industry

Packaged food companies forced to cut production; cos warn of shortages


KOLKATA/MUMBAI: India’s largest essential and packaged food companies are staring at a huge production and supply cut after factories shut in several places due to enforcement authorities, workers not allowed to travel and many migrating to their hometowns.

In towns where factories are still running, worker strength was at best 50% as police restricted worker movement. While many manufacturers are facing shortage of raw materials due to supply chain disturbances, they are also finding tough to even deliver finished products to retail stores due to restricted movement of trucks.

Companies like Parle, Amul, Britannia, ITC, Adani Wilmar and Cargill India sounded the alarm bell saying unless the government and local enforcement authorities immediately come forward to iron out the issues, there could be shortage for consumers.

“Factories are shut as there are no workers coming. If this continues, we are looking at having shortages and panic situation among consumers,” said Varun Berry, MD, Britannia. “While we are trying to issue authorisation letters for travel and supply chain, it is too short a time to manage everything smoothly.”

Parle said it is operating at 50% capacity since Tuesday with several factories unable to open and there is practically no stock either in factories or in the supply chain. “We are in a hand to mouth situation right now with no stock in the pipeline due to production curtailment and demand shooting up led by panic buying and hoarding,” said Parle products category head Mayank Shah.

The production curtailment comes just three days after most companies decided to hike manufacturing by 10-15% to meet the sudden surge in demand. The nationwide lockdown announced on Tuesday has created confusion amongst local authorities who are not clear which factories are exempted, the companies said.

Two industry executives said ITC too is facing issues of lower manpower availability, supply of raw materials and product packaging for its plants, while the company has outlined a contingency plan to produce some of the products through third-party manufacturers who are able to operate.

An ITC spokesperson said the company is in constant dialogue with relevant state government authorities to seek permission and clearance for the manufacture of essential products in select factories with bare minimum people, and transportation of essential products from the factories, warehouses to retail outlets.

“It will take a few days for the entire eco system and processes to fall in place for movement of essential goods. Our effort is to ensure that consumers during these trying times are not inconvenienced on account of shortages and unavailability of essential products,” the person said.

Affected products include staples, packaged atta, edible oil, biscuit, dairy products, instant noodles, ready-to-eat and also personal and household hygiene products.

Edible oil manufacturers like Adani Wilmar and Cargill India said that there could be a huge shortage in the country.

Adani Wilmar deputy CEO Angshu Mallick said while it is forced to operate at just 50% of its production capacity, the company is waiting to despatch tonnes of finished goods due to issues in inter-states transportation.

“I foresee a huge shortage of edible oil in the country as the entire ecosystem from chemicals used to process oil to packaging materials are affected. Our plants are located in few states but consumers are across the country. With issues in inter-states transportation, we are still waiting to despatch tonnes of finished goods,” said Mallick.

India’s largest dairy firm Amul’s MD, RS Sodhi, said goods filled trucks are able to operate but empty trucks are facing issues to return back to the plant to take fresh stock.

Cargill India MD Piyush Patnaik said there is some degree of automation to handle critical production but the issue of trucking that carry supplies is nightmarish. He said supplies will last few days if the situation continues.

Meanwhile, retail chains said they were getting much less supplies than what orders placed. For instance, supermarket chain More is getting 60% of what it is ordering. “While right now our stores are at a decent availability level, if this continues, then in 2-3 days it will go down to bad availability,” said deputy MD Mohit Kampani.

Packaged food companies have requested the government to issue a directive that clearly specifies that they too are exempted from the lockdown so that workers can come, truckers and last mile distribution can operate.





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