DEMONETIZATION AND ITS IMPACT: A STUDY ON INDIAN FMCG SECTOR

Demonetization of all the Rs.500 and Rs.1000 denomination banknotes is an attempt to curb black money, fake notes and to achieve other ancillary objectives. Numerous debates have been held over this move and various pros and cons of demonetization have come into picture. Against these backdrops, in this paper it is tried to find out the immediate effect of demonetization on the FMCG sector. It is likely that immediate cash crunch arising out of demonetization is likely to impact the sales and other performance of FMCG Companies. Analysis is made on the quarterly performance on the selected FMCG companies and annual reports are thoroughly scrutinized to find out the views of the companies concerned on demonetization and its effect. The content analysis is made by searching for terms Like “demonetization”, cash-crunch cash shortage etc. The analysis reveals that most of the sample companies have made some disclosure in the annual report on demonetization. Our analysis reveals that for 7 companies there is absolute negative growth in sales and for 4 companies sales growth is lower as compared to sales growth of corresponding quarter of previous year in respect of December end quarter.