Nestle wants govt to allow food processing cos to work with 75% workforce

Nestle India on Tuesday urged the government to allow food processing industries to deploy 75 per cent workforce to ensure adequate production capacity utilisation in factories, saying without which there could be disruptions in goods supply.

The FMCG major at present is looking at production capacity enhancement through technologies and expressed concerns that under-utilisation of workforce will put pressure on the company and add to costs.

Nestle India Chairman and Managing Director Suresh Narayanan in a video conferencing with reporters said that under the social distancing guidelines, 100 per cent capacity utilisation is not possible and the company is taking help of machine capacity enhancement for meet productivity needs.

"Larger companies are trying to use technologies -- value analysis and value engineering -- to enhance productivity, but yes, if it persists for a long time then it would have an impact on the company," he said.

Narayanan, who is also the chairman of CII National Committee on Food Processing Industries, said food companies on behalf of the Confederation of Indian Industries (CII) have made presentations to the government asking for permission to increase the labour strength to 75 per cent in green and orange zones.

"This (social distancing) means that deployment of the workforce can never be 100 per cent. You can not have social distancing and 100 per cent workforce at the place at any point of time. Our exercise has shown that maximum of 75 per cent you can do that after realignment of lines," he said.

Presently, at most places, permissions have been granted to operate with manpower of anywhere at 50 to 60 per cent.

"So that's where my suggestion would be -- in the orange and green areas and we had requested this through CII as well -- that the food processing industries be allowed to enhance workforce to 75 per cent because otherwise we will have a situation where shortages (of goods) will persist because nobody will be able to produce at 100 per cent of what they have been doing pre-COVID," the Nestle India CMD said.

Stating that the company has now attained a production capacity utilisation of 70 per cent, he said if the manpower restrictions persist for a long time then it would have an impact on the company and may have an enhanced cost to its bottomline.

He further said that such easing now "would help mitigate some of the future shortages that might occur if we persist at operating at 50 per cent or below..."
On being asked as whether Nestle would introduce some more brands to tap the growing opportunity in the premium segment, Narayana said: "We have some brands in the space and they would be tune up in consonance of need and requirements."