Capacity utilisation across FMCG plants may rise as truckers return

The throttled capacity utilisation across FMCG companies is likely to ease in the coming week owing to increased availability of trucks after the Centre allowed transportation of both, essential and non-essential items.

While there was no restriction on movement of essential items earlier, companies faced a major challenge in procuring raw materials and packaging. Truck scarcity added to their woes. According to the Federation of West Bengal Truck Operators Association (FWBTOA), out of a total of nine million trucks in India, only 4-5 per cent are currently operational.

Industry officials feel the new move from the Centre will help address both procurement and supply of finished products to some extent.  

“I think things on the logistics front will improve in the next one week which in turn will help improve operational efficiency in the plants. Although production cannot be at the normal level, I anticipate capacity utilisation to improve from the current level of 10-15 per cent to 30-35 per cent,” Mayank Shah, senior category head at Parle Products told Business Standard.

Industry officials noted that owing to ambiguities around defining essential items, issues on inter-state and intrastate movement of trucks, raw material procurement and availability of workers, companies were faced with both production and supply issues.

“While the Centre and states had allowed movement of essential items earlier, there are several non-essential items that go into making an essential item. Previously, trucks were reluctant to move these raw materials as there wasn’t clarity if they were permitted. But now I think it will be easier to procure raw materials and improve operational efficiency at the plants,” an industry official said.

According to an ITC spokesperson, a “few more days” will be needed for the entire eco-system and processes to be streamlined for movement of essential goods.

Companies like Emami Agrotech, which earlier had shut its plants due to scarcity of workers and transport is also reopening them as it feels logistical challenges can now be addressed to some extent.

“We are reopening our plants in a phased manner. First, we will start with dispatches and based on how things improve, we will take a call on improving production,” Aditya V Agarwal, director at the Emami Group told Business Standard.

Emami Agrotech has reopened its plant in Jaipur in Rajasthan. Two others in Haldia, West Bengal and Krishnapatnam in Andhra Pradesh are expected to commence operations soon.

Over the past few weeks, all FMCG companies had either reduced production drastically owing to scarcity of labour and transport or temporarily shut units.

However, though the Centre has allowed transport of non-essential goods, companies are keen to stick to manufacturing essentials like packaged food, hygiene products and items of daily use as industry officials feel there is a huge backlog in the market that needs to be addressed first.

“Our effort is to ensure that consumers during these trying times are not inconvenienced on account of shortages and unavailability of essential products. We have redoubled our efforts to ensure a heightened level of precaution and have implemented strict protocols for safety, personal hygiene and sanitation in these select factories and for our salesmen and value chain partners,” an ITC spokesperson told this business daily.

Coca Cola is also taking steps to make beverages available.

“We are making every possible effort to ensure our beverages reach our consumers in complying to the local government’s regulations and safety of all our employees” a Coca-Cola India spokesperson said.

Truck operators, however, feel state governments also need to come up with clarifications over the movement and classification of essential and non-essential items.

“The police is a state subject and thus, states also need to clarify on the movement of trucks. I think this way, there will be more confidence in the system and drivers can be made available,” said Sajal Ghosh, general secretary of the FWBTOA.