Nestle Consolidating Distribution Centres After GST

Nestle India Ltd. is looking to consolidate its logistics and supply chain as the new uniform nationwide tax obviates the need to have multiple centres.

“We would need to have distribution centres based more on location, consumption and the cheapest freight routes,” Suresh Narayanan, managing director of Nestle India, said in an interview to BloombergQuint on the sidelines of the World Economic Forum, India Economic Summit in New Delhi today. “The exercise is on.”

The maker of Maggi noodles has close to 40 distribution centres across the country as taxes varied between states in the pre-GST tax regime. The company is looking to speed up consolidation to drive benefits.

“We are at looking at how we can calibrate this shift without making serious impact on the business,” Narayanan said.

Not Much Exposure To Rural Market

Nestle India won't feel the impact of any adverse rural demand as its distribution is largely limited to metros, urban and semi-urban regions, Narayanan said. It has very little exposure to rural demand compared to its peers, he said.

“There are reports that rural demand is yet to pick up. The demand from urban markets has been fairly even and satisfactory for Nestle,” he said.