The high inflation that has impacted the growth of the FMCG industry remains a major near-term challenge, with lingering geopolitical tensions and protracted global supply chain disruptions posing “risks of major declines” for the coming year, according to diversified entity ITC Ltd.
In its annual report for 2021-2022, the company also highlighted the need for policy interventions “strongly focused on supporting sustainable livelihoods and promoting inclusive growth” as the economy faces immediate challenges. subdued consumption, persistent inflationary headwinds and a supply chain. disturbances.
FY22 operating environment remained “extremely challenging” and marked by heightened uncertainty and volatility due to the COVID pandemic and unprecedented inflationary headwinds; geopolitical tensions at the end of the year exacerbated the situation.
The year also saw an unprecedented increase in the prices of major inputs such as edible oils, packaging materials, soap noodles, fuel, logistics, etc., which put considerable pressure on the margins.
Unprecedented price increases of key inputs have been mitigated by targeted cost management interventions along the value chain, premiumization, product line enrichment, judicious pricing actions and incentives tax, he added.
During the year, the ITC said the FMCG industry experienced moderate growth mainly due to subdued demand conditions, particularly in rural markets, high inflation which weighed on household budgets and a high base effect in some categories such as staple foods and convenience foods.
Health and hygiene, personal care products experienced demand volatility in line with the varying intensity of the pandemic, while remaining significantly above pre-pandemic levels.
On the challenges ahead, the company said, “Inflation continues to remain a controllable key for your business in the near term.” The company continues to take proactive steps to counter the impact of these headwinds across all nodes of operations and deliver superior competitive performance by leveraging its institutional strengths and exploiting scale advantages. , smart buying initiatives and world-class talent in a consumer-centric, agile and innovative way, he says.
On the macro side, the ITC said that through January 2022, the near-term outlook for the Indian economy looks extremely promising – all sectors of the economy, including the contact-intensive services sector , having experienced a steady recovery.
“However, sustained inflationary headwinds and the outbreak of the Russian-Ukrainian conflict resulting in protracted global disruptions and a spike in commodity prices have led to downward revisions to growth forecasts for 2022,” he said. declared.
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