GST will help create demand for products

The Hindi Business Line By PURVITA CHATTERJEE December 27

Mumbai, December 27:
Vivek Gambhir, MD of Godrej Consumer Products Limited (GCPL), spoke to BusinessLine on the year-end performance and outlook of the FMCG sector for 2017.

How was 2016 for Godrej Consumer Products with slowdown in the FMCG industry?

Overall, 2016 was a lacklustre year. We did see some recovery. However, given the low penetration and consumption rates in India, we witnessed far lower growth than the significant potential of the sector. GCPL’s performance was relatively better; we delivered over 9 per cent volume growth in five of last six quarters.

How will 2017 pan out when GST gets implemented?

Once GST gets implemented, it will help the economy grow faster. It is a transformative structural reform, both for the economy and how we do business.

It will create a greater demand for products. Consequently, manufacturing will grow and more jobs will be created. The introduction of GST will also significantly reduce the generation of black money. Direct tax evasion too is largely due to indirect tax evasion.

Will recovery in rural markets help the FMCG industry bounce back?

While rural consumers are most affected by the current cash crunch, once the liquidity situation improves, we will see much stronger growth from rural India. The impact of a good harvest should help grow the rural economy.

Which was the most impacted category in your portfolio?

Soaps was the most challenging category as there was up stocking in consumer homes which led to negative value growth in the first two quarters. But once consumers start replenishing the stock, we expect volumes to come back and there would also be price led growth.

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