Equity Market Updates – FMCG Growth to be Better – Axis Direct
Adi Godrej, Chairman, Godrej Group
Jun 22, 2018 | Source: ET Now
FMCG Growth to be Better in FY19 than in FY18
On growth of FMCG going forward: Growth will be good. GST is fully in place. It is adding a lot of value to the economy particularly to the FMCG sector. Both rural and urban growth will be good as the monsoon is also expected to be very good this year. Everything indicates that there will be strong growth in the FMCG sector in the quarters to come.
What kind of volume numbers could we look at? It will be good but I would not like to make any prediction. Giving a number would be unrealistic because we will have to see how the year pans out.
Do you think the industry can at least match up to the FY18 growth if not really better it? Yes FY19 should be better than the FY18 growth because FY18 for various reasons was not optimal and growth has been improving over the last couple of quarters. In April-June of FY18, the growth was not good because that was the quarter prior to the introduction of the GST and because of some items having lower taxes in GST than earlier, there was some down stocking. So, that was not a very good quarter for the FMCG sector, This year, April-June should be much better than last April-June and the following quarter too would be better.
Are you concerned about the rising oil prices :It could be. Raw material prices could rise because oil prices are much higher than they were about a year ago. There is an OPEC meeting on June 22 and OPEC is also concerned that they are not producing enough volumes. They may take a decision to increase the volume and then the prices stock may come down somewhat. Clearly, there will be some inflationary impact not just oil but there are other inflationary impacts as well.
Price hikes in FY19: Right now, prices are much lower than they used to be because under GST, the rates are lower and that has been passed on to the consumers. Even if there are some price increases, that has to be taken because of the inflationary impact in the raw material effect, prices would still be lower than what they were a couple of years ago.
Godrej Consumer Indonesia business: Indonesia is picking up again and we expect to do much better in FY19 in Indonesia than we did in FY18.
Godrej Consumer garnering market share: Definitely, we are seeing our shares and our penetration increasing and it is not a question of organised versus unorganised. It is more a question of those who are tax compliant doing better than those who are not tax compliant because under the GST regime. it is not possible to dodge taxes.
What is the outlook on new product development: We are doing a lot of R&D and you will see a lot of launches during this financial year which will also help our operations in this financial year.
What categories would it be if you could give us some indication on that? It is across the board, in all our categories particularly in households’ insecticides and hair colour.