NEW DELHI :
Costs of fast-moving shopper items (FMCG), similar to biscuits, milk-based edibles and private care gadgets, might proceed to rise this quarter as corporations attempt to counter inflationary headwinds.
Biscuit maker Parle Merchandise stated it can impact one other worth hike within the quarter. “On some merchandise, we’ve got already taken it up in December. And the stability of them will occur in January—this will probably be about 5-7% enhance. The worth hike will proceed until February,” stated Mayank Shah, senior class head on the firm. This yr, the corporate would have hiked costs by 10-12% on its total portfolio.
Excessive costs of edible oils, wheat, sugar and packaging supplies are driving the worth hikes for the maker of Parle-G biscuits. “I feel the largest problem is in edible oil, (the place) the worth has gone up about 50-60% in comparison with the (identical) interval final yr. Wheat and sugar are up about 10-12%. The opposite essential commodities are packaging materials, due to crude—plastics have gone up by 20-25%; there is a rise of 20-25% in paper, which is principally cartons and paper packaging. All these prices have elevated,” stated Shah.
Chennai-based CavinKare stated the corporate continues to see “pressures” on commodity costs. “We’re probably getting right into a cycle the place we might go in for a spherical of MRP (most retail worth) corrections once more,” stated Venkatesh Vijayaraghavan, CEO and director, FMCG, CavinKare.
The corporate, which sells shampoos, dairy drinks, private care merchandise in addition to packaged meals, took a worth hike in Q1 and Q2 of this fiscal yr. “Mixed for the yr, our worth hikes could be to the tune of 4% to five%. This was largely on non-sachets portfolio,” he stated.
Inflation was seen on sure specialised inputs for shampoos and private care merchandise. “We’ve seen these costs go up; we’ve got seen a little bit little bit of strain on the provision of milk as effectively,” he informed Mint.
Firms sometimes announce staggered worth will increase throughout their portfolios. Regardless of excessive inflation, not all merchandise see a rise of their most retail worth without delay. Firms additionally scrap reductions to save lots of prices.
In a 23 December report, brokerage Motilal Oswal stated that agricultural in addition to non-agri commodity costs elevated reasonably within the third quarter, earlier than stabilizing in direction of the tip of the quarter. It stated the complete commodity price basket, on a median, witnessed a point of inflation—to the extent of 33.5% year-on-year in Q3.
“With commodity inflation refusing to ebb even in 3QFY22, we count on many of the corporations underneath our protection to see a year-on-year contraction of their gross margins. To fight the upper enter prices, corporations continued to take worth hikes in the course of the quarter; nonetheless, the results will materialize with a lag,” the brokerage stated.
In a December interview with Mint Sunil Kataria, CEO, India & SAARC at Godrej Shopper Merchandise, stated, “We’ve already taken round 9% to 10% worth hikes which is able to play out within the coming quarter (January-March). Proper now, it’s very tough to foretell this commodity (cycle). We’ve seen some correction in crude not too long ago, although it has been marginal. I don’t count on an excessive amount of of a basic correction occurring for possibly one other 4 to 6 months.”
Value hikes have been “broad-based” throughout the portfolio of the corporate that sells Cinthol soaps and GoodKnight mosquito repellents. “We’ve been very even handed. We’ve to stability it out between strategic inventory maintaining models and classes and make sure the proper stability between margins and development,” he stated.
Others, nonetheless, are reaping the advantages of some decrease enter prices. Edible oil costs, for one, have risen sharply. Nevertheless, final month the central authorities lowered import duties on edible oils, making them cheaper.
Because of this, edible oil corporations, together with Adani Wilmar and Ruchi Soya, lowered the utmost retail worth of their merchandise by 10-15%.
Mumbai-based Marico Ltd stated that amongst key inputs, copra costs had been range-bound for many of the December quarter, earlier than witnessing a correction in direction of the tip of the quarter.
Supply: Live Mint