FMCG production yet to return to normal; retailers say stock depleting fast

KOLKATA/NEW DELHI: FMCG companies on Friday said they are yet to return to normal production with the nationwide lockdown still hampering movement of factory workers and trucks.

Amidst this, leading retailers said pulse and cereal prices have started to move up due to truckers charging a premium and warned that staple stock situation is fast depleting.

On Friday, two of the largest FMCG makers – Hindustan Unilever and ITC – said operations across manufacturing and supply chain are disrupted due to the lockdown.

“The Indian government has announced a nationwide lockdown for 21 days from the 25th March 2020. Due to this, the operations in many of our manufacturing, distribution centers. warehouses and extended supply chain partner locations have been disrupted. We have had to scale down and suspend operations in most of our operating locations,” Dev Bajpai, HUL’s executive director – legal said in a statement to the BSE.

ITC too informed the bourses that manufacturing of essential items like atta, noodles, biscuits, snacks, soaps and sanitisers are operating partially with limited workforce, while it has suspended production of other items.

Leading biscuit maker Parle Products category head Mayank Shah said things are improving after the commerce ministry issued directives to local authorities that the sector is essential. He said production is increasing slowly.

“But still there is a human element and people are scared to come to work. Hopefully, in next 3-4 days things should stabilise and we should be back to normal. We have 135 manufacturing locations so lead time is not very high. We are also taking truckers into confidence about their health and hygiene,” he said.

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However, packaged basmati rice producer Kohinoor Foods’ joint MD Gurnam Arora said orders from local administrators have been contradictory and till a clear message comes from Centre to district level, there will be glitches. “We are working at all levels to ensure seamless supply across channels so that there are no delays and prices remain stable,” he said.

The availability of staples is drying up in the retail stores with supplies taking a massive hit due to closure of APMC mandis, trucks stuck on highways, and several truckers refusing to work fearing police action and chances of infection.

Future Group which runs the Big Bazaar chain on Friday sold out its stock of poha, rawa, saboo dana, rajma and soya chunks. The retailer has about seven days stock of cereals and pulses. Another supermarket chain More said supplies of loose staples and FMCG products have almost halted due to non-functioning of APMC mandis and truck operations grounded.

Big Bazaar CEO Sadashiv Nayak said he expects supplies to resume in next 2-3 days with the authorities clearing the bottle necks. “The disruption in supply chain should get sorted soon with the ground level authorities making encouraging moves,” he said.

Mohit Kampani, deputy MD at More Retail, said truck transportation rates have shot up by 25-30% which is having a direct impact on the input cost of loose staples like cereals and pulses. Prices of these commodities are already up by Rs 10-12 per kg.

“Some states have made it clear they want to clear the movement of trucks carrying non-essentials too so that they can be made available for carrying essential goods which is a silver lining,” said Kampani.

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However, production of personal care is at a complete stop. Dabur executive director-operations Shahrukh Khan said currently production is suspended at all units. “We are awaiting clarity and permissions from the government not just on commencing production, but also on movement of workers and smooth functioning of the entire supply chain, covering incoming raw and packing materials and outgoing finished products,” he said.



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