Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 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.
Budget Impact - FMCG and Consumer durables - Views on News from Equitymaster
  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Budget Impact - FMCG and Consumer durables
Jul 10, 2014

The Union Budget 2014-15 has announced a number of sops for the FMCG and consumer durable sector. The soap sector has been the major beneficiary with customs duty reduction on a number of inputs. Fatty acids, palm oil derivatives and other industrial grade crude oils used in soap manufacture have been exempted from imposition of 7.5% duty earlier. Additionally, the duty on crude glycerine has been cut from 12.5% to 7.5%. This is likely to benefit soap manufacturing companies such as Hindustan Unilever and Godrej Consumer Products.

Incentive for capex

To provide incentives for processing capacity expansion, the government has reduced the excise duty on food processing and packaging machinery from 10% to 6%. This is likely to benefit food & beverages sector that are in the process of increasing scale. However, the tobacco companies have been penalized on growing health concerns.

Higher tax on tobacco, aerated drinks

The excise duty on cigarettes and cigars has been raised in the range of 11% to 72%. While cigarette major ITC is likely to pass on the duty hike in the form of price increases, smaller players such as Godfrey Phillips and VST Industries are likely to be hit in the short run. Additionally, the excise duty on other forms of tobacco such as pan masala, unmanufactured tobacco, gutkha and chewing tobacoo has also been raised. Even aerated waters containing added sugars have been levied with an additional duty of 5% making them expensive. This is likely to make packaged juices more attractively priced, spurring their sales. Thus Dabur India can benefit indirectly from this cost benefit.

Tax relief to footwear, television manufacturers

The footwear industry saw some relief. The excise duty on foot wear retailed at a price of Rs 500 to Rs 1000 per pair has been halved to 6%. This is likely to provide some benefit to Bata India in the economy segment. In consumer durables, the television industry had some reason to cheer. The customs duty on colour pictures tube for Cathode Ray Television has been waived off. This is likely to benefit small companies as most of the larger companies have exited from this segment. Additionally, the import duty on LCD and LED television panels below 19 inches has been slashed from 10% to zero. This is likely to make small screen LCD and LED television cheaper and benefit companies such as Videocon Industries and Mirc Electronics.

Overall, the Budget was a positive for the FMCG and consumer durable sector, which is also likely to be benefit from the thrust on rural employment and consumption trends in the longer term.

Madhu Gupta

Madhu Gupta (Research Analyst), Managing Editor, ResearchPro has a post graduate degree in both physics and finance. Having worked with India's leading economic research agency, she has a natural flair for numbers and analytics. She brings with her a near-decade long rich experience in the field of finance. A firm believer of the principles of value investing, she looks for robust businesses with durable competitive advantages. Madhu contributes towards our small cap service Hidden Treasure.

Equitymaster requests your view! Post a comment on "Budget Impact - FMCG and Consumer durables". Click here!


More Views on News

What They Forgot to Tell You About Sensex at One Lakh (Smart Contrarian)

Nov 29, 2017

Stocks that could beat Sensex returns in the long term.

How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

Jun 10, 2017

Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

Venezuela's Own Crypto Currency: Smart or a Sham? (Outside View)

Feb 21, 2018

The South American nation of Venezuela just launched its own cryptocurrency. Is this the beginning of a revolution? Read on to find out more...

Safe Stock Ideas for You from Monday to Friday (The 5 Minute Wrapup)

Feb 21, 2018

The 5 Minute WrapUp will now come to you every weekday.

Narrow Banking: Public Sector Banks Should Not Be Lending to Corporates (Vivek Kaul's Diary)

Feb 21, 2018

Corporate bad loans constituted nearly 70% of the total bad loans of public sector banks in India, in 2016-2017.

More Views on News

Most Popular

Follow India's Super Investors to Make Big Money in the Market Crash(The 5 Minute Wrapup)

Feb 8, 2018

Has the sell-off in the markets left India's super investors unduly worried?

The Era of Easy Money is Coming to an End. What Happens Now?(Vivek Kaul's Diary)

Feb 9, 2018

The easy money policy of the Federal Reserve of the United States, which drove up stock markets all over the world, is ending, with the Federal Reserve looking to shrink its balance sheet.

The Markets Want Your Money. Don't Give It to Them.(Smart Contrarian)

Feb 9, 2018

MFs are having a gala time taking money from over-eager investors and funneling it into equities. Smart investors, though, know better than to do that.

The Big Gamble(The Honest Truth)

Feb 15, 2018

Once you accept the fact that elections are round the corner and that this budget is geared to reach a 40% target, everything makes sense.

Rising Dominance of Mutual Funds(Chart Of The Day)

Feb 8, 2018

Domestic money flow into Indian equities surpassed foreign fund flows in the recent years. But will it continue in volatile market?


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Feb 21, 2018 (Close)