Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
FMCG sector's budget wish list - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Feb 25, 2010

    FMCG sector's budget wish list

    As Mr. Pranab Mukherjee prepares to present the 2011 budget, all of us have our wish lists. Corporates especially look forward to this event in anticipation of fiscal sops. While FMCG companies had a good year so far in FY10 with robust demand coupled with a benign input price scenario, they do have a wish list for the Finance Minister.

    What they wish for in this budget?

    Implementation of Goods and Service Tax (GST): FMCG companies want a speedy implementation of GST. This tax will replace multiple indirect taxes levied on products and would lead to a uniform, simplified and single-point taxation. This would help reduce prices. GST would also be beneficial for the government as consumption growth and improvement in tax compliance would help boost the government's tax collection kitty.

    Excise Duty roll back: While excise duty rates were reduced in December 2008 and then again in February 2009 in order to give boost to the FMCG sector, there is a fear that the old excise rates would be restored. FMCG companies in the light of rising food prices are hoping that the excise duty roll back would not be reversed as it would add to the cost of the goods, thereby accelerating demand compression.

    Rural focus: FMCG companies want the government to continue its focus on the rural sector in the forthcoming budget. Rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. Given the low penetration levels in the rural markets, FMCG companies are banking on rural areas for volume growth. Hence, companies would like the government to increase focus on education, employment generation and infrastructure development in the rural sector.

    Tax exemption for consumers: Companies would like the government to lower corporate and personal tax rates. This will result in more money in the hands of consumers thereby boosting spending.

    Control in prices of the commodities: With subpar monsoon, the rise in price of commodities is hurting FMCG companies both on the supply and the demand side. FMCG companies therefore want the government to take steps to control prices and focus on increasing food crop production in the long run.

    Enforcement of the Trade Mark and Copyright Laws: Counterfeit products result in companies losing revenue as well as goodwill due to availability of spurious products. Therefore FMCG companies want the trademark and copyright laws enforced more strictly.

    Better infrastructure facilities: FMCG companies have been suffering as a result of bad connectivity and lack of proper warehousing facilities. This has resulted in higher transportation costs, wastage of goods and an inefficient supply chain. Companies want increased focus on building of roads, warehousing facility and cold storages.

    Tobacco: Cigarette companies and ITC in particular are hoping that excise duty on cigarettes is rationalized. This is because at the current rate of excise, there is a substantial difference in the price of cigarettes compared to other forms of tobacco. As a result, the consumption of cigarettes is falling.

    Way forward: The government's National Rural Employment Guarantee Act (NREGA) has ensured that after the subpar monsoons last year the rural population had sufficient income to support themselves. However, rising food prices are acting as a dampener for growth of FMCG companies. Implementation of GST coupled with controlled commodity prices would benefit the FMCG sector by protecting margins and aiding growth.



    Equitymaster requests your view! Post a comment on "FMCG sector's budget wish list". Click here!


    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    P&G: Strong Core Growth (Quarterly Results Update - Detailed)

    Dec 9, 2016

    Procter & Gamble Hygiene and Health Care has announced the first quarter results of the financial year ended June 2017 (1QFY17). The company's sales rose by 12.5%YoY while net profit rose by 50.1% YoY during the quarter.

    Nestle India: Sales Traction From New Products (Quarterly Results Update - Detailed)

    Nov 30, 2016

    Nestle India declared results for the quarter ended September 2016. Here is our analysis of the result.

    GSK Consumer: Price Hike Hurts Volumes (Quarterly Results Update - Detailed)

    Nov 30, 2016

    GSK Consumer Healthcare declared results for the quarter ended September 2016. The revenues dropped by 1.3% during the quarter as compared to a year ago; while the profits declined by 16.6% YoY during the quarter.

    Marico: Margin Expansion Drives Profit Growth (Quarterly Results Update - Detailed)

    Nov 28, 2016

    Marico has reported a flat topline while the bottomline has grown by 18% YoY during the quarter.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 01:50 PM