram in Chennai on Wednesday night, a day before the commercial LPG price was increased by Rs 8 per cylinder.
“I am not leaving the place until you pay at least Rs 500 for the cylinder,” the delivery agent yelled at the shopkeeper and asked, “Why should I get a scolding from my owner for you.”
Raja Kannan, owner of the hotel, bows his head in shame and asks him to come the next day to get his due. However, the agent was too stubborn to leave and finally got Rs 200 before warning Raja to settle the pending dues by the next day.
Question of survival
Raja has been running a small hotel for over 20 years that could seat occupy eight people. However, he has never seen such a crisis before the lockdown. “Lockdown was the first blow to us. Now the LPG price hike is testing us and it has become such a big threat that I could shut the shop anytime soon,” he bemoans.
Also read: LPG price hiked by Rs 3.5, crosses Rs 1,000 mark
Though Raja’s hotel menu is limited to Dosa, Idly, Chapati and Parota for breakfast and dinner, he couldn’t reduce the usage of the cylinder much. “At least once in four days I need a new cylinder. With the rising prices of oil and vegetables, the rise in price of the LPG is an additional burden,” Raja says.
He has taken a number of steps to reduce expenditure, but to no avail. “I first increased the price of the food. Then I reduced the salary of my cooks; later I bargained and got rent for the shop reduced. I even reduced the opening hours of the shop to reduce the electricity bill. But, despite doing all this, I am making a loss and I am clueless now,” Raja adds.
Raja is one among the many hoteliers in the city trying to control the loss and run a business.
A big struggle
Another tea-shop owner at Nungambakkam in Chennai, S Sangeethan, says to run a shop without a loss is a big struggle now.
“At least hoteliers had the chance of opening their shops a little earlier since takeaways were allowed. But, for tea shopkeepers it was a bloodbath,” Sangeethan says. “Even though the government allowed tea shops to open in August 2020, I could open only in January, 2021 after getting a loan,” he says.
Now the rise in the price of the LGP cylinders has troubled him so much that he has to make changes to his plan every month based on the price of the LPG.
“Whether you sell tea or not, the gas should always be on. So, I require two cylinders every three days — one for making tea and another one for making snacks. With the rise in price, I reduced the salary of the tea master; I reduced the shop timing; I reduced the number of employees. Even after all that, I am struggling to break-even,” Sangeethan shares.
Considering the rise in the price of the LPG cylinders, according to Sangeethan, even if you sell tea for Rs 20, it wouldn’t be enough. “But I have not increased the price. If I increase the price, I will not get my regular customers. Had I been in a place where most of them are floating customers, it would have worked. But here, I can’t afford to increase the price,” he shares.
Around 10 years ago, according to hoteliers, the price of the commercial LPG was somewhere between Rs 1,000 to Rs 1,200. “But now it has crossed Rs 2,500. In the last couple of months alone, they have increased the price so many times that we have even lost count of it,” Muthukrishnan, a small hotel owner in Ramapuram in Chennai, says.
On Thursday, after the price hike, the 19-kg commercial gas cylinder cost stood at Rs 2,354 in Delhi, Rs 2,454 in Kolkata, Rs 2,306 in Mumbai and Rs 2,506 in Chennai.
Demand to reduce GST
Few hoteliers have demanded the Union government to reduce the GST for them. “At least that could save us from falling into more trouble,” says M Ravi, President of Chennai hoteliers association.
“Without any input return, we are paying 18 per cent GST and for every product we purchase, the tax slab is 18 per cent. At least if the Union Government reduces it to 5 per cent, we will be able to survive,” Ravi adds.
Few of the commercial LPG cylinder supplying agents to whom The Federal spoke to say that almost all the small hotel and tea stalls have a minimum credit of Rs 20,000. “Some of them have even shut their shops and vanished. We couldn’t trace them and we are paying for it,” shares one of the agents, supplying cylinders to small shopkeepers.
However, mid-level restaurants and chain restaurants, who purchase LPG cylinders in bulk, between 50-100, are asked to pay immediately.
Induction stoves a way out, but still costly
On the other hand, few of the mid-level hotels and restaurants, who run a chain of restaurants, are also exploring ways to switch to induction stoves.
“If the price of gas increases at the present speed, I think it would definitely touch Rs 3,000 in another couple of months. Also, I cannot pass on the burden completely to the customers since we all increased the price only in April. The only option left is to move to induction stoves,” says M Sundaram, a restaurant owner, who runs five restaurants in Chennai.
Ravi, who was also of the same opinion, the installation cost and procedure for installing induction stoves came as a shock.
“The only way out was to move from LPG to induction stoves. But, you know, the entire kitchen set-up has to be changed and it requires 30 per cent more money than what it would require to set up a kitchen with LPG. For that as well, the GST is 18 per cent for purchasing the induction stoves and utensils,” he shares.
Also read: While Finance Ministry takes refuge in data, the poor bear the brunt of soaring inflation
