Macroeconomic Environment
Over the last year, the government has made several efforts to revive the Indian economy. Demonetisation has led to a significant push towards digital financial transactions, as well as improving the tax net. Steps have been taken to further digitise and streamline the economy, with initiatives such as Aadhar linked subsidy schemes, UPI and Startup India, which have improved transparency and reduced red tape.
Some of our macroeconomic indicators dropped, like a decline in the GDP growth to 7.1 per cent in the fiscal year 2017, from 7.6 per cent in the fiscal year 2016. Inflation is largely under control. The passage of the Goods & Services Tax (GST) bill is a significant achievement and its implementation will have a positive impact on the economy.
The macroeconomic environment in some of our international markets remained challenging. While Indonesia saw a relatively stable GDP growth at 5 per cent in fiscal year 2017, growth in our Sub-Saharan Africa markets was weak. South Africa’s GDP remaining largely flat year-on-year; Nigeria’s GDP declined. Moreover, we faced challenges of currency depreciation - particularly in Nigeria, Mozambique and Argentina - where currency depreciated by 35-60 per cent, along with double-digit inflation.
FMCG Sector
Though growth rates were below historical averages and long-term potential, we outperformed the markets in our core categories. We are seeing signs of recovery in consumer demand in the FMCG industry. While the progress has been subdued, we expect demand to pick up pace in fiscal year 2018. We are hopeful that a timely and successful implementation of the transformative GST will spur stronger growth for the sector. The fundamentals of the industry remain strong and there is still significant growth potential, given the low penetration and consumption rates for many FMCG categories.
Our business has delivered strong and profitable growth, despite the macroeconomic challenges. We have consistently outperformed across quarters. We are driving a relentless focus on our strategy, and investing strategically in creating new growth vectors for the future, while continuing to drive our core to full potential, enhancing our go-to-market infrastructure and driving execution excellence.