Demonetization to have positive impact on organised FMCG players: Dabur

FMCG firm Dabur on Monday said the demonetization of high value currency notes would have beneficial impact on organised players in the segment. However, on account of scarcity of cash available with customers and trade, the company foresees near term pressures on its business.

"Demonetization of high value currency note initiated by the government is a positive move for the economy and industry and will lead to better transparency and compliance in the medium to long run. This will be beneficial for organised FMCG players creating a level playing field," Dabur Ltd said a regulatory filing. Elaborating on the impact, the company said it will vary across channels and geographies and stress is highest for wholesalers and small town grocery shops, who are facing a severe liquidity crisis and are destocking.

"The impact is likely to be positive on modern trade outlets and plastic enabled retailers who are likely to benefit from this change," it said. However, on account of continuity of current uncertain situation it is difficult to quantify the impact for third quarter on the company at this point in time, Dabur said. "However, it is temporary in nature and situation will improve with increase in availability of new currency. In the meanwhile, we are focussing more on modern retail, e-commerce and institutional sales and also encouraging our general trade (GT) retailers to adopt cashless payment systems," it added. 

This will help in mitigating the overall impact of demonetization and pave the way for normalisation in the next few months, the company said.