Political turmoil unlikely to impact Indian FMCG companies

ET Intelligence Group: India’s neighbouring countries such as Bangladesh, Sri Lanka and Nepal have been traditional frontier markets for Indian consumer goods companies. However, political or economic turmoils in these countries never had a significant or lasting impact on Indian companies.

While several consumer goods companies such as Godrej Consumer Products, Emami, Dabur, Britannia and Asian Paints have a presence in Bangladesh, their exposure is not singularly significant to their overall operations. Little wonder then that stocks of most fast-moving consumer goods (FMCG) companies did not take a major beating on Tuesday.

Marico shares, however, closed nearly 6% lower since the company earns nearly 12% of its revenue from the eastern neighbour.

The company had set up a subsidiary in Bangladesh in 1999 and listed it on the Dhaka Stock Exchange in 2009. Over the years, the subsidiary has become a significant contributor to the overall business of its Indian parent, accounting for 44% of its overseas revenue in the previous financial year.

The company has two factories in Bangladesh, both located in Gazipur, Dhaka, and five depots. It is among the top three multinational FMCG companies in Bangladesh.

Indian FMCG Cos

In case of other companies, the impact of Bangladesh turmoil will be evident in their earnings in coming quarters. The political turmoil in Bangladesh was one of the factors impacting international business performance of Asian Paints for the June quarter.

In 2022, Indian businesses had similarly faced the political upheaval in Sri Lanka.