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Purvita Chatterjee

Mumbai, July 2 While the petrol and diesel price hike is expected to take its toll on freight costs, FMCG companies are not planning to increase prices straight away.

Companies such as Godrej Consumer, Dabur and Marico have decided that a price hike is not going to be imminent .

For instance, Marico, the makers of Parachute oil and Saffola, feel the impact will be negligible. Mr Saugata Gupta, CEO, Consumer Products group, Marico Industries, said, “It is unlikely that our company will increase prices, at least not for now. The petrol and diesel price hike will have a marginal impact and most FMCG companies will be hit a little bit.” Other FMCG majors such as Godrej Consumer Products with brands such as Cinthol and FairGlow have not been resorting to price increases in the recent past, in spite of input costs going up. There are no plans to resort to a price hike in the near future either.

According to Mr Hoshi Press, Vice-Chairman, GCPL, “While there is going to be a small increase in freight cost, many FMCG companies for a while have been using trains as a mode of transportation. So a price increase in petrol and diesel will not be that significant for them at this point of time and it is unlikely that any of them will react so quickly in terms of increasing prices.”

Added Dr R.K. Sinha, Chief Operating Officer, GCPL, “Clearly, input cost on freight would go up but there will be no price hike. We have yet to assess the impact this is going to have on prices in fact.”

Besides, there are FMCG companies which are not freight-intensive in their operations and freight costs comprise a mere fraction of their input costs.

According to Mr Sunil Duggal, CEO, Dabur India, “Freight cost comprises a mere two per cent of our total costs and will not necessitate a price change. The price hike on petrol and diesel will be negligible for our company.”

Echoing the viewpoint, Mr Ramesh Viswanathan, Executive Director of the Chennai-based FMCG major CavinKare, says there is no need for any immediate reaction. It is not going to directly impact the trade in any big way.

However, there is another way of looking at it, the increase in crude price will affect the industry, as majority of the packaging products are crude-dependents. “We are yet to assess the impact of this. As of now, we are on the watch,” he said.

(With inputs from R. Ravikumar, Chennai.)

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