High inflation that has impacted FMCG business progress continues to stay a key problem within the close to time period, with continued geopolitical tensions and prolonged international provide chain disruptions posing “key downside risks” for the 12 months forward, in accordance with diversified entity ITC Ltd.
In its annual report for 2021-22, the corporate additionally highlighted the necessity for coverage interventions which might be “sharply focused on supporting sustainable livelihoods and fostering inclusive growth” because the financial system faces the fast challenges of muted consumption, persistently excessive inflationary headwinds and provide chain disruptions.
The working atmosphere in FY22 remained “extremely challenging” and was marked by heightened uncertainty and volatility as a result of COVID pandemic and unprecedented inflationary headwinds; geopolitical tensions in direction of the top of the 12 months exacerbated the scenario.
The 12 months additionally noticed an unprecedented enhance in costs of key inputs reminiscent of edible oils, packaging supplies, cleaning soap noodles, gas, logistics, and so forth. which exerted appreciable stress on margins.
The unprecedented enhance in costs of key inputs was mitigated by means of targeted value administration interventions throughout the worth chain, premiumisation, product combine enrichment, considered pricing actions and monetary incentives, it added.
During the 12 months, ITC mentioned the FMCG business witnessed moderation in progress primarily on account of subdued demand situations particularly in rural markets, excessive inflation consuming into family budgets and excessive base impact in sure classes reminiscent of staples and comfort meals.
Health and hygiene, and private care merchandise witnessed demand volatility in keeping with various depth of the pandemic whereas remaining considerably above pre-pandemic ranges.
On the challenges forward, the corporate mentioned, “Inflation continues to remain a key monitorable for your Company in the near term.” The firm continues to take proactive measures to counter the impression of such headwinds throughout all nodes of operations and ship competitively superior efficiency leveraging its institutional strengths and harnessing benefits of scale, sensible shopping for initiatives and world-class expertise in a consumer-centric, agile and modern method, it mentioned.
On the macroeconomic entrance, ITC mentioned up till January 2022, near-term prospects for the Indian financial system appeared extraordinarily promising – with all sectors of the financial system, together with the contact-intensive service sector, having made a gradual restoration.
“However, sustained inflationary headwinds and outbreak of the Russia-Ukraine conflict leading to extended global disruptions and spiralling of commodity prices have led to downward revisions to the growth forecast for 2022,” it mentioned.