Fast moving consumer goods industry impacted by demonetisation, says Godrej

The FMCG industry, which was looking forward to good sales following a robust monsoon this year, has been impacted by demonetisation, according to Godrej Consumer Products Ltd (GCPL).

“Given the good monsoon this year, rural sales had begun picking up postharvest from October onwards. This has, however, been significantly impacted in the last few weeks due to demonetisation,” GCPL Managing Director Vivek Gambhir told PTI.

“Since the rural economy is largely cash based and wholesaler dependent, the large cash crunch has led to a slowdown in rural sales. We believe though that the slowdown is temporary. We expect that as the liquidity situation improves, rural (segment) will start showing better growth,” he added.

However, GCPL said that it has been able to perform better than the industry. “We delivered over nine per cent volume growth in five of the last six quarters,” Gambhir said, adding that the impact of demonetisation “could be relatively lower” on the company in the ongoing quarter.

According him, this is a temporary phase. “While the demonetisation move will be good for the Indian economy in the medium to longer term, we expect muted growth this quarter. We believe, however, that this challenge is a temporary one,” he added.

The situation should normalise from the last quarter of fiscal year 2017 onwards, as the liquidity crunch eases.

Gambhir further said that as half of GCPL’s business comes from outside India, the impact on demonetisation on the company’s overall performance will not be huge.

“Our dependence on the wholesaler channel, which has been significantly impacted, is relatively less than some other players,” he said.