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Demonetisation, GST: Centre’s moves part of challenging environment, says Hindustan Unilever

FMCG major Hindustan Unilever Ltd (HUL) has termed Prime Minister Narendra Modi's demonetisation move and goods and services tax (GST) as part of a 'challenging environment' in the last few quarters.

FMCG major Hindustan Unilever Ltd (HUL) has termed Prime Minister Narendra Modi’s demonetisation move and goods and services tax (GST) as part of a ‘challenging environment’ in the last few quarters. (Reuters image)

FMCG major Hindustan Unilever Ltd (HUL) has termed Prime Minister Narendra Modi’s demonetisation move and goods and services tax (GST) as part of a ‘challenging environment’ in the last few quarters. The company’s chief executive officer Sanjiv Mehta has also said that rural growth of the country has not yet recovered. Mehta said that the rural growth has witnessed decline as compared to urban India, according to a Mint report.

On August 31, HUL had said some pockets in wholesale trade and rural areas are yet to return to normal level after taking a hit from demonetisation and pre-GST destocking, and the sales in these areas are expected to pick up soon. A good monsoon and governments increased spending on rural areas will be major contributing factors in the growth of FMCG sector, it added. “As far as FMCG is concerned, there has been a bit of turbulence first with the demonetisation and then with run-up to GST,” Hindustan Unilever CEO and MD Sanjiv Mehta said on the sidelines of the Economist Summit, according to PTI report.

He further said in the last two consecutive years, the sector has suffered due to drought and its impact. Rural markets, which have historically huge growth rates, had come down significantly due to the combined impact “We certainly believe that the markets would pick up…we are always optimistic about the medium to long-term FMCG prospects in the country,” he said. Mehta further said: “I think the kind of steps the government is taking and also with good monsoon, certainly not in a very distant future, we should start seeing a pick-up in rural India.”

On the impact of GST implementation, he said: “What has gone disrupted is the supply chain because there were lot of wholesellers who had stopped buying before the GST came in.” Similarly, he said some big customers have stopped buying and it had an adverse impact.

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