Impact of demonetization on FMCG sector and HUL

Abstract

India, being a cash based economy with more than 68% of the transactions happening through cash. Due to demonetization, there has been a severe cash crunch in the economy and the consumer spending reduced which resulted in the reduction of the volume of transactions. In this report, we analysed the impact of demonetization on the economy by analysis of the parameters like currency present with the public and money multiplier. We also observed how the digital transactions increased in the economy and analysed if it is a short-term or a long-term shift. Among all the industries, FMCG industry is the one which is highly dependent on cash transactions. We observed the impact of cash crunch on the FMCG industry by analysing the data about the impact on traditional and modern retailers. We also understood how it impacted wholesalers and retailers separately. We also studied the impact on Hindustan Unilever Limited due to demonetization by analysing the parameters like share price value, net sales, net profit and Earnings per share.