FMCG cos hike prices to offset rupee shocks

Sep 16 2013, 17:38 IST
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SummaryWith an increase in input costs, the R1,85,000-crore industry effects price hikes across all categories of retail commodities like personal care, dairy business, paints and detergents

needs to be seen are the impact on volumes if the levels of prices increase,” he said.

Industry analysts point out that the depreciation of the rupee has a major impact on paint companies in India. “As crude oil is a key ingredient in paints, these companies will soon opt for price hikes to protect their margins,” said an industry analyst with a domestic firm.

On Asian Paints' strategy, KBS Anand, its managing director and CEO, said, “The fluctuations in crude, currency and other raw materials are a regular part of the business environment. We review these changes on a regular basis and attempt to price our products to optimise both growth and profits.”

Like other FMCG companies, ITC Foods is also reviewing the market sentiments before taking a final call on price hikes. “There's a significant impact on the costs of oil and oil derivatives and in the prices of packaging materials with the depreciation of the rupee. FMCG majors may need to consider price hikes to offset cost pressures,” said Chitaranjan Dar, CEO of ITC Foods.

Based on the overall inflationary impact, Dabur India may consider a price hike on a selective basis. “The rupee depreciation has an impact on certain products like packaged juices. However, it is partly offset against exports and partly by translation impact on consolidation,” said Lalit Malik, CFO of Dabur India Ltd.

However, in sharp contrast to other FMCG companies’ pricing strategies, Parle Agro has no plans to revise prices at this point of time. “Most of our raw and packaging materials are sourced from within the country. Earlier, we used to import cans for our fruit drinks. Now, the same company has set shop in India,” said Nadia Chauhan Kurup, joint managing director of Parle Agro.

India depends on imports for a large part of crude oil it consumes, and a weak rupee will influence petrol and diesel prices. As a result, fast moving consumer goods such as soaps, detergents, deodorants and shampoos, of which crude oil is an input, are likely to become more expensive in the next few months.

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