The Downfall of Parle: It May Lay off 10,000 Employees

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Parle Products Pvt Ltd, the country’s largest cookie (biscuit) maker, could lay-off up to 10,000 workers, as slowing economic growth and declining demand in rural areas could reduce production, the company’s head said on Wednesday.

Parle Products LogoThe recession in Asia’s third-largest economy is cutting sales from cars to clothing, forcing companies to limit production and hoping the government will provide an economic stimulus to revive growth.

A sharp decline in sales of Parle’s biscuit means that the company may have to cut production, which could lead to layoffs of 8,000-10,000 people, according to a telephone interview with Mayank Shah from Mumbai, category head at Parle.

“The situation is so bad that if the government does not intervene immediately … we may be forced to take away these positions,” he said.

Founded in 1929, Parle employs about 1,000,000 people, including direct and contract workers in 10 company-owned facilities and 125 contract manufacturing plants.

Mr Shah said that demand for popular Parle-biscuit brands such as Parle-G has been deteriorating since the government introduced the National Goods and Services Tax (GST) in 2017, which imposed a higher biscuits tax, whose cost is as low as Rs. 5 pack.

Higher taxes forced Parle to offer fewer biscuits per pack, which led to lower demand for low-income consumers in rural India, which brought in more than half of Parle’s revenue.

“Consumers here are extremely price sensitive. They know very well how many biscuits they get at a certain price, ”said Mr Shah.

Parle, whose annual revenue is more than $1.4 billion, last year held talks with the GST government council, as well as with former finance minister Arun Jaitley, to review tax rates, Mr Shah added.

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

According to Mr Shah, the slowdown in India’s economic growth, which has already led to the loss of thousands of jobs in its crucial automotive industry, was accelerating the decline in demand.

Parle is not the only food company in which there is a decrease in demand.

Varun Berry, managing director of Britannia Industries Ltd, a major competitor to Parle, said earlier this month that consumers “thought twice” about buying products worth only Rs. 5.

“There is a serious problem in the economy,” Berry said at a conference with analysts.

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