Companies plan to dole out big bonuses this year

When your moneybags are full, your aspirations get a booster dose; so do their hopes. Marketers around the country are giving last minute touches to their plans to woo you with their goodies this festival season—and why not?

The party just got bigger this year, after three years of calm. Companies are claiming they will shower their employees with bonuses and increments as they move into higher profit zones, and you are probably more confident as a buyer than ever before.

At the country’s biggest retailer, Future Group, 24 hours in a day seem too less for the employees these days. The production, operations and marketing teams are working overtime to meet festival season deadlines. Unlike the organisers of the Commonwealth Games in Delhi, they cannot afford last-minute makeovers. They also can’t leave snags and pass the buck around. This is one opportunity they just can’t miss.

Rajan Malhotra, president (strategy) for the group, which owns retail brands such as Pantaloon, Big Bazaar and Food Bazaar, sounds confident. He has planned higher volumes of merchandising and inventory to back this bullish sentiment.

Malhotra’s optimism stems from unexpected high volume sales in Kerala during Onam last week, which he believes will replicate during the festivals in other parts of the country, over the next three-four months.

He also expects more companies to dole out bonuses and increments to their employees this year than the past two years.

“All that will enthuse the consumer to spend more, especially on high value products,” he says. If Malhotra’s assessment is correct, fast moving consumer goods (FMCG) and consumer electronics firms, jewellers and carmakers, among others, are moving into the fast lane.

Agrees Sudhanshu Vats, vice-president of the home and personal care division of Hindustan Unilever, India’s biggest FMCG firm.

“We expect consumer sentiments to be robust and bullish this festive season unlike the past two years when emotions were circumspect,” he says. The Indian arm of Unilever Plc is expecting 40% year-on-year sales growth during this year’s festival period. “We have geared production to meet the demand pull, both from urban and rural markets,” says Vats.

Seasonality in consumer buying behaviour has changed over the past few years with premium or even middle-class consumers no more waiting for the festival season to make purchases.

But consumers of mass products such as refrigerators or flat screen TVs wait for an auspicious period, especially in tier II and III cities, and that form the bulk of the market.

So, production is being ramped up at India’s biggest consumer electronics and home appliances maker, LG Electronics India. Says LK Gupta, the company’s chief marketing officer, “This is indeed a revival, with a growth of 30% after two years of circumspect spending by consumers. Salaries are rising and businesses are looking up.” Such claims by India’s top marketers may not be unfounded.

A quick survey by SundayET and consulting firm Manpower has revealed that 56% of India Inc are planning to give out bonuses this year—in the range of 10-27%. As high as 80% of the companies said their employees can expect an increment. Increments will range anywhere between 7-15%.

This wasn’t the case in the last two years, when a US-triggered recession had a rub-off effect in India. While some companies pruned workforce and cut salaries, some others decided not to give out increments and bonuses. Needless to say, this had a major impact on consumer spending.