Crisis is the new normal: Nestle India's outgoing CMD to successor

FMCG market stabilising now, Narayanan tells shareholders during company's AGM

Crisis is the new normal and more battles will continue, said Suresh Narayanan, outgoing chairman and managing director, Nestle India, on Thursday, addressing shareholders in his 10th and last annual general meeting.

 

“Adversity is the only thing that does not change. So, I think we will have to battle many more (adversities) as we go forward, but the company is very strong,” Narayanan said while responding to a question asking for a message for his successor, Manish Tiwary.

 

Tiwary, who has helmed retail giant Amazon India, is set to take over from Narayanan as managing director on August 1.

 

Narayanan led the company during its 2015 Maggi crisis, when the Food Safety and Standards Authority of India found offending substances in the item but the company’s position was upheld judicially. He also saw through the recent sugar controversy.

 

Talking about the company’s growth, he said in 22 of the last 32 quarters, the company recorded double-digit growth. 

 

“This means in 10 quarters it has not been double digits, which has been largely in the last couple of quarters,” he pointed out.

 

“There has been an overall slowdown in consumer goods because of food inflation, the evolution of real incomes, unemployment, and various other global maladies that have also affected us. However, I’m happy to report that things are stabilising now,” he said.

 

Narayanan pointed out the impact of rising commodity inflation, stating that it had “clearly cast a shadow on the overall evolution of the company’s volume”.

 

“For commodities like coffee, cocoa is at a decadal high and that puts pressure on managing penetration-led growth and the company’s bottom line,” he said.

 

To mitigate these, the company has undertaken cost-saving and efficiency initiatives while initiating price increases “in a responsible manner”, Narayanan pointed out.

 

“Hopefully, we will be getting back to the normal stride in the coming quarters and months,” he added, adding that the company would not like to initiate more price increases now. 

 

Narayanan said the company’s capital expenditure in FY25 grew to 10 per cent of sales as against 1.8 per cent about 10 years ago. It had committed capex of ₹6,500 crore between 2020 and 2025, with approximately ₹5,600 crore already spent.

 

The upcoming Odisha factory, which will manufacture confectionaries, will involve an investment of ₹950 crore, he added.

 

India is among the top 10 markets of Swiss major Nestle SA. It is the largest market for Maggi globally, and the second-biggest market for Kitkat chocolates -- after the United Kingdom.