Indian companies operating in Bangladesh are bracing for a hit on their revenues in the second half of this current fiscal due to the ongoing political turmoil.
A number of players in the Fast-Moving Consumer Goods, personal care and automobile sectors that are operating in the region are facing difficulties in trying to mitigate business operations in the country.
For instance, Mumbai-headquartered Marico Ltd which has a subsidiary in Bangladesh, has suspended its manufacturing operations. The company is facing an impact on its retail and distribution network in the country.
‘Gradually improving’
“The operating conditions in the market are gradually improving, however, we remain watchful of the evolving situation. We continue to prioritise the safety of our employees, factory workers, distributors and other stakeholders of our business. After a brief interruption, a large majority of our retail sales force and distributors have now resumed operations. We expect our manufacturing operations to resume soon, while we continue to maintain an adequate assurance of supply of our products to meet market demand in the interim. We firmly believe that the medium-term prospects of Marico’s business in Bangladesh remain intact,” stated Marico in a stock exchange filing.
In the automobile segment, commercial vehicles are likely to experience a greater impact due to the disruption in operations.
“We are concerned about the Indian corporations operating in Bangladesh. Some of the notable names that come to mind are VIP, Emami, Marico, Dabur, Asian Paints, Pidilite, Tata Motors, and Hero MotoCorp, all of whom have significant operations there. This unrest will undoubtedly damage the country’s brand value in the eyes of US and European manufacturers, who often give Bangladesh preference,” said Vikram Kasat, Head - Advisory, PL Capital - Prabhudas Lilladher
“We are not impacted in the passenger vehicle sales as we do not have operations in Bangladesh but any company present in the country will see short-term disruption,” said Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicle and Tata Passenger Electric Mobility Ltd.
Sectoral gains
However, the Indian textile industry will gain business opportunities due to the protest.
“The garments and textile sector in India may gain an advantage, companies with excess capacity and the ability to quickly adapt to new orders could benefit. It is essential to adopt a cautious approach and closely monitor the situation in Bangladesh to assess the potential impact on the Indian textile industry,” added Vikram Kasat.