FMCG majors forced to scale down operations over Covid-19 lockdown

Lack of operational clarity due to the coronavirus lockout (COVID-19), and labor shortage have disrupted the functioning of FMCG majors like Hindustan Unilever (HUL), ITC and several others . This has resulted in full-fledged plant closings and limited production of even essential items.

HUL and ITC said Friday that the operation had been compromised due to the lockout and joined their peers like Marico, Nestlé, Dabur, Emami and others to reduce the operations.

In a regulatory case with the BSE, HUL stated that due to the 21-day lockout, operations in many manufacturing and distribution centers, warehouses and partner sites of the extended supply chain were halted .

“We have had to cut back and suspend operations at most of our operating sites,” said HUL.

Sources say that in some places even the production of essential items has been partially or totally affected.

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The same is true for Nestlé and Marico who either reduced their operations or suspended them.

While putting a brake on the manufacture of cigarettes – its main source of income, ITC decided to maintain the production lines for essential items such as atta, noodles, cookies, snacks, soaps, disinfectants and other products running, although at low capacity with limited labor.

In addition to factories manufacturing essential items, ITC has suspended operations in its units across the country.

People wearing protective masks shop in Kendriya Bhandar following the coronavirus pandemic. PTI

“We have obtained the necessary authorization in certain states for the manufacture of essential articles and the transport of essential products from factories, warehouses and the distribution of products to points of sale. The movement of trucks for interstate and local movements has been impacted and it will take a few days for the entire ecosystem and processes to set up for the movement of essential goods, “said an ITC spokesperson.

Dabur has also suspended operations in all of its manufacturing units, with the exception of essential products such as Ayurvedic medicines, Chyawanprash, hand sanitizers, hand washing and other items.

An industry leader has said that companies want to keep the workforce in factories as low as possible in order to maintain social distance. There is a shortage of personnel at all levels of the manufacturing and distribution process.

“More clarity and support from the various state and local governments is needed to keep the system more fluid. Although there is some clarity on the part of some local governments and that passes are issued in certain regions, this does not occur consistently across the country. This is disrupting the supply and distribution chain, ”said the executive.

Marico said his distribution network has been significantly impacted.

Industry leaders have unanimously stated that the seamless movement of trucks, both between and within states, is the main problem facing businesses on the distribution side. In addition, last mile connectivity must be ensured to avoid any shortage on the retail front.

“Although there is some collaboration from local governments, including issuing passes for the movement of goods and workers, more attention is needed from the authorities,” said another executive from industry.

Most FMCG companies, including HUL, ITC and others, have stated that it works with several government authorities to enable business continuity at manufacturing and distribution sites.

“We are working with state and local governments to ensure that manufacturing and distribution activities continue uninterrupted with a minimum of staff,” said an ITC spokesperson.

Various states in the country issue passes to factory workers and other players in the distribution network, as well as e-commerce players.

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