How FMCG and appliance makers plan to pass on GST benefits to consumers

Fast consumer goods manufacturers, which see the biggest benefit with GST in daily use products falling from 12-18% to 5%, said that they will reduce the prices of large package dimensions or offer promotions. However, priced product prices LaTo 5 LaWhen maintaining the range of 20, extra grams will be added to them.

It is more likely that household appliance manufacturers such as television sets and air conditioners will convey promotions in the later hours of spruce and the benefit of lower GST to consumers.

For soap, biscuits and shampoo producers, the transition to new packages at revised prices can be difficult in the short term.

“This is the biggest difficulty in front of almost all companies, Mayan said Parle Products Vice President, Mayank Shah. Mint. “In India, most of the FMCG goods sell in smaller packages and make it difficult for companies to change their popular price points. La5, La10, La15 and La20. La5 packages La4.50. Typically, you change the weight of the package and give consumers probably 10% extra. “

Price points for categories such as biscuit and bhujia LaTo 5 La20 Taking into account 50-70% of sales.

Shah said he expects Parle to be released full of reviews for the release of Parle until November-December. A decision on the price changes of larger packages will depend on the company’s bandwidth and the sales volume of the product.

“If the product is not high, we can do it quickly, but if the volumes are too high, it may take some time because we need to enter the new edition of packaging and revised prices,” he explained.

Request Return

Shah described the GST discount as a game exchanger since the return of urban demand. Rural markets are going well.

“We will see that growth between the categories. Monthly grocery bills may drop by 5-10%,” he said.

On Wednesday night, the GST Council announced comprehensive reforms to reduce the tax burden on daily use products for ordinary people. 12% and 28% signs have been removed, 12% of most categories go to 5%, and most 28% of the categories of 28% go to 18%. The new GST ratio will be valid on September 22nd.

The BSE FMCG index increased by 0.86% at 21.107.37 on Thursday morning. Hindustan Unilever Ltd progressed by 0.46% and ITC 1.36%.

Companies examine the overall effect of gst rationalization, which affects the existing stocks in the market with retailers and finished goods in production units.

“We usually protect a limited product inventory of 2-4 days,” Rishabh Jain, CFO of Bikaji Foods International Ltd, a packaged snack company. He said. Mint Thursday. “From our perspective, price points La5- La20 will remain the same, but we will put more grams in these packages. However, we evaluate a MRP reduction in family packages. “

FAMILY PACKAGES PRICE La60 to La300. Bikji’s Bhujia and Namkeen portfolio have previously attracted a 12%GST, which will now fall to 5%.

“We will benefit consumers in large package dimensions,” he added.

However, Jain expressed his concerns about inventory levels, considering the proximity to the festival season, which is critical for Namkeen and Tatlı Maker.

“All distributors are stock for 2-3 weeks. We see a little slowdown in inventory loading next week, but it will be temporary,” he added.

Indirect benefits

For smaller package dimensions, companies can offer indirect benefits such as grams instead of direct price deductions.

“In sub -unit packages La2, La5, La10, we expect a double -digit gram addition to increase volume growth. In larger packages, we expect price cuts and promotions to help consumption again, “he said.

However, the absence of a clear anti -profitability substance may cause lower tax to be transferred to consumers. Asset refers to the application of increasing product prices when taxes are reduced to balance savings for consumers.

Roy, “depending on the general competition intensity, prices have a chance to hold some amount. Some categories will be a complete transition, others can partially benefit from companies,” he said.

In -store promotions, consumers, with higher grams, as well as lower prices, as well as options such as options, such as promotions and discounts on store shelves in the coming weeks can see.

“However, we expect some companies to force their own margins from January-probably from January, not only for a growth move, but for the competition,” Aditya Goel, the founding partner of Love In Store. He said.

GST ratio rationalization is due to weak demand between categories and will benefit both consumers (lower product prices) and companies (higher sales volumes). Help is not limited to daily goods.

Large ticket products such as air conditioners, 32 -inch televisions (including LED and LCD TVs), monitors and projectors and dishwashing machines have seen a segment between 28% and 18%. Retailers expect consumers to delay their device purchases until September 22, when the revised rates will be launched.

Consumer savings

“Consumers may delay purchases for large products, especially for large products, but the market is expected to increase after 10%. The festival season is expected to be beneficial for consumers.” He said. “Especially in non -TV categories without TV, there is also the expectation of increasing competition intensity like smart phones.”

Vijay Satıl plans to apply revised prices on September 22 and more promotion to increase in -store sales.

Others said that sales would pause until September 22 and lead to a working capital challenge for tool sellers.

Blue Star Ltd.

Companies await some changes in air conditioning demand for energy consumption ratings next year.

“Those who want to buy a three -star air conditioner can buy a five -star with a five -star air conditioner and buy two ACs.