The signs of an imminent economic slowdown are evident not just because there is a dip in auto sales. The FMCG sector is also showing signs of desperation. According to a study by Elara Securities, FMCG companies, over the past year, are dumping their stock with distributors and retailers to report a higher volume growth.
The report estimates that the growth fuelled by this dumping was in the region of 8 per cent last year. This has led to heavy undercutting in the market across brands. The average closing stock at the distributor level has gone up from 10 days to 25 days, while retailer credit has increased by 15 days to 25.