Food industry faced challenges due to govt policies

Rujuta Parekh
Sunday, 8 October 2017

While some companies saw an overall dip in business, others saw a growth due to the onset of the festive season.

Pune: The first half (H1) of the current Financial Year (FY) has been very challenging to the food and food processing industry owing to the announcements and policies of the government.

While some companies saw an overall dip in business, others saw a growth due to the onset of the festive season.

Demonetisation followed by the introduction of the Goods and Services Tax (GST) took a toll on this industry despite a large number of products falling under the zero tax bracket. Packaged foods industry was hit badly as the tax rates on branded food products and items increased. Consumers started purchasing unbranded food grain, spices and other food products. Many traders had also raised this issue with the government, seeking exemption on branded food grains and the likes too.

Speaking on the performance of the company, Head of Business Development, Desai Brothers Ltd (Food Division - Mother’s Recipe), Sanjana Desai, said, “For Mother’s Recipe as a brand, the first half of the current FY has been challenging owing to reformatory announcements by the government.

Overall, sales are lower than targeted, with the uncertainties during the rollout of GST, causing a dip in the sales stocking at retail shelves. With good monsoon and festive season setting in, we expect to recover the lost ground, and be back on track by the next quarter.”

Providing an industry perspective, Desai added that the sector has seen an overall dip in business. “We are lower than the same period last year by about 10 per cent, but hope to recover the lost ground in the coming quarter, with festive season driving sales. GST is one of the major factors that has affected sales, the lack of clarity on the GST implementation has led to down-stocking at the retailer level across the industry,” she added.

However, Director of K-Pra Food Products, Kedar Bhat, said, “The pace of food processing industry, in which we are operating and includes different spices, pickles, upwas (fast) and seasonal products, is growing at a steady pace of around 15 to 18 per cent as compared to last year. There was a temporary fall in the sales post GST for some time. However, the onset of the festive season including Navratri and Diwali have picked up sales again. Moving forward, we expect that the momentum will continue as the demand for festive products will only grow. The main reason is that irrespective of the economic scenario, people in India celebrate all festivals with the same enthusiasm, joy and happiness.”

Meanwhile, Managing Director, Chordia Food Products Ltd, Rajkumar Chordia, said that the slowdown in the sector is more prominently visible in the rural setup as compared to the urban areas. Chordia, whose company is currently in the business of manufacturing food products - namely pickles and grounded spices, marketed under the brand name of Pravin, said, “There certainly has been a slowdown, as initially there was no tax on single spices. But now, it has been included under GST, making it expensive.”

He stated that the slowdown has been visible since demonetisation was announced nearly a year ago. “The slowdown has been witnessed since demonetisation, more so in the rural areas. The retailers there are disturbed and only more confused after GST implementation,” Chordia added.  

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