Economic situation tough: HUL
Astute handling, balancing act required
New Delhi, June 23: Describing the current macroeconomic situation as "probably the most difficult economic situation", HUL chairman Nitin Paranjpe on Thursday said India will require some astute handling and a balancing act to make sure that growth does not stall, while inflation is contained, as the immediate future is challenging.
Responding to queries of shareholders at the annual general meeting, Paranjpe said global supply chain disruptions due to the pandemic and geopolitical tensions have had an impact on India as well.
"It is true that we are going through probably the most difficult economic situation. Inflation is high, there are supply chain disruptions that are going on," he said.
Elaborating further, he said it is a result of a combination of factors that is the outcome of just coming out of the pandemic, which disrupted many supply chains and also of the geopolitical tension that is being witnessed in many parts of the world.
"Therefore in India, we are probably getting to a situation where we have now seen 14 consecutive months of double-digit wholesale price inflation. I don't know when we have last seen something like that," Paranjpe said.
Stating that this has had an effect on the Indian market, he said, "FMCG markets, which have generally been strong for a long period of time, have started seeing the effect of this and more recently, we have seen market growth rates moderate and our volume growth rates have actually become negative in the short term".
"Many people were complimenting India on how we were coming out of the Covid period but it does mean that the immediate feature is challenging, and it will require some astute handling and a balancing act to be able to make sure that growth does not stall and we are able to contain inflation."
However, he said, "I remain confident that as a country, we will be able to navigate through this crisis there. It's not just my saying. The World Bank believes that India will remain the fastest-growing economy in the coming years.”
About the FMCG industry, he said, "I will say that we have to navigate the short term but I remain confident of the mediumterm to longer-term future that this industry has".
He cited low per capita consumption, a large young population, a growing middle class, rising affluence and adoption of digital technology as reasons for HUL’S bullishness for the sector.