Finance minister P Chidambaram’s proposal to rationalise customs duty on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols has brought cheer to many FMCG companies that manufacture soaps and oleo chemicals.
”This should have a positive impact on both Godrej Consumer Products and Godrej Industries,” said Adi Godrej, Godrej Group chairman.
According to Vivek Gambhir, managing director of GCPL, makers of Cinthol soaps, the reduction in customs duty for non-edible oils should have a favourable impact on input cost pressures for the soaps category.
?As far as stimulating demand is concerned, much will depend on overall GDP growth and consumer sentiment getting more positive,? he said.
Welcoming the news, P Ramachandran, CMD, Jyothy Laboratories (JLL), said Chidambaram’s proposal will definitely have a favourable impact on JLL’ s profitability. “We will pass on the tax relief to consumers who are burdened with too many price increases,” he added.
However, industry analysts are not enthusiastic about the proposal. “I think this will have a marginal impact on FMCG companies’ performance in FY15,” said Abneesh Roy of Edelweiss Securities.
Sharing similar sentiments, Ullas Kamath, joint managing director of JLL, said the FMCG industry would have got the required boost if the FM had reduced excise duty across categories. “Now this cut in non-edible oils will hardly have any impact on companies who are present in the competitive soap industry,” he added.
