Growth in FMCG demand in rural areas to be in double digit: Adi Godrej

Low Goods and Services tax rates will be critical for FMCG sector, says Adi Godrej

Godrej Group Chairman Adi Godrej on Thursday said that the rural demand for fast moving consumer goods (FMCG) will likely to have a double digit growth with a good monsoon.

He also said the real estate demand, particularly the residential segment, will start picking from July onward and the Group will focus on affordable housing segment.

"If the monsoon is good, the agricultural economy is expected to grow 4 per cent and rural economy will grow little more as there are others parts of the rural economy. I expect the demand growth in rural India for FMCG products should be double digit," he said.

Godrej said last monsoon was good and demand in rural area for FMCG products has been quite good over the last year. Two monsoons prior to that were poor and that had impacted the rural demand.

He said input costs have come down in the last couple months.

"Input costs are reasonably under control and I do not see much price increase in FMCG sector over the next 12 months," he said.

Godrej, however, said low Goods and Services tax (GST) rates will be critical to the sector.

"Overall, I expect GST rates to be lower than the present rates for FMCG products. So there will be scope for either price reduction or soften of cost increases. We will only know when final rates are announced," he added.

"Following demonetisation and remonetisation, implementation of the Goods and Services Tax is expected from July. People are optimistic about India's economic performance and country's economy is expected do well," he said.

On the RERA (Real Estate Regulation and Development Act, 2016) implementation in Maharashtra and in other states, he said it was good move because consumers will be protected and builders who have the good record will be benefitted.

Godrej, however, remained careful about penalty cause for late deliveries.

"They have suggested penalties for late deliveries. If the late deliveries were because of the fault of property developer, then it is understandable. But in many cases, the late deliveries were because of the problems with governments. They should be careful that such things do not penalise a builder."

He said if economy grows, the real estate sector will improve.

"I expect the real estate demand, especially residential segment, will start picking up from July onwards," he told BTVi in an interview.

Godrej Group will more focus on affordable housing after the several changes in rules and regulation in the budget and liberalise the definition of the affordable housing.

"The affordable housing will add lot of value to people in terms of meeting their demands and it will also add to real estate sector.

"Under the original definition, some of our projects were in the affordable segment. Now, under the new definition, quite a few of our projects will come under the segment. That is the area we will concentrate on," he said.

Going forward, the real estate will be the fastest growing business in the group, he added.