InvestorQ : My broker was telling me that there is lot of concern in the market over the layoffs planned by Parle Products. Why is there so much panic?
Aditi Sharma made post

My broker was telling me that there is lot of concern in the market over the layoffs planned by Parle Products. Why is there so much panic?

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Aashna Tripathi answered.
1 year ago


You are right that Parle Products did make a statement that they may be forced to lay off nearly 8,000-10,000 workers if the slowdown continued. This is important because Parle, which makes iconic biscuit brands like Parle-G and Marie, is positioned in the mass market. Unlike Britannia which is positioned in the premium market. Parle category head, Mayank Shah, had stated that the sales of biscuits had taken a sharp hit after the GST rates had increased the levy on biscuits from 12% to 18%. This had hit Parleā€™s rural demand in a big way and that had to led to slowdown in sales.

In the past, Parle has had a history of launching and running biscuit brands and soft drink brands in a difficult market and even in the midst of competition. That is why the statement about a slowdown coming from Parle is a worry as it pertains to the mass urban and the largely rural market. While Britannia CEO, Varun Berry, had already spoken about a slowdown in the previous quarter, this is the first time that a mass market product has spoken about a slowdown. Markets are worried that this could lead to a chain reaction of slowdown in other sectors, low circulation of money and even defaults at a retail level. That may be too early to talk about now.



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1 year ago


Auto stocks may turn out to be the second most worst performing sector after metals. Auto Index has drastically fallen down by 5.52% due to declining sales. Around 12 components out of 16 of the BSE auto index has performed low.

Should you buy auto stocks? Auto sector is a very diverse field and there is not much that you can really do with a macro approach. For example, two-wheelers with a strong export franchise will be a beneficiary. Secondly, entry-level cars have been in the dumps and that could see a turnaround.


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Pranit Sharma answered.
1 year ago


The concerns are mainly poor sales of primary products like biscuits in the Rs 10 category. The prime reason quoted is GST on food causing lesser biscuits per pack. The cookies category is doingwell - so it is difficult to say if the GST will be revised for biscuits under a purchase point.