FMCG revenue to de-grow by 2-3% in FY21: CRISIL

The latest forecast is a drastic change from CRISIL's estimate of 8-10% growth made before the pandemic struck.

Jun 03, 2020 05:06 IST India Infoline News Service

FMCG
India's FMCG sector is expected to witness de-grow of 2-3% in revenue for the fiscal FY21, says CRISIL an S&P Global company. The latest forecast is a drastic change from CRISIL's estimate of 8-10% growth made before the pandemic struck.

Anuj Sethi, Senior Director, CRISIL Ratings, “Growth in the food and beverage segment (accounting for ~50% of revenue) will mirror the overall sector’s performance. Some segments such as ice cream and beverages would see a steeper fall because of revenue loss for the major part of summer."

Sethi further adds, "The personal care segment (~25% of sector’s revenue), which has the highest proportion of discretionary products, will witness the steepest decline, while the home care segment (~20% of sector’s revenue) will be the least-affected because of its high essentials quotient, and rising hygiene awareness.”

FMCG sales have been derailed due to Covid-19 which has hampered demand and supply chain in the lockdown period. Meanwhile,  lower income visibility for consumers also added to the disruption.

However, CRISIL points out that, softer input prices and pruned ad spends will cushion the impact of the sharp revenue drop on operating profitability, which will still remain healthy at 18-19% (estimated at ~20% in fiscal 2020).

CRISIL's assessment is based on analysis of 57-rated  FMCG companies that account for ~50% of the sector’s revenues.

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