Parle Products likely to lay off up to 10,000 employees on demand slump; seeks stimulus from govt

The slump in demand for consumer goods seems to have hit the country’s largest biscuit firm Parle Products, which is likely to go in for a massive retrenchment of its employees if the situation does not improve, said a media report.

Parle Products, which employs about one lakh people and has a turnover of about Rs 10,000 crore, is expected to lay off up to 10,000 employees  if a bruising consumption slowdown persists, said a report in The Economic Times.

“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,” the daily said quoting Mayank Shah, category head of Parle Products.

Shah said the demand for popular Parle biscuit brands such as Parle-G had been worsening since India rolled out a nationwide goods and services tax (GST) in 2017, which imposed a higher levy on biscuits costing as low as 5 rupees a pack, reported Reuters.

The higher taxes have forced Parle to offer fewer biscuits in each pack, hitting demand from lower-income consumers in rural India, which contributes more than half of Parle’s revenue and where two-thirds of Indians live.

“Consumers here are extremely price-sensitive. They’re extremely conscious of how many biscuits they are getting for a particular price,” Shah said.

A representative for Parle did not respond immediately to Reuters’ request for comment.

Recently, Britannia managing director Varun Berry while raising his concerns over the ongoing economic slowdown in the country had said that consumers were even not ready to buy biscuits costing  Rs 5 a packet .

In March this year, Parle Products had said that it was eyeing up to Rs 150 crore turnover from its newly launched brand ‘Nutricrunch’ for the health-conscious customers in the next 18-24 months. The company re-entered healthy biscuits space with Nutricrunch range after it exited the category six months ago and discontinued its brand Simply Good, said a PTI report.

#CNBCTV18Exclusive | Consumption of Rs 5 & Rs 10 packs in several categories take a hit on a YoY basis. As per @NielsenIndia , fall in some categories can be attributed to consumers buying larger pack sizes @PriyaSheth7 pic.twitter.com/IQMWvYF98p

— CNBC-TV18 (@CNBCTV18Live) August 21, 2019

Market research firm Nielsen said last month India’s consumer goods industry was losing steam as spending in the rural heartland cools and small manufacturers lose competitive advantages in a slowing economy. Volume growth in India’s fast-moving consumer goods (FMCG) sector slowed to 6.2 percent in the three months to June from 9.9 percent in the previous quarter, Nielsen said, citing internal data from retail research. “The sentiments echo those in India’s economic environment, with the Gross Domestic Product (GDP) moving down,” the report said.

— With inputs from agencies