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| Egypt crisis: FMCG firms look at back-ups, alternatives |
| Viveat Susan Pinto / Mumbai Feb 07, 2011, 00:41 IST |
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 Prashant Goenka, director, international business, Emami Ltd, has his eyes peeled on the television set these days. The anti-government protests in Cairo have made him nervous.
Emami had acquired a manufacturing plant in Egypt a few months earlier, for Rs 25 crore. “We were to start local manufacturing by April this year,” he says.
Goenka’s anxiety is shared by other domestic fast moving consumer goods (FMCG) companies, who had turned to Egypt and other countries in the region in a quest for growth.
The companies vary from Emami’s peers Dabur, Marico and Godrej Consumer (GCPL) to paint companies such as Asian Paints and beverage makers such as Rasna International. Most are in a wait-and-watch mode.
Says Marico chairman and managing director Harsh Mariwala, “We are keeping a close watch on the situation. It is too early to draw conclusions at this stage.”
Says Sunil Duggal, chief executive officer, Dabur Ltd, “The situation should ease. We are keeping our fingers crossed.”
As a precaution, Dabur, Marico, Emami and Asian Paints have all shut plants and evacuated their Indian staff from Egypt. By some estimates, the revenue loss to each firm on account of the shutdown in Egypt was about Rs 1.5 to Rs 2 crore in January. “If the shutdown prolongs, the revenue loss could be more,” says Duggal.
Most are choosing to play down their anxiety levels. GCPL chairman Adi Godrej says there is no cause for worry, since his firm has no operations in Egypt. But industry sources say quite a few companies have begun redrawing their plans for the North African and West Asian belt, looking for other markets if law and order deteriorates further.
Emami’s Goenka is forthcoming about his company’s plans for the future. “We are looking at alternative markets,” he says. “This is within the African continent. We are also considering the idea of preponing a few brand launches in a few key markets to make good the loss suffered on account of the disruption of business in Egypt.”
Though the contribution to turnover from Egypt alone for most firms is only about two-three per cent, if the entire Middle East-North Africa or Mena belt is taken into account, it is more For Marico, for instance, it is about seven-eight per cent, says Mariwala. Duggal of Dabur says the contribution to turnover from the MENA belt is about four-five per cent. Goenka says almost 34 per cent of revenues from Emami’s international business comes from the MENA belt.
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