Leading Indian biscuit maker Parle Products Pvt Ltd could lay off up to 10,000 workers amid slowing economic growth and falling demand, which could cause reduction in production, a company executive told Reuters.
India’s economy is witnessing a consumption slowdown, which has hit sales of everything from cars to clothing, forcing companies to cut production, reported Reuters.
Mayank Shah, category head at Parle said that a sharp drop in the company's sales could mean that they might need to cut production, leading to sacking of 8,000-10,000 people.
“We have sought reduction in the goods and services tax (GST) on biscuits priced at Rs 100 per kg or below, which are typically sold in packs of Rs 5 and below, but if the government doesn’t provide that stimulus, then we have no choice but to let go of 8,000-10,000 people from our workforce across factories as slowing sales are severely impacting us,” Shah said, according to The Economic Times.
Parle, which was founded in 1929, has about 100,000 employees across 10 company-owned facilities and 125 third party manufacturing plants, according to the reports.
Low-Priced Biscuits, Higher Taxes
According to Shah, demand for biscuit brands such as Parle G had been worsening since GST was brought in place, because it imposes a higher levy on biscuits costing as low as Rs 5. Low-priced biscuits operate on low margins.
Owing to the higher taxes, Parle has been forced to offer fewer biscuits in each pack, which has hit demand among the lower-income consumers in rural India, who contribute to more than half of Parle’s revenue, the Reuters report said.
Shah said that the slowdown in India's economic growth was fuelling the drop in demand.
Not Just Parle
Biscuit and dairy products giant Britannia has similar concerns over slowing demand. Varun Berry, managing director of Britannia Industries Ltd, which is Parle's main competitor, said that consumers were "thinking twice" about buying products worth even just Rs 5, which showed signs of some "serious issue in the economy", The Economic Times reported.
Last month, market researcher Nielsen said that the slowdown was significant across all food as well as non-food categories, with categories such as salty snacks, biscuits, spices, soaps and packaged tea leading a slowing consumption, according to The Economic Times.
Twitter Rues Parle-G’s Problems
Congress spokesperson Sanjay Jha commented that the BJP had destroyed the Indian economy, so much so that even Parle-G biscuits weren’t selling.
A Twitter user commented sardonically that despite the impending layoff, Finance Minister Nirmala Sitharaman would say that there was no cause for worry, while another expressed his shock at the news about the leading Indian biscuit maker.
Some Twitter users approached the news with humour, in context of a Parle-G reference that is present in the second season of popular Netflix television show Sacred Games.
(With inputs from The Economic Times and Reuters.)