- Friday, April 26, 2024
By: Radhakrishna N S
THE manufacturer of India’s iconic Parle biscuits may lay off up to 10,000 staff members following a decline in demand and slowing of the country’s economic growth.
The decline in domestic demand for the biscuits could force Parle Products Pvt Ltd to reduce production and lay off its workers, a company executive said on Wednesday (21).
The economic slowdown in Asia’s third-largest economy, which resulted in the fall in demand and rise in inventories, has already forced India’s automotive firms to cut production and axe hundreds of jobs.
Mayank Shah, category head at Parle, was quoted by Reuters: “A sharp drop in Parle’s biscuit sales means the company may have to slash production, resulting in layoffs of 8,000-10,000 people.
“The situation is so bad that if the government doesn’t intervene immediately … we may be forced to eliminate these positions.”
The Mumbai-based company has an annual revenue of over £1.15 billion.
Demand for Parle biscuit brands such as Parle-G has come down, especially in semi-urban and rural areas of the country, after the federal government rolled out a nationwide goods and services tax (GST) two years ago, which imposed higher levy on biscuits.
The higher tax has reduced the number of biscuits in each pack.
Parle Biscuits Private Ltd recorded a seven per cent revenue growth at Rs 84.87bn during the financial year (FY) 2017-18 against Rs 79.22bn recorded the previous FY, according to the company’s financial filings with the Registrar of Companies.
However, the revenue growth of the biscuit producer was lower than in FY2016-17, when it witnessed a 10 per cent growth in revenue over FY2015-16.
The small decline in revenue could be attributed to the high GST of 18 per cent on biscuit makers.
GST has impacted biscuit makers such as Parle that produce low priced biscuits with negligible margin. The levy forced the firms to raise the price of biscuits, which reduced demand as an outcome.
The 90-year-old food and drink group has a staff strength of 100,000 across 10 company-owned facilities and 125 contract manufacturing plants.
