Parle Products category head Mayank Shah said that weakening demand is because of increased GST on biscuits, which is only worsened by absence of adequate government stimulus.
Parle Products, India’s largest biscuit maker may end up letting go of 8,000-10,000 employees, the company said on Tuesday. This development has been the aftermath of slowdown in ongoing consumption. The company said that they have sought reduction in Goods and Services Tax (GST) on biscuits priced at Rs 100 per kg or below, which are usually sold in packs of Rs 5. Parle Products said that if the government does not provide that stimulus, then the company might have to lay off 8,000-10,000 employees.
Parle Products employs 1 lakh people and operates 10 company-owned plants. It also maintains 125 third-party manufacturing facilities. More than half of Parle’s over Rs 10,000 crore sales come from rural markets.
Parle Products category head Mayank Shah told the Economic Times that weakening demand is because of increased GST on biscuits, which is only worsened by absence of adequate government stimulus. “We have multiple biscuit brands that are aimed at mid- and low-income consumers which form the core consumer base of a category such as ours, and we are hoping the GST increase will be rolled back if the government wants to revive demand,” Shah told the daily.
Biscuits priced at Rs 100 per kg or below were taxed 12 per cent under the previous tax regime. However, once GST was introduced, all biscuits – premium and lower-priced – were fixed at 18 per cent, which forced companies to increase the prices. Shah said that Parle increased the prices by 5 per cent leading to decline in sales.
Similar concerns were expressed by Britannia – another biscuit and dairy products company. Britannia MD Varun Berry said that consumers were hesitating to even buy even products worth Rs 5.
Source : https://www.businesstoday.in/current/slowdown-blues/parle-may-lay-off-up-to-10000-employees-over-weakening-demand-gst-woes/story/374128.html