While there are rarely any direct announcements in the Budget for the FMCG industry, the companies are expecting measures which could boost consumption such as reduce inflation and improve the rural economy.
The industry also feels implementation of GST in the Budget will boost growth. Senior officials of leading FMCG makers like Godrej Consumer Products, Dabur, Emami and Cavin-Kare said sales growth of the sector has slowed down due to stiff economic conditions and hence some measures to boost consumption can come as a welcome relief.
“Any steps to boost the agrarian economy which can drive consumption will help the FMCG industry,” says Dabur IndiaBSE 0.65 % CEO Sunil Duggal. FMCG companies like HULBSE -2.60 %, Dabur, MaricoBSE 0.36 % and Godrej Consumer ProductsBSE -1.90 % have all reported a decline in volume growth in the third quarter ending December 2012. The volume growth was down anywhere by around 20% for the industry in the current fiscal with consumers holding back their spending.
CavinKare CMD CK Ranganathan feels measures to control inflation will also help to reduce commodity cost thereby giving some cushion to input cost and profitability. “Also, implementation of GST will help the trade which will make taxes uniform and can also help to reduce prices. Today, we do not launch some products in certain markets where the VAT rates are high as it would increase prices.
GST in a way will also boost consumption,” says Ranganathan. Emami CEO (finance, strategy and business development) N H Bhansali too feels some clarity on GST will help to reduce some of the existing anomalies on excise duties and taxes and can make operations better. “It will help us to plan better and can even boost profitability,” he said.