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FMCG sector pins hope on 2018 to erase woes of GST, demonetisation

Recovering from the double impact of demonetisation and GST implementation, FMCG companies and consumer durable firms are pinning hopes on 2018 that improved market sentiment will bring them back to the growth path. With the streamlining of the process after GST implementation behind them, the companies feel that the prospects of good economic growth, coupled with a revival in demand and consumption, will help them overcome the hit they took in volumes and profits in 2017. Interestingly, these firms believe that the demand should be evenly distributed between urban and rural markets. “With the market sentiment showing signs of improvement and stability returning post-GST implementation, we expect the demand scenario to move up, both in rural and urban markets,” said Lalit Malik, CFO, Dabur India.

Expressing similar views, Harsha Vardhan Agarwal, director, Emami, said that retail and rural businesses have bounced back fully and are growing in healthy double digits while wholesale channel is yet to recover fully at about 80 per cent of the base. “We believe that economic reforms like GST and demonetisation would help drive economic growth in a structured way in the long term and we expect further improvement in our performance in coming quarters,” he said.

Recollecting challenges faced in 2017, Sunil Kataria, business head (India and SAARC), Godrej Consumer Products (GCPL), said, “Demonetisation was a black swan event for the Indian economy. Among many challenges, the biggest disruption was caused in the distribution network for FMCG companies.”

Malik added, “In the short term, both demonetisation and GST impacted wholesale trade because of issues related to execution and led to a massive amount of destocking across the trade channel.”

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