strait of hormuz
Indian consumer companies operating in West Asia are suffering huge losses. Due to worsening situation, many companies are reducing their work. After the start of the US-Israel-Iran conflict, the turnover of some companies has decreased by about 40%. Also, the price of containers for sending goods has increased almost five times.
According to officials, expansion plans in this area have also been stopped. Many Indian companies like Britannia, Godrej Consumer Products, Biba Fashion, Dabur, Emami, Rasna, iD Fresh, Reliance Consumer Products, Marico and Bisleri operate in this sector. About 5% to 20% of the total earnings of these companies comes from this area.
Companies’ response and impact
PC Mustafa, Global CEO of iD Fresh Food, said that the company is re-looking at its brand and investment plans. Now the company is doing its expenditure and expansion thoughtfully so that profits remain safe and the company remains strong. Rasna Group Chairman Peeruz Khambatta said that the situation in West Asia has become like Covid. Many common people and middle class people are leaving this area.
Impact on sales and investment
Siddharth Bindra, MD of ethnic wear brand Biba Fashion, said that business was fine in UAE till Eid, but after that the sales have declined by 30-40%. iD Fresh has kept long-term stock, adopted alternative supply routes and stockpiled more inventory to reduce risk. The company had also recently received an investment of Rs 1,500 crore to increase growth.
Important market for Indian companies
Middle East is a huge market for Indian companies. People here have good income to spend. Many Indian companies also have plants in this area, from where goods are sent to Africa and Europe. Chairman of Rasna said that orders have reduced and the cost of sending containers has increased 4-5 times compared to February. Now companies are taking high risk insurance while sending goods.
Situation of some companies
Biba Fashion has said that it will still remain in this market and is hoping that the situation will gradually improve. Dabur said that due to this conflict the business in the Middle East has been affected. The company has about 500 employees in this area and it accounts for about 15% of its annual sales. Its plant is in UAE, from where products are sent to many countries.
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