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

Manpower crunch forces large-scale factory closures; ITC keeps cigarette manufacturing on hold, continues with food and sanitary products

Lack of clarity with regard to operations, owing to the coronavirus (COVID-19) lockdown, and the manpower shortage have disrupted the functioning of FMCG majors like Hindustan Unilever (HUL), ITC and several others. This has resulted in full-fledged factory closures to limited manufacturing of even essential items.

Both HUL and ITC on Friday said functioning has been hit due to the lockdown and joined peers like Marico, Nestle, Dabur, Emami and others to trim operations.

In a regulatory filing with the BSE, HUL said owing to the 21-day lockdown, operations in many of its manufacturing and distribution centres, warehouses and extended supply chain partner locations have been disrupted.

“We have had to scale down and suspend operations in most of our operating locations,” said HUL.

Sources said in some locations, production of even essential items have been hit partially or wholly.

The same has been the case with Nestle and Marico as well which have either scaled down operations or suspended them.

While putting a hold on cigarette manufacturing – its largest revenue earner, ITC has decided to keep production lines of essential items like atta, noodles, biscuits, snacks, soaps, sanitisers and other products running although at a low capacity with limited workforce.

Apart from the factories manufacturing essential items, ITC has suspended operations at its units across the country.

People wearing protective masks shop at Kendriya Bhandar in the wake of coronavirus pandemic. PTI

“We have obtained necessary permission in some states for manufacturing essential items and transportation of essential products from factories, warehouses as well as distribution of products to retail outlets. Truck movement both for inter-state and local movement has been impacted and will take a few days for the entire eco-system and processes to fall in place for movement of essential goods,” an ITC spokesperson said.

Dabur, too, has suspended operations across its manufacturing units except for essential products like ayurvedic medicines, Chyawanprash, hand sanitisers, hand wash and other items.

An industry executive said companies are keen to keep manpower in factories at the lowest level possible to maintain social distancing. There is shortage of staff at every level of the manufacturing and distribution process.

“More clarity and support from various state governments and local administrations are needed to ensure more smoothness in the system. While there is some clarity from some of the local administrations and passes are being issued in some areas, it is not happening across the country coherently. This is disrupting the supply and distribution chain,” the executive said.

Marico has said its distribution network has been significantly impacted.

Industry executives unanimously said that seamless truck movement, both inter-state as well as within states, is the major issue companies are faced with on the distribution side. Also, last mile connectivity has to be ensured to avoid any scarcity on the retail front.

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

Most FMCG firms, including HUL, ITC and others said it is working with several government authorities to enable continuity of operations at manufacturing and distribution locations.

“We are working with state authorities and local administrations to ensure that manufacturing and distribution activities continue uninterrupted with bare minimum people,” an ITC spokesperson said.

Various states in the country are issuing passes to factory workers and others engaged in the distribution network as well as for e-commerce players.