Increased input costs impacting profitability of biscuit manufacturers: TPCI

TPCI Chairman Mohit Singla said Indian biscuit manufacturers are going through turmoil and disruption on account of 35-40 per cent increase in input costs in the recent past. "The industry is not able to honour contract on the agreed pricing, as purchase (price) of raw material such as wheat, refined palm oil and sugar have shot up.

The increase in prices of commodities such as wheat flour and refined palm oil is impacting margins of biscuit manufacturers in India, the Trade Promotion Council of India (TPCI) said on Friday. TPCI Chairman Mohit Singla said Indian biscuit manufacturers are going through turmoil and disruption on account of 35-40 per cent increase in input costs in the recent past.

"The industry is not able to honour contract on the agreed pricing, as purchase (price) of raw material such as wheat, refined palm oil and sugar have shot up. All three are the essential raw material of the bakery industry, therefore the industry is getting price uncompetitive in international market despite the good quality," he said in a statement. TPCI is the organiser of leading food and beverages show -- IndusFood -- in India.

He said despite having a good harvest and sufficient stocks of wheat and sugar, their prices are still shooting up. A slight rise in input cost can lead to fear of shortage, and the disruptive pricing trend is surely a reason to worry, Singla added.

The statement quoted Arun Sehgal, director of Richlite, biscuits and cookies producing company, as saying that six months ago the price of refined palm oil was Rs 58 per litre, from which it shot up to Rs 98 per litre, and now is at Rs 80 per litre. Wheat flour, which constitutes 66 per cent of the total biscuit raw material, has seen a price rise of Rs 2 per kg, while sugar has also registered rise of Rs 2 per kg, he added.

Sunder Industries, which manufactures and exports biscuits and namkeen and supplies it to Middle East and some parts of Africa, said due to the competition in international market owing to pricing, Turkey has emerged as a large producer of biscuits. India exported USD 181 million worth of biscuits in 2019. The US, European Union, Russia and African nations are among the major export destinations.