Companies Like Dabur, Parle, Marico Expecting More Profit

Indian consumers are spending on packaged food and personal care products but holding back on apparel and fashion in the run-up to Diwali. Companies across sectors are pinning their hopes on a robust festive season, following three muted quarters in the wake of last November’s demonetisation and the July 1 rollout of the goods and services tax (GST).

Large consumer-facing companies, including Britannia, Parle Products, Marico and Dabur expect a 10-15% increase in consumer sales this Diwali, riding mainly on higher spending in rural markets and moderately improved consumer sentiment. That will mark a return to double-digit growth for the first time in at least four quarters.

Varun Berry, managing director of the country’s largest biscuits maker Britannia “The consumption momentum is returning even if there is some amount of downtrading in select categories. Stocks in trade channels are almost back to pre-GST levels.

Dabur chief executive Sunil Duggal said “the maker of Real juices was expecting a double-digit increase in sales over the last season, mainly on account of the revival of rural consumption following a good monsoon in parts of the country. But the Diwali quarter will see a higher consumption on a very low base because of last year’s note ban.”

Abneesh Roy, vice president at Edelweiss Securities said “While the consumer sector is still emerging out of demonetisation, discretionary products should see double-digit increase in the quarter, since the year-on-year base is favourable and there is pent-up demand, which should aid volume growth.”

The chief executive of a foreign fashion group that sells several brands said “This is not Diwali but diwala for us. Business is down 15-20% this year compared to Diwali last year. It hasn’t been a good Diwali for us this year

Anant Daga, managing director of TCNS Clothing (maker of W and Aurelia brands), said “he was getting a mixed response from various retailers. Some markets per se are not looking so buoyant. If you look at any large format chain and at exclusive brand outlets, there are two distinct views. Some say sales are down and some others are doing well. However, the larger response is that Diwali is slow. Most of the brands are in any case on promotion. If you go to any mall, you will see 50% brands are already on some kind of promotion. You get Rs 1,000 on purchase of Rs 5,000 or 20% off”.