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FMCG SECTOR

FMCG SECTOR.

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FMCG SECTOR

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  1. FMCG SECTOR The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. As per the Pre GST regime , FMCG has to pay many taxes like VAT, Service Tax, Excise Duty, Central Sales tax. After GST law implemented it covers all the above tax one single point of the tax in form of GST. GST has been listed under the 4 broad categories. (5%,12%,18%,28% etc).

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  7. CONT . . . The GST rate structure shows that not all FMCG companies stand to benefit from the new regime. Some companies may gain & some lose by their segment, means GST on FMCG sector marginally impacted to the company.

  8. GST IMPACT ON FMCG SECTOR : • Indian FMCG companies set up their warehouses in states like Himachal Pradesh/Uttaranchal  .After implantation of GST the effective tax rate has come down from 40% to 20%.They don’t have to pay central sales tax if they do a stock transfer to warehouses. • Reduction in GST rate may reduce the prices of the product. Reduction of the prices will be improving the competition of product as well as in volume of sector & markets also go ahead. • As consumption of people increase, ultimately GDP will rise. • As an analyst we have a positive view on FMCG sector as a whole. Companies like HUL, Emami, Colgate palm, Britannia will be benefitted.

  9. HUL GST IMPACT ON HUL • HUL is the Indian wing of the Multinational consumer goods company lever International. HUL has a market cap of Rs.2,39,130.04Cr with traded at Rs.1104 as on 7th July 2017.Company has 4 segments like: • Home care • Personal care • Foods • Refreshment • As the GST rate lower in soaps by 8% from 26% in pre GST as against 18% in post GST.

  10. CONT . . . • As the GST rate lower in soaps by 8% from 26% in pre GST as against 18% in post GST. • Under Home care, The Company has slashed the price of its detergent soap Rin bar of 250 gm to Rs 15 from Rs 18 and increased weight (grammage) of its Surf Excel bar costing Rs 10 to 105 gm from 95 gm at the same price. Company & customer will get more benefit as per the new GST regime. In home care Segment Company will get mostly 4-5% benefit. • Personal care includes personal wash, skin care & hair care. GST rate for products like hair oil, soaps and toothpaste has been lowered by 8% to 18% in post GST as against from 26% in pre GST. Company is also offering 33 per cent extra in Dove bathing bar.

  11. CONT . . . • The food processing industry such as jaggery, cereals and milk, being exempted from GST, is expected to be beneficial for the company. • Sales volume on Tea & coffee may increase by 1-2% due to decrease in tax rates. • Competition will improve in global market. • HUL earned good profit today; lower prices could potentially support the volume growth of certain product particularly in rural segment.

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