FMCG firms expect full recovery by end of Q3

As the goods and services tax (GST) completes 100 days on Sunday, major fast-moving consumer goods (FMCG) firms, including Dabur and Godrej Consumer, expect full recovery from the pangs of implementation of the new tax regime by the end of the third quarter, with clear signs of demand picking up on the horizon.

Most FMCG firms were hit by de-stocking by channel partners ahead of the implementation of the GST in July this year due to uncertainties of transition to the new system.

Dabur India and Godrej Consumer Products (GCPL) said they had adapted well to the transition and are hopeful of the situation to completely improve by this quarter considering the stable market sentiments. “With the market sentiments showing signs of improvement and stability returning post-GST implementation, we expect the demand scenario to move up, both in rural and urban markets,” Dabur India Chief Financial Officer Lalit Malik told PTI.

He said the company had seen a marked improvement in demand, with the new indirect tax regime now settling down.

Expressing similar views, GCPL Business Head (India and SAARC) Sunil Kataria said: “Overall the massive destocking seen in June has been sufficiently refilled and we are seeing a clear recovery.” He said although the wholesale channel has taken a bit longer to adapt to the new tax regime the retail channel recovered much faster and quite smoothly in the JulyAugust period.