KUALA LUMPUR | Hatten Group will be closing its non-performing business units, which would see affected employees being placed on temporary lay-off scheme until the global economic situation recovers, upon which the company will arrange for their potential return.

The Melaka-based group, which is involved in property development, property investment, hospitality, retail and education, will also implement a 30% pay cut for employees firm-wide, while some will be on unpaid leave for six months starting May 1.

In an internal memo to staff dated May 8 seen by theedgemarkets.com, Hatten Group managing director Datuk Colin Tan said the group’s cash flow has not been in good shape since 2019 due to significant declines in its property development sales and rental income from investment properties.

“While we were trying our utmost to turn the situation around, the Covid-19 outbreak and the imposition of the Movement Control Order by the government since March 18 has decimated our turnaround plans,” he said.

To ensure business survival, Tan said the group will be taking a variety of measures to save every single asset that can be turned around. These include closing down all business units that are currently not generating sufficient revenue to pay for staff salaries and operation costs.

“For the other business units, our company will need to prepare for the challenges of the ‘new normal’. We can no longer afford to continue our business the way we used to because the world as we used to know it no longer exists,” he added.

Against this backdrop, Tan said the group will be taking certain austerity measures to conserve its cash flow and ensure continuance of profitable operations post-Covid-19. It will be restructuring its benefits and allowances, as well as delay payment of salary deferment.

Last month, it was reported that Estadia Hotel and Hatten Place Melaka, both owned by Hatten Group, had asked employees to take unpaid leave from April 15 to June 30 this year. Recently, two other Melaka-based hotels, Ramada Plaza and Emperor Hotel, said they were closing business indefinitely as a result of the pandemic.