Dabur predicts mild growth in next few months due to demonetisation, GST

Dabur will take a few more months for its trade to rebalance, post-demonetisation.

The Dollar Business Bureau

The Government-led demonetisation drive seems to have left a deteriorating impact on the domestic business atmosphere, as FMCG major Dabur says the company is still attempting to shake off the effect of the November 8 decision, and it will take a few more months for its trade to rebalance. 

The Uttar-Pradesh-headquartered company said that the delay in implementation of GST has further added to its challenges and would want the government to stick to its deadline. 

"One thing is for sure, we are not going to see strong growth emerging in the next few months. I think it is going to take longer for the trade to re-balance," Dabur India CEO Sunil Duggal said. 

Duggal, however, indicated that the company could get back to a double-digit growth, but only once everything settles down. "10-12% will probably happen only post substantial stimulus, complete liquidity emerging and the trade reassessing and recalibrating the business model." 

Referring to the delayed implementation of GST, Dabur CEO said, "There is a little bit of overhang and everybody is going to become very cautious as they approach the GST deadline in driving up pipelines even more".

He said he would prefer to have adequate pipeline stock in the company’s supply chain as things could become very messy after the implementation of the GST framework in terms of input credits. 

He reminded that the industry had adopted a similar approach when VAT was implemented. In the case of GST regime, however, the risk is even higher and that may depress short-term performance following the implementation of GST in July. 

“But I think inherently, the consumption stays resilient. It has got battered but is recovering. The pace of recovery is yet to be ascertained," he said.

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The Dollar Business Bureau - Feb 13, 2017 12:00 IST