Written bySiddhant Pandey
India's leading biscuit maker, Parle Products Pvt. Ltd. may have to lay off up to 10,000 of its employees, as economic growth continues to slow down, a company executive said yesterday.
The economic slowdown in India has affected sales everywhere, as consumers are becoming more cautious with the money they spend.
This has led to a steep drop in Parle's consumer consumption as well.
According to Reuters, the fall in Parle's sales resulted in the company reducing production.
This may result in layoffs of 8,000 to 10,000 people, said category head at Parle, Mayank Shah. That's about 10% of the company's workforce.
Founded in 1929, Parle Products currently has 100,000 employees across 10 company-owned facilities, in addition to 125 third party manufacturing plants.
Shah told The Economic Times, "We've sought reduction in the goods and services tax (GST) on biscuits priced Rs. 100/kg or below, which are typically sold in packs of Rs. 5 and below."
He added, "If the government doesn't provide that stimulus, we have no choice but to let go 8,000-10,000 people from our workforce across factories, as slowing sales are severely impacting us."
Previously, Rs. 100/kg biscuits were taxed at 12%, and firms anticipated that the GST rate for premium biscuits would remain fixed at 12% and at 5% for lower-priced products. However, under the 18% tax structure, Parle was forced to hike prices by 5%.
Parle, known for popular biscuit brands like Parle-G, Monaco, and Marie, has sales of over Rs. 10,000 crore, most of which comes from rural markets.
Since the price hike, Parle Products has reportedly been witnessing a downward trend in consumer sales in the last two quarters.
Shah told Bloomberg Quint, "Consumers have become more value-conscious during times of slowdown in the last six months."
Further, as per market researcher Nielsen's growth forecast last month, India's consumer goods industry is witnessing a slowdown. The growth forecast for FMCG sector was revised to 9-10% in 2019 from 11-12% previously. The slowdown proved significant across all food and non-food categories, ET reported.
Meanwhile, another biscuits and dairy company, Britannia Industries Ltd., is facing similar issues.
Last week, Britannia managing director Varun Berry had said that consumers were "thinking twice" even before buying products worth Rs. 5.
Berry revealed that the company has "only grown 6%" adding that the market growth is even slower.
He said, "Obviously, there is some serious issue in the economy."
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