Business Standard

Festive season sales to be good for FMCG but next 6 months crucial for consumption revival: Nestle


Press Trust of India Ludhiana
FMCG major Nestle India expects the ongoing festive season sales to be good for consumer-centric companies but added that the next six months would be crucial for revival of consumption.
The company is still keeping an eye on short- to medium-term consumption trends, Nestle India Chairman and Managing Director Suresh Narayanan said.
According to him, while the overall demand sentiment is yet to improve, the government's recent move to reduce corporate taxes will help boost earnings of companies and stimulate the investment cycle in India.
"People are looking forward to the festive season, there is a bump that companies will get. Most consumer products companies have got expectation out of festive season. For me, what needs to be watched is the short- to medium-term which is really the next six months, how that evolves," Narayanan said at a media roundtable here.
"I have no reason to believe that the festive season will not be a good one but this alone will not be an answer to the longer-term secular issues of consumption that seems to be foremost in the minds of most industry people," he added.
The FMCG sector is struggling with low growth this fiscal, primarily dragged by consumption slowdown in the rural markets.
"It is fair to say that FMCG has clearly seen strains as far as growth is concerned, the levels of growth have come down. Rural India is seen to be worse impacted," Narayanan said, adding that rural demand remains a concern for most of the companies.
On commodity prices, Narayanan said prices of milk and wheat are on the higher side but because of good monsoon, rates may come down in the coming months.
Lower wheat and dairy prices would "certainly ease pressure on commodities in term of benevolence of pricing."

Regarding the recent reduction in corporate tax rates, Narayanan said it would translate into higher capital expenditure, more cash in the hands of shareholders and boost demand.
"I think the overall sentiment has not dramatically changed but at the same time the recent round of corporate tax reductions... is a step in the right direction for stimulating capex cycle and stimulating investment cycle in the country," he said.
Terming it as "very positive steps for the future", Narayanan said corporate tax in India is now comparable with other South East Asian economies.
India is "attractive in terms of investment destinations as compared to many of the South East Asian countries where there have been migration of some Chinese manufacturing capabilities".
Nestle India has recorded 10 consecutive quarters of value growth.
The company, which follows the January-December financial year, has recorded revenue of Rs 11,292 crore in 2018.

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First Published: Sep 30 2019 | 7:40 PM IST

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