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Journalism of Courage
With alarm bells ringing over weak monsoons, the corporate sector is closeted in strategy meetings to deal with the possibility of flat sales and dip in profits.
Sectors like fast-moving consumer goods, consumer durables and automobiles are fearing the worst. ‘‘Sales and bottomline of companies are going to be hit. However, it’s not total doomsday as many other people are projecting,’’ says economist Surjit Bhalla.
Companies fear that lower agricultural income will impact rural consumer spending. ‘‘There is monsoon pressure on the topline. We felt pressure on the distribution line up too,’’ says Vijay R. Singh, managing director, LG Care. The company intends to continue cutting prices in the FMCG segment despite shrinking margins.
‘‘This is the time to gain not grow,’’ says an optimistic Soumitra Ghatak, executive vice-president (marketing and sales) of Godrej & Boyce. ‘‘We can not expect growth at this point, so to remain steady in our markets, we need to plug the gaps and gain newer markets within markets,’’ he says.
For example, North India is a very cluttered market with competitors vying for limited space. For Godrej to remain on course, newer sub-pricing and categories will have to be discovered.
Rajesh Jain, GM (marketing), Voltas, says tough times are in store for the refrigerator and air-conditioner business. ‘‘Our input costs are rising. Due to competition, we cannot even increase costs at this point. As a result, we will face a tough challenge during festival seasons,’’ he admits.
Special offers for the festive season and more ad-spend are options he could be looking at. ‘‘I think this is the best time to spend more on ads, the market is less cluttered now,’’ Jain adds.
‘‘We have seen many good and bad monsoons… don’t expect that the lower than expected rainfall this year will have an impact on sales. But our raw material costs will go up. It is sad that the farmers will bear the brunt of lower rainfall,’’ says Amit Burman, CEO, Dabur Foods.
Some players, however, are looking at the mood swings of the rain Gods as an opportune time to create demand for new products. ‘‘Neither the rains nor the sun will stop us…Our promotions are on in full swing,’’ says Ajinkya Firodia, GM (marketing) of Kinetic Engineering
Adds Ananda Bhoumik, V-P, Fitch Rating India, ‘‘Going by past experiences, the most obvious thing to do will be to look at new markets, like some tractor companies did when the aimed at exports’’. For most of India Inc, it’s early days yet.
Inputs from Santanu Ghosh & Pragya Singh
