Companies

GST, note-ban have hit distribution: ITC

Our Bureau Kolkata | Updated on January 11, 2018

YC Deveshwar

FMCG retail channels less hit, wholesale continues to be impacted

Diversified conglomerate ITC Ltd has seen disruptions in its trade channels after GST implementation. The situation, however, is improving “week-on-week”, said CEO and Executive Director Sanjiv Puri on Friday.

While Puri did not mention the expected time frame within which the FMCG trade channels are expected to “normalise”, he did maintain that disruptions because of the new tax regime were far less than expected.

ITC, which announced its results for the April-June 2017 quarter on Thursday, saw net profit and turnover drop on a sequential basis as compared to the January-March quarter by four per cent and eight per cent, respectively.

The company attributed the performance to “challenging business environment marked by continuing pressure on the legal cigarette industry and sluggishness in demand for FMCG products exacerbated by de-stocking in trade channels ahead of implementation of GST.”

Wholesale pain

While retail channels (both direct sales to stores and modern trade) have been less hit, wholesale continues to be impacted.

“A tax reform of that scale (GST) is expected to bring in some disruptions. However, on a week-on-week basis, the situation is improving. Disturbances were far lesser than expected," the CEO told reporters during a press meet post the 106th AGM.

Demand, on the other hand, is not expected to be hit because of GST roll-out. Earlier in the day, responding to shareholder queries, Puri had maintained that demonetisation has had an impact on trade channels.

ITC, its CEO said, will foray into vegetables and other perishables.

It has already forayed into the frozen prawn segment. While the offerings have been launched in “select markets”, plans are afoot to roll out the same nationally. Investments have also gone into farming of aromatic and medicinal plants, “keeping in mind” the focus on agri-based health and wellness products.

“There are some (FMCG) categories that we have entered into, some are nascent ones like the juices, while there are some that we are incubating - like premium coffee and chocolates," he said.

ITC has also launched its ‘ITC Master Chef’ brand of spices. The Subean brand of coffee and Fabelle brand of chocolates are now being introduced at "premium outlets" (modern retail).

”We will also be entering new categories,” Puri said.

The company has already brought on-stream a new facility for food and personal-care product manufacturing and packaging at Guwahati, in Assam.

Published on July 28, 2017

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like