Biscuits to automobiles: How real is India’s economic slowdown?
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Different companies are sailing down due to low performance in India’s economy. On Wednesday Parle Products Pvt Ltd, mentioned its financial struggle and if intervention of government is not done immediately they might reduce 8,000-10,000 workers. The Parle is not the only biscuit manufacturer facing the demand and deficit issue, Britannia’s managing director Varun Berry recently said, “We have grown only 6% and the market is growing slower than that. And that’s a little bit of a worry, because even for a Rs 5 product if the consumer is thinking twice before buying it, then there is some serious issue in the economy,” Berry was speaking in the company’s latest earnings call.

The Indian automotive industry has been badgered, bruised and continues to suffer great losses. Even Maruti (MSIL), the market leader and growth indicator for decades, has suffered a 36.7 per cent sale loss. Massive drop in sales has happened despite the introduction of recent models like the Mahindra’s XUV300, the Hyundai Venue and the MG Hector. Due to less demand, manufacturers are also having to cut down on production, sometimes even shutting their factories down to adjust inventory.

Hindustan Unilever marked only 6.61% revenue rise year-on-year, bring down the weekly collection at only 5% year-on-year which are lowest in seven quarters. Chief financial officer of Hindustan Unilever Ltd., was quoted as saying in a Financial Express report, “We expect the near-term demand to remain a bit subdued given the macroeconomic environment. Commodities and currency will continue to remain volatile.”

The above statements give a clear overview of different sectors which are getting massively affected owing to less demand, tax revenue, and so on so forth. Regarding the tax implication, Mayank Shah, category head at Parle, stated, “Consumers here are extremely price-sensitive. They’re extremely conscious of how many biscuits they are getting for a particular price.” The company had to reduce the biscuits in per pack.

Financial Express further reported Managing Director of Britannia, Varun Berry, as saying in the analyst call, “In the dairy business for milkshakes, we’ve employed no capital at all. It’s all third-party. Our manufacturing is done by a third-party. Similarly for wafers, we have started the business with a third-part with, in fact, two third parties, who are making our products. But yes, even if we were to employ the capital today, which we are not doing, we will get a payback in four years.”

Coming back to automobile sector, companies are demanding reduction of GST rate, vehicle scrappage policy’s introduction, regaining Non-Banking Financial Company (NBFC) sectors, which would provide certain financial relief. No regaining of NBFC would result in increase in vehicle registration fees.

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