Slowdown in India won't impact growth, says Nestle

Nestle India, a unit of the world’s biggest food company, doesn’t expect the economic slowdown in Asia’s third-biggest economy to have any significant impact on its growth.

“There will be some effect but we are very much part of the fast-moving consumer goods industry,’’ said Martial Rolland, chairman and managing director, Nestle’s Indian unit. “This is one industry which doesn’t benefit from a huge upturn but there’s a certain level of protection when there’s a downturn,” he added.

Prime Minister Manmohan Singh expects a 7-7.5 per cent growth by the end of this financial year because of the global recession after four years of close to 9 per cent expansion. Finance Minister P Chidambaram today said that growth will bounce back to 9 per cent in the next financial year. The decline in global commodity prices will ease pressure on Indian companies, according to Ashok Chawla, Union economic affairs secretary.

Input costs are still “fairly high’’ in India, Rolland said in the nation’s capital, where he’s attending the World Economic Forum’s India Economic Summit.

“Worldwide, clearly the commodity prices have softened,’’ he said. “Here in India, there might be a lag effect. Sugar is also a commodity whose prices are fairly high. We have to monitor the local situation.’’

Prices of coffee in India are still higher than in the international markets “so we have to see how the crops are growing to determine what the trend is going to be,’’ he said.

Consumer goods demand

Demand for consumer goods may slowdown in India, which has the world’s biggest population after China.

“Some reports suggest FMCG growth will continue to be fairly good,’’ Rolland said. “We aren’t in a downturn but probably a slowdown. The liquidity squeeze hasn’t affected the demand of consumer goods in the price range that Nestle sells”, Rolland said.

“Liquidity is a problem in the market but this affects products of higher value,’’ he said. “The effects have been limited. The type of products we sell have not yet seen any downgrading, only in very few categories.’’

The company may consider acquisitions to grow in India. “If there’s a good strategic fit and proper price, then certainly this is one way to grow,’’ Rolland said.