Home >Industry >Retail >Coronavirus impact: FMCG companies run into logistics troubles

New Delhi: Fast-moving consumer goods (FMCG) companies said they have received approvals for some of their facilities, and are in the process of resuming production, albeit at very limited capacities, even as the government moved to ease the supply of personal hygiene products.

However, the supply of packaged essential goods could take a few more days to stabilize as the availability of manpower, and goods transport to the market, remain major challenges.

On Sunday, the Union home ministry clarified that groceries, which are considered essential commodities, also include hygiene products .

“The central government’s decision to include diapers and sanitary pads in essential goods has helped us open our manufacturing unit in Nasik. However, at present, we are working on 20-25% of our capacity," said Kartik Johari, vice president, Nobel Hygiene, the maker of adult diapers Friends and baby diapers Teddyy.

However, movement of products remains restricted because of the paucity of trucks, lack of manpower and misinterpretation of the Centre’s orders, companies said.

“The availability of trucks continues to be the biggest challenge at the moment," said a spokesperson for ITC, which makes soaps and wheat flour among other things. “We believe it will take a few more days for the entire ecosystem and processes to be streamlined for the movement of essential goods," the spokesperson said.

Supplies of home and personal hygiene products will start improving over the next week, analysts said.

“With the easing in the supply chain, we expect inventory movement to return to normal next week. However, the big challenge for FMCG companies is to resume production and deal with the shortage of manpower," said Nitin Gupta, analyst, FMCG, SBI Caps.

Several FMCG companies said they have temporarily suspended or scaled back operations. However, production has resumed at some of the plants. Companies said production capacities are at 20-40%.

Last week, Godrej Consumer Products Ltd said operations in several locations were scaled down or shut down. However, the company said it is seeing some progress on the ground. “Some factories have received permission to manufacture essential hygiene products, at reduced capacity," said Vivek Gambhir, MD and CEO. The company is still facing a significant shortage of trucks

The home ministry order also authorized the transportation of all goods, without distinguishing them as essential and non-essential, as it moves to ease the flow of goods to millions of Indians stuck at home during the 21-day lockdown across the country.

“We have commenced production of Ayurvedic medicines to meet the demand. We have already got the approvals in place and will be restarting production of our hygiene products, including sanitisers and hand wash, over the coming days," said Shahrukh Khan, Dabur India Ltd’s executive director of operations. Dabur had announced a temporary suspension of 60% of its manufacturing units in India.

However, there is still an acute shortage of workers as a large section of them have left cities for homes. “The number of workers reporting to factories and distributor locations is still very low because of the social pressure and safety concerns. People are facing many difficulties in transportation, with a significant shortage of trucks," said Gambhir.

Nobel Hygiene needs a skilled workforce to carry out tasks, said Johari. “Right now, only 20% of our manpower is available as we cannot force people to come to work though we have told them that we are in the essential goods category," he said.

According to Sachin Haritash, founder and CEO of Mavyn, a digital trucking platform, renowned companies work with logistics firms who have their own fleet. Amid the lockdown, drivers of these established transport companies have abandoned vehicles and left for their home towns. “On the other hand, with a business model like Mavyn, the company has been able to place almost 30-35 vehicles pan-India," Haritash claimed.

Meanwhile, in the backdrop of workers fleeing cities, infrastructure and construction giant Larsen & Toubro Ltd said it will support 160,000 of its contract workers during the lockdown, setting aside 500 crore every month. L&T is also donating 150 crore towards the PM CARES fund.

Nandita Mathur from New Delhi and Jayshree P. Upadhyay from Mumbai contributed to this story.

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