The fast-moving consumer goods (FMCG) sector is supposed to see revenue to 10-12 per cent in the current fiscal due to price increase in products. According to a report by CRISIL Ratings, the operating margin of the FMCG companies had risen by 100 bps despite low revenue growth, which has occurred due to a decrease in advertising and promotional expenses.

“Price hikes of 4-5 per cent affected by the product categories on inflation in raw materials, and volume growth of 5-6 per cent and recovery in discretionary products, will further support revenue growth of 10-12 per cent. However, recovery in urban market for FMCG products will offset this and beat rural revenue growth,” Anuj Sethi, Senior Director, CRISIL Ratings, said.

As per the CRISIL report, the urban division will see an improvement in the growth of discretionary products on a low basis and phased resumption of offices and educational institutions. Urban revenue growth was affected due to limited mobility and a drop in the supply chain. While, in the rural division, low allotment to MNREGA in the Union budget, slow sowing in crop season, and the significant impact of the second wave will decrease growth for FMCG products. It is expected that healthy reserve levels, higher minimum support prices and the anticipated increase in non-agriculture rural employment will contribute some break to the rural demand in this fiscal.