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Positive impact on industry; to provide level playing field

Bangalore/ Mumbai May 4 The Finance Minister's announcement on excise duty exemption for biscuits whose retail price does not exceed Rs 100 per kg (from the Rs 50 proposed earlier) will keep a check on prices and have a positive impact on the biscuit industry in general, said Mr Durgesh Mehta, CFO, Britannia Industries Ltd.

As for Britannia, whose Tiger brand was already set to benefit from the earlier proposal, more brands such as Marie, 50-50 and Nutrichoice are expected to benefit from the revision. Britannia would certainly look at a price reduction, although it is too soon to mention which brands would see a cut.

"The prices of some brands may come down, but they will not go up certainly," he said.

Affordable prices

Mr Mehta said: "This (the Finance Minister's announcement) will go a long way in enabling us to make products available at affordable prices. It will also ensure the viability of the industry in general despite an unprecedented input cost inflation. Input costs were rising sharply and the industry was wondering when it should pass them on to the consumers."

Mr Mehta wants the State Governments to emulate the Centre and bring down VAT on biscuits to 4 per cent from 12.5 per cent now.

Mr Praveen Kulkarni, Marketing Manager, Parle Products, is upbeat about the impact of the new measure. "There will obviously be an increase in our profitability. But we have still to decide whether to increase our grammage or decrease prices. Now the excise cuts will be applicable to all our brands. This is the first time that such an excise cut has happened in our industry," he said.

Parle is in the process of increasing its grammage for its Rs 4 packs from 88 gm to 93.5 gm by adding one more biscuit in its packs post Budget announcements.

New pack sizes

"We are now introducing the new pack sizes post the Budget," added Mr Kulkarni. The weight of a single biscuit is 5.5 gm.

According to Mr B.P. Agarwal, Managing Director, Surya Foods, "We have already taken a 7-8 per cent decrease in price for all our brands post the Budget.

"For our glucose brand, Don, we increased the grammage from 80 gm to 85 gm for the Rs 4 packs."

Mr Asad Wasi, Secretary, Federation of Biscuits Manufacturers Association of India, said, "The excise cut is all about giving the biscuit industry a level playing field. Considering foods such as pasta, noodles, jams and jellies have been exempt from taxes, biscuits was not part of this list.

"The bulk of the biscuit manufacturers will benefit, although the more premium brands are not expected to benefit from the excise cut. The important factor to note is that there is inflation and biscuit prices were set to rise. Had this excise cut not happened biscuits makers would have had to hike prices due to increasing input costs. Now this will not happen and the players will maintain prices.''

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