Fair tax, GST and big job cut: Parle clears air on layoffs

Parle is a leading manufacturer of biscuits and confectionery in the country. Outside India, it has manufacturing units in Cameroon, Nigeria, Ghana, Ethiopia, Kenya, Ivory Coast, Nepal and Mexico.

Parle Products Pvt Ltd, a leading Indian biscuit maker, today denied reports of 10,000 job losses due to slowing economic growth, falling demand and consequent production cuts. “The facts have been hyped by media. The condition of job loss is actually an eventuality if our demand for lesser tax rates is not met,” a senior Parle official said.

Parle Products on Monday denied reports of 10,000 job losses due to slowing economic growth. (Pradeep Gaur/ Mint)

“It is not a fact that people have lost their jobs by now. The fact is that we cannot continue with the same number of manpower if we are not having the same production volume as earlier,” said Mayank Shah, Senior Category Head at Parle.

Shah said that demand for popular Parle biscuit brands such as Parle-G had been worsening since the government rolled out a nationwide goods and services tax (GST) in 2017, which imposed a higher levy on biscuits costing as low as 5 rupees, or 7 cents a pack.

“I just believe that 18 per cent Goods and Services Tax (GST) on biscuits is too much. Biscuits were exempt from excise tax earlier. But now they are taxed at 18 per cent,” he said.

The higher taxes have forced Parle to offer fewer biscuits in each pack, hitting demand from lower-income consumers in rural India, which contributes more than half of Parle’s revenue and where two-thirds of Indians live.

“Consumers here are extremely price-sensitive. They’re extremely conscious of how many biscuits they are getting for a particular price,” Shah said.

Other company products like rusk were earlier exempt from taxes. Now it is taxed at 5 per cent GST rate. Shah said even biscuits could be put in the tax bracket of 5 per cent.

“It is more important to talk about the fair tax rate for us. A high tax rate can affect our volume of production. About jobs which we are talking is actually an eventuality of the whole scenario,” said Shah.

Once known as Parle Gluco, the Mumbai-headquartered company’s flagship biscuit brand was renamed as Parle-G, and became a household name in India through the 1980s and 1990s. In 2003, Parle-G was considered the world’s largest selling biscuit brand.

Parle, founded in 1929, employs about 100,000 people, including direct and contract workers across 10 company-owned facilities and 125 contract manufacturing plants. Outside India, it has manufacturing units in Cameroon, Nigeria, Ghana, Ethiopia, Kenya, Ivory Coast, Nepal and Mexico.