Parle hit by lockdown; biscuits unit head reveals how much revenue will be hit | INTERVIEW

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April 28, 2020 5:21 PM

Parle Industries' unit that makes the popular Parle-G biscuits expects a 7-8% hit on its revenue in the ongoing April-June quarter due to the coronavirus lockdown.

Parle Products makes namkeens, popular Parle G brand biscuits and candies.

Parle Industries’ unit that makes the popular Parle-G biscuits expects a 7-8% hit on its revenue in the ongoing April-June quarter due to the coronavirus lockdown. With factories running at about 70% now, Parle has ramped up the production again, and the company sees a ray of hope on the output and supply front, Krishnarao S Buddha, Senior Category Head at Parle Products, told Financial Express Online. Among other things, he also talked about why there will be more jobs in the FMCG sector after lockdown lifts, why big FMCG players cannot collaborate with regional manufacturers for now, and the overall impact of lockdown on FMCG business. Edited excerpts of Krishnarao S Buddha’s conversation with Prachi Gupta: 

There have been talks of layoffs across sectors. But, shouldn’t there be a rise in employment since factories will try to make up for the loss in production after lockdown lifts?

There should be an increase in employment as manpower is already short due to various reasons. There has been high attrition, workers are also left for Ramzan festivities and the migrant workforce is scarce. We at Parle are willing to have more manpower. It is a dilemma. At one hand, we are talking about layoffs, on the other hand, people are struggling to get hold of manpower.

Is this applicable to all industries or just the FMCG sector?

There will be higher employment in all sectors and not just FMCG, provided that manpower is available. 

Will Parle’s quarterly results be impacted for the previous quarter and the coming one?

The January-March quarter is definitely impacted. We have 3rd week closing and we fell short by 4-5% of our objective. For April-June, it is very early to say. Every quarter comprises 25% of the annual calendar. We are expecting a 7-8% revenue impact in the current quarter as 60-70% of our factories’ utilisation is now at 70%. This is a significant jump from pre 20th April condition when factories were operating at 15-25% capacity. When calculated on a yearly basis, the impact will be negligible at 3-4%. There is tremendous demand in the market.

Has the lockdown situation added to the woes of the FMCG sector or cushioned the blow of slowdown?

The lockdown has definitely added to the woes in the FMCG sector. Due to the pandemic, it is extremely difficult to maintain and continue the supply chain management. In the initial phase of the lockdown, the instructions from the government for the manufacturing sector were very vague in terms of permissions, due to which Parle faced a difficult time. Once we received the circular from the Central Government, things started easing, thereby streamlining a lot of processes and we started working with a workforce capacity of 15% to 25%. We have also tried to improve the supply chain, right from production, to delivery of goods. The other major blow we faced was the exodus of the migrant labourers to their native places which resulted in limited manpower.

What has been the impact on Parle’s business post lockdown?

The lockdown slowed down things a lot leading to sharp decrease in production and not being able to meet the market demands. However, on a positive note, the inventories from the factories, depots and the distributors have all been moved to the market.

What steps are being taken to maintain supplies as well as the safety of the employees?

Safety of our employees and all our business associates is of utmost importance to us. We have circulated the guidelines issued by the government to all our employees, depots, distributors and all our vendors in the most simplified manner which is easy to understand and follow. We have shared various guidelines right from sanitation, maintaining hygiene, social distancing and have made sure the employees and workers wear masks and gloves at all times.

Are you mulling salary cuts or layoffs?

No, we are not at all taking any such measures. This is not the right time to impose salary cuts or to layoff people. We believe that at a time of such crisis, we need to support our employees and hence, we are ensuring that the salaries of all the employees and workers are being paid on time. We are optimistic that things will get back to normal very soon.

Can the company think of collaborating with small manufacturers private labels in lieu of demand surge for FMCG products in general? Why, why not?

We are not really looking to collaborate at the moment since there are a lot of formalities pertaining to wrapper printing, FFAI license, other regulatory requirements and stringent quality checks from our end to be completed for such collaborations. Currently, we are focused on increasing and ramping up our own production to meet the current high market demand.

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