Parle may lay off up to 10,000 workers amidst slump in sales: report
21 August 2019
Biscuit maker Parle Products Pvt Ltd is reported to be staring at a lay-off, involving up to 10,000 workers, in signs that slowing growth and falling demand is pervading all sectors of the country’s economy, including manufactured food products and other consumer products.
Parle has seen a sharp drop in biscuit sales, including in the rural heartland, forcing it to cut production, which may result in lay-offs of 8,000-10,000 people, The Economic Times quoted Mayank Shah, category head at Parle, as saying in a telephone interview from Mumbai.
A slump in demand that dented sales of everything, from cars to food products, forced companies to curtail production and seek government stimulus to revive growth.
“The situation is so bad, that if the government doesn’t intervene immediately ... we may be forced to eliminate these positions,” the paper quoted Shah as saying.
Mumbai-based Parle employs about 100,000 people, including direct and contract workers across 10 company-owned facilities and 125 contract manufacturing plants.
Founded in 1929, Parle produces some very popular biscuit brands such as Parle-G. The company, which sells biscuit packets costing as low as Rs5, saw returns falling after the roll-out of the Goods and Services Tax (GST) in 2017.
GST, in fact, imposed a higher levy on biscuits costing as low as Rs5 a pack. This forced Parle to trim the biscuit pack, hitting demand from lower-income consumers in rural India, who contribute more than half of Parle’s revenue and where two-thirds of Indians live.
“Consumers here are extremely price-sensitive. They’re extremely conscious of how many biscuits they are getting for a particular price,” Shah told ET.
Parle, which is famous for the Parle-G and Marie brand of biscuits, was set up originally as Parle Gluco and the Parle-G brand was oncve the worlds largest selling buiscuit brand.
The slowdown in India’s economic growth, which has already led to thousands of job losses in its crucial automotive industry, was accelerating the drop in demand, Shah said.
Parle is not the only food product company to have flagged a slowing demand.
Earlier this month, biscuits maker Britannia Industries Ltd's managing director Varun Berry had also flagged concerns over consumer resistance amist an economic downturn.