Parle Products Pvt Ltd may lay off nearly 10,000 employees as 18 percent goods and services tax (GST) on its cheap biscuit brands coupled with economic slowdown has hit sales, Mayank Shah, category head told CNBC-TV18.
He said, "Parle, directly and indirectly employs about 1 lakh people. This is a difficult time for everybody. The entire biscuit industry is going through a demand slowdown."
Shah confirmed the company may have to let go between 8000 and 10,000 employees. He blamed the demand slowdown due to price hike the company had to take earlier this year.
Shah said, the company had to increase prices of its 'value biscuits' due to the goods and services tax. He said, earlier these biscuits were exempt from excise duty but have been included in the 18 percent GST rate now.
"As a result of this, we are forced to take a price hike," Shah of Parle said.
We are asking the government to reduce GST on biscuits that are sold at Rs 100 per kg or below, he said.
Parle Products sells its marquee Parle G biscuits, milk biscuits and certain other biscuit brands at this price point.
Shah said, these biscuits are usually consumed by middle-class and lower middle-class, adding, in the first quarter of this financial year, 'value biscuits' category saw a dip in sales to the tune of around eight percent.
He said, "Entire slowdown in demand is driven by biscuits priced below Rs 100 per kg."
The news comes as a slowdown in Asia’s third-largest economy has hit demand for everything from automobiles to retail products, forcing companies to curtail production and recruitment while raising hopes that the Indian government would unveil an economic stimulus to revive growth.
Parle, popular for its Parle-G and Marie brand of biscuits, 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 said consumers were “thinking twice” about buying products worth just 5 rupees ($0.07).
“Obviously, there is some serious issue in the economy,” Berry had said.