Parle may cut up to 10,000 jobs amid sluggish demand

[kevinUsa]

Biscuits and confectionery firm Parle Products is likely to fire as many as 10,000 people if the slump in consumption continues, signalling that the Indian economy has slowed down. To recap, India’s gross domestic product (GDP) growth has slowed to 6.8 per cent in 2018-19 — the slowest pace since 2014-15. Last week, Prime Minister Narendra Modi had reviewed the state of the economy with Finance Minister Nirmala Sitharaman and other top officials of the finance ministry.

The maker of popular brands such as Parle-G, Monaco, Milano, Hide and Seek biscuits and Mango Bite toffees has a turnover of more than Rs 10,000 crore, and it employs 1 lakh people. Parle operates 10 company-owned manufacturing facilities, in addition to 125 third party plants. The company’s more than 50 per cent of sales come from rural markets.

Mayank Shah, category head of Parle Products, told a leading financial daily, “We have sought reduction in the goods and services tax (GST) on biscuits priced at Rs 100 per kg or below, which are typically sold in packs of Rs 5 and below, but if the government doesn’t provide that stimulus, then we have no choice but to let go of 8,000-10,000 people from our workforce across factories as slowing sales are severely impacting us.”

Under the previous tax regime, the sub-below Rs 100 per kg biscuits were taxed at 12 per cent, and companies had expected the goods and services tax (GST) rate to be fixed at 12 per cent for premium biscuits and 5 per cent for the lower-priced ones.

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Following the roll out of the GST in July 2017, all biscuits were brought under the 18 per cent GST rate, forcing companies to raise prices which negatively impacted sales. Parle, too, had hiked prices by about 5 per cent, which led to sales fall considerably, the publication quoted Shah as saying.

Parle competes with players such as Britannia, ITC and UNIBIC in the Indian market. It is worth noting that the company has ventured into snacks, bakery items such as cakes and rusks and got into staples segments.

Last week, FMCG major Britannia Industries’ managing director Varun Berry had raised similar concerns when he had mentioned consumers are even not ready to buy Rs 5 packs of biscuits. “We’ve only grown 6 per cent and the market is growing slower than that,” Berry had said at a post-earnings conference call. The company’s net profit declined 3.5 per cent year-on-year to Rs 249 crore for the quarter ended April-June 2019.

“Weakening consumer demand is because of increased GST on biscuits and worsened by the absence of adequate government stimulus. We have multiple biscuit brands that are aimed at mid-and low-income consumers which form the core consumer base of a category such as ours, and we are hoping the GST increase will be rolled back if the government wants to revive demand,” the financial daily quoted Shah as saying. 

Market researcher Nielsen had lowered its growth prediction for the FMCG sector last month to 9-10 per cent in 2019 from its previous outlook of 11-12 per cent, citing a slowdown in the rural economy.

[jalsa01]

20 Rs Biskut pack ki 5 % price tag add cheste 21/-  which is not a big deal for ppl who can afford to buy Bickut packets.....    Fault ekkado undi adi vetakkunda annitiki GST ne ante etta saami...

[kevinUsa]

1 minute ago, jalsa01 said:

20 Rs Biskut pack ki 5 % price tag add cheste 21/-  which is not a big deal for ppl who can afford to buy Bickut packets.....    Fault ekkado undi adi vetakkunda annitiki GST ne ante etta saami...

u see  it as 1re

but when u look at macro level its worth crores

[jefferson1]

Mei bhi chowkidar