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FMCG players consider price hike, amid inflationary pressure on raw material inputs

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January: FMCG companies are considering a marginal price hike of their products in order to normalise the inflationary pressure they have been facing on their raw material inputs. Marico, an FMCG company has already gone for a price hike, but simultaneously companies like Dabur, Patanjali and Parle and monitoring the situation closely.

Mayank Shah serving as Parle Products Senior Category Head, told PTI, “We have seen a significant rise in input cost and especially edible oil in the last three to four months and that is putting pressures on our margins and costs. As of now, we have not taken any price hike but we are closely monitoring it and if it goes like this then probably, we may go for a price hike. It will be across products as edible oil is being used in all products. It would be at least 4 to 5 per cent.”

However, it is a wait and watch situation for Haridwar-based Patanjali Ayurveda. A Patanjali spokesperson, S K Tijarawala quoted, “We always try to absorb the market oscillation but if compelled by the market factors, we would take a final decision on that.”

Also read: FMCG brands should find a new way to work, say experts

Talking about the inflation inching up for some key commodities in the recent months, Dabur India CFO Lalit Malik said, “Going forward too, we expect some inflationary pressure in key commodities. Our efforts will be to absorb the raw material price increase through our synergies and cost efficiencies, and undertake only selective and judicious price hikes, which will also depend on the competitive scenario in the market.”

However, FMCG companies are trying to absorb the raw material inputs price increase such as coconut oil, edible oil and palm oil. Holding the prices of their commodities for a long time would impact the gross margins of the companies.

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CCI approves Flipkart’s acquisition of ABFRL minority stakes

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22 January: Flipkart Investments Private Limited had requested purchase of a minority stake in Aditya Birla Fashion and Retail Limited which was approved by the Competition Commission of India. FIPL proposed the acquisition of 7.8% equity shares of the public limited company ABFRL.

The proposal was drafted in October 2020 which mentions that by way of subscription of equity shares, FIPL is to invest a total of Rs. 1,500 crore for minority shareholding of 7.8%, on a fully diluted basis in ABFRL.

Sharing their take of the website, ABFRL said, “In addition to approval of shareholders by way of Postal Ballot (received on November 22, 2020), the issue was subject to regulatory approvals and completion of customary closing conditions under the Investment Agreement. In this regard, we wish to inform you that CCI has accorded its approval to Flipkart for its proposed acquisition of 7.8 per cent equity stake in the company on a fully diluted basis vide its approval letter dated January 20, 2021.”

Also read: Jewellery brand Melorra allocates $50 million for its offline foray, aims at launching 350 stores

Flipkart Investments Private Limited is a newly incorporated company and a subsidiary, wholly owned by Flipkart Private Limited.

ABFRL is a part of Aditya Birla conglomerate and is a public limited company incorporated in India. The company is involved in manufacturing and retailing of branded apparels, accessories, and footwear. The services are provided through their retail stores across India. Other than this, they have multi-brand outlets, departmental stores, e-commerce platforms as well.

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Surat’s polished diamond exports improves; overall rise by 41%

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20 January: With coronavirus impacting the overall diamond polishing industry in Surat, December month witnessed a significant boost in the polished diamond exports.

The total polished diamond exports rose by 41% year-on-year in December in the previous year as the total stood on Rs. 12,692 crore. Whereas the export count was Rs. 8,000 crore in December of 2019. The data was cited by the Gem and Jewellery Export Promotion Council and reported by TNN.

Surat’s diamond industry was specifically hit hard during the pandemic as many workers fell ill forcing the polishing units to be shut temporarily. The exports of polishing diamonds decreased by 30% during April to November time period in 2020, however, increasing by 158% towards the end of the unforgettable year.

Also read: Jewellery brand Melorra allocates $50 million for its offline foray, aims at launching 350 stores

The export increases were fueled ahead of the holiday seasons reportedly in China and the United States. Both are the main destinations for India’s exported polished diamonds. Other than this, a decreasing covid restriction in India has also contributed towards the increased demand.

This gave a ray of hope to the industry as the boost was much-needed after covid-19 took over the businesses and their operations. Since the pandemic, this is the first time that the industry witnessed a year-to-year increase giving a confidence boost in the sector.

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Textile industry might get stable by 2022 financial year, states ICRA

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Textile industry, January: 2022 will be seeing a stabilised Indian textile sector along with the cotton spinning and apparel exports segment faring ‘especially well’, this was Consumer Ratings Business ICRA‘s confidence. The confidence came to light when it said that the cotton spinning and apparel exports could be increased by 15% to 20% in the financial year of 2022.

Further, fabrics could go up by between 30% to 35% and domestic apparel segments could grow by 35% to 40%. At the same time, these segments are expected to face steep declines in the 2021 financial year.

With the rolling out of the vaccinations in the country leading to a rise in the positive consumer behaviour, ICRA is confident the industry will see a silver lining in the coming time. Economies are opening and a surge can be witnessed in the domestic and export demand. With this, the textile sector can expect the positive sentiment of the third quarter of the 2021 financial year to continue in the upcoming quarters.

Also read: FMCG players consider price hike, amid inflationary pressure on raw material inputs

Talking about the findings, Jayanta Roy serving as ICRA’s senior vice president and group head for the Corporate Sector Ratings was quoted as saying to Press Trust of India, “As demand continues to normalise in domestic as well as export markets, we expect the textile sector performance to recover to pre-Covid levels in FY2022 at a broader level. Accordingly, ICRA’s textiles sector outlook for FY2022 is stable.”

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