The uncertainty might be over, but companies have still not come out of Prime Minister Narendra Modi’s demonetisation impact -- the economic situation that weeded out 86% of the country’s currency notes.
“In the first two-three months, the sales were down by 25% to 30% compared to out forecast,” said Manish Sharma, president and CEO, Panasonic India and South Asia, after launching it new range of premium air conditioners in Delhi.
That would mean 2.5% to 3% dent in Panasonic India’s annual revenue -- estimated to be Rs 10,000 crore for 2016-17. “That’s a lot (impact)... but sales are coming back on track,” said Sharma.
Sharma, however, was not sure if the customers who didn’t buy at the peak of demonetisation are coming back to the stores. “The momentum did break, but some customers would be coming back,” he said.
The Japanese electronics maker, has been consolidation its operations for the past couple of years, as India became the headquarters for the India, South Asia, Middle East and Africa region -- a cluster of about 80 countries.
Though demonetisation would have pulled the company back, but Sharma is confident of getting a 30% growth in the next financial year. “We will go back to what we were doing three years ago,” he said.
{{/usCountry}}Though demonetisation would have pulled the company back, but Sharma is confident of getting a 30% growth in the next financial year. “We will go back to what we were doing three years ago,” he said.
{{/usCountry}}“We lost out prominence because we decided to consolidate ourselves -- to reduce dependence on Japan, even financially,” said Sharma.
The company is a year delayed on meeting its Rs 10,000 crore target -- it was planned for 2015-16. That was also because it did not have the product variety it has now. It was also setting up manufacturing facilities.
The company is planning to start manufacturing refrigerators in 2018. “We will also spend 10% of our revenue on promoters, advertising and consumer finance,” said Sharma. Panasonic’s consumer business is worth Rs 4,500 crore.
Coming back to demonetisation, Panasonic is not the only company feeling the heat. Soap to shampoo and cement to automobiles, the cash crunch is punching red marks on their balance sheets, even as they continue to put on a brave face on hopes for “long-term gains from this short-term pain”.
An analysis of the latest quarter results of listed firms shows that the government’s ambitious exercise of withdrawing old Rs 500 and Rs 1,000 notes led to adverse impact on businesses across the sectors, though not many have publicly criticised the move and the likes of Rajiv Bajaj are only an exception.
Though most of the companies said that the note-ban has caused short-term financial impact -- it is a ‘new normal’ for businesses. Large corporations and their owners agreed.
“Pace of domestic demand growth slowed down due to demonetisation of old currency notes during the quarter. However, demand is expected to revive as the effects of demonetisation are absorbed and the economy readjusts to the new normal,” said Mukesh Ambani-led Reliance Industries (RIL) in a statement, according to agencies.
In an investor presentation, Aditya Birla Group’s UltraTech described the note ban as “short-term pain and long-term gain” and listed a number of short-term adverse impact such as “acute liquidity crunch”, reduction in purchase volumes as also impact on GDP and currency rates.
Tata Group firm Titan Company, in a quarterly update for third fiscal quarter, said all its consumer-facing businesses witnessed a “drastic slowdown for a few days”.
(With inputs from PTI)