Biscuit maker Parle Products Private Limited’s senior official on Friday said that the problem of job losses in the company that he had spoken about earlier in the week was “blown out of proportion”, which was inappropriate. Parle Products category head Mayank Shah had said on Tuesday that the firm may lay off almost 10,000 employees if the demand slowdown continued.
There was a definite slowdown in the consumption, Shah said in an interview with news channel BTVI. He said that the consumption of biscuits priced at Rs 5 had been impacted due to high Goods and Services Tax due to which the “overall run” had taken a hit. Shah said that job losses would be an “eventuality over a period of time” if immediate action was not taken.
Shah mentioned that the sales for biscuits below Rs 100 per kg had fallen by 7-8% as it attracts 18% GST. He further added that reduced demand compounded with a high GST rate would eventually lead to a slowdown in production and job cuts.
There was a need for different tax rates for premium biscuits and those priced lower, he said.
Shah also said that demand for the Parle biscuits had become worse since GST was rolled out in 2017 as it imposed a higher rate on lower-priced biscuits. However, he said this would have no impact on employment.
Shah had, on Tuesday, explained that 12% tax was imposed on biscuits that cost Rs 100 per kg before GST was introduced. The company, therefore, had expected the GST to be fixed at the same rate for premium biscuits and at 5% for biscuits priced lower. However, all biscuits came under the 18% GST tax bracket, forcing companies to increase prices, which had a direct impact on sales.
Parle had increased its price by around 5%, which led to a decline in sales. The company has around one lakh employees in 10 plants and 125 third-party manufacturing units. More than half of the company’s sales come from rural markets.
Parle’s concerns followed a week after food-products company Britannia’s Managing Director Varun Berry said the demand for Rs 5 biscuit packets had fallen.
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