Trying to shake off the effect of demonetisation and remaining cautious on the "GST overhang", FMCG major Dabur does not see strong growth tailwinds in the next few months, saying it will take longer for the trade to re-balance.
Sunil Duggal, CEO, Dabur India, said, "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."
Stating that it could get into "mid-single digits" in terms of category growth, he said: "10-12 per cent will probably happen only post substantial stimulus, complete liquidity emerging and the trade reassessing and recalibrating the business model."
Duggal 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".
"So, I personally would like to have as little pipeline stock in the supply chain as I can afford prior to the GST implementation because it is going to get very messy after that in terms of input credits and all that," he added.
Duggal said a similar approach was adopted when VAT was implemented and in the case of GST, 'the order of magnitude is higher up'.
"So, that could also depress short-term performance if GST comes into play in July. But I think inherently, the consumption stays resilient. It has got battered, but it is recovering. The pace of recovery is yet to be ascertained," Duggal said.
