FMCG stocks slide as IMD downgrades monsoon forecast

Shares of nine FMCG stocks fell by 1.34% to 5.49% at 14:56 IST on BSE after the India Meteorological Department downgraded this year's monsoon forecast to 88% of the long-term average from April forecast of 93% of the long-term average.

The BSE FMCG index was down 2.47% at 7,733.15. It underperformed the Sensex, which was down 2.03% at 27,284.25.

Marico (down 5.49%), Bajaj Corp (down 2.92%), Hindustan Unilever (down 2.65%), Tata Global Beverages (down 2.38%), Britannia Industries (down 2.07%), Colgate Palmolive (India) (down 1.42%), Dabur India (down 1.34%), Jyothy Laboratories (down 3.66%) and Godrej Consumer Products (down 1.81%), edged lower. Procter & Gamble Hygiene & Health Care (up 0.05%) and GlaxoSmithKline Consumer Healthcare (up 0.48%) edged higher.

Shares of Nestle India were up 2.61%. Nestle India announced after market hours yesterday, 1 June 2015, that consumers are concerned by reports that the authorities in Uttar Pradesh have found elevated levels of lead in a sample pack of Maggi noodles. Nestle India said that the company is fully cooperating with the authorities who are conducting further tests and the company is awaiting their results.

Nestle India has submitted samples of Maggi noodles from almost 600 product batches to an external laboratory for independent analysis. These samples represent around 125 million packets. All the results of these internal and external tests show that lead levels are well within the limits specified by food regulations and that Maggi noodles are safe to eat. The company is sharing these results with the authorities, Nestle India said.

The company regularly monitors all its raw material for lead, including testing by accredited laboratories which have consistently shown levels in Maggi Noodles to be within permissible limits. Nestle India said that the company remains committed to continuing to improve the quality of agricultural raw materials across the food chain working with farmers, suppliers, authorities and the food industry to ensure food safety. The quality and safety of products are the top priorities for the company, Nestle India said in a statement.

A deficient monsoon could adversely impact revenue of FMCG firms. FMCG companies derive substantial revenue from rural India.

Earth Sciences minister Harsh Vardhan was quoted as saying today, 2 June 2015, that the India Meteorological Department (IMD) has downgraded this year's monsoon forecast to 88% of the long-term average from April forecast of 93% of the long-term average. The downgrade in monsoon forecast has sparked fears of a drought in the country where nearly half of farmland lack irrigation facilities.

The IMD will announce the official second stage Long Range Forecast (LRF) for Southwest Monsoon 2015 at 16:30 IST today, 2 June 2015.

The onset of monsoon in Kerala has been delayed. The IMD yesterday, 1 June 2015, said that conditions are becoming favourable for the onset of southwest monsoon over Kerala around 5 June, four days after the scheduled onset date of 1 June.

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