GST impact: Godrej cuts soap price up to 8%
New Delhi: Home-grown fast-moving consumer goods (FMCG) firm Godrej Consumer Products Ltd (GCPL) has slashed its soap prices by 6 to 8%, extending the tax benefits to its consumers, while absorbing the hike in hair colours.
The company which sells soaps under brands as—Cinthol and Godrej No 1—is optimistic about an uptick in the consumer demands coupled by the goods and services tax (GST) and good monsoon from September onwards and expects a good second half this fiscal.
“We are looking on a price drop of 6 to 8% on our soaps, extending the benefits of the GST to our consumers. We are also not increasing the price of the products which attracted higher tax as hair colours etc,” GCPL business head-India and Saarc countries Sunil Kataria told PTI.
Other FMCG makers such as HUL, Patanjali, ITC, Emami, Colgate Palmolive and Marico have passed on the GST benefits to their consumers either by slashing the prices or by increasing the grammage of the product on the dispatches made from 1 July onwards.
“In terms of pricing, our category as hair colours have seen rates going up, similarly in the air care, parts of some segment were going up. Where ever there is a price impact, we would not go for any increase. It is a call we have taken,” he added.
In the Home Insecticides (HI) segment such as HITS and Good Knight, it would have a neutral impact of the GST, Kataria added. “The reason is that we believe that by passing on these benefits to the consumers, it would drive in the demand,” Kataria said.
He further added: “We believe that with a good monsoon and GST benefits, we are on the threshold of getting kick start of the FMCG growth and see a strong demand happening in next three months.”
Kataria further said that the entire channel pipelines have been filled up again in the first quarter of this fiscal. “We see a sentiment recovery. I am confident that the second half of this year would be very positive,” he said adding that a good monsoon would “be great multiplier” in the demands from the rural side.
The FMCG segment was heading towards a good growth last fiscal boosted by factors such as good monsoon and seventh pay hike etc, however the demand crashed after the government announced demonetisation. “We could have got (growth) if the demonetisation would not have happened. We had seen growth happening to start in October last year,” he added.
Besides, the company would also have couple of new launches in the next three to five months across the category, he added without naming the segments. In the first quarter of this fiscal, GCPL had launched ‘HIT Gel Stick’ in its HI category.