DNA Money Edit: FMCG cos emerge unscathed from disruptions

Has the economy fully recovered from the disruptive impacts of the demonetization and the rollout of Goods and Services Tax (GST)? Some third quarter earnings figures from the FMCG sector seem to suggest that. What is heartening is that the demand in rural and urban India seems to be on a steady rise.

Industry bellwether Hindustan Unilever recently reported a revenue growth of 17% and volume growth of 11% year on year. The growth came mainly from a low base of October-December 2016 which was severely impacted by demonetization.

Jyothy Laboratories, another FMCG player active in the home-care segment, appears to paint a similar picture with a revenue growth of 16%. While there were some trade disruption because of GST implementation, analysts believe HUL soon recovered to normal. Both HUL and Jyothy benefited from GST too, with the former cutting down its products’ price by 3-4% in categories such as detergents, soaps, toothpaste and hair oils. Jyothy says urban consumer demand got spiked by GST rate correction.

Companies like HUL and Jyothy are top rung organised players and their transition to GST has remained smooth because of their well-oiled strategy rollout ahead of GST. There has been zero disruption in trade up till now, with their trade channel members mostly adjusted to GST regime.