Our Bureaus

Feb. 28

, Consumers can heave a sigh of relief. While they may not be forking out less for their soaps, toothpastes and detergents, the flip side is that makers of fast moving consumer goods of daily consumption are unlikely to hike prices. As Mr Satish Kumar, Managing Director of Henkel India Ltd, which churns out detergent brands Henko and Mr White, says, it's a neutral Budget for the sector.

A view endorsed by the big daddy of FMCGs, Hindustan Lever. According to Mr S. P. Mustafa, Vice-President (Treasury, M&A & Investor Relations), HLL, "In spite of customs duty being reduced there will be, overall, no impact on prices since we make all our products here. If at all, the Budget will have a marginal impact on prices."

According to Mr R. Hariharan, Secretary, ISTMA (Indian Soaps and Toiletries Manufacturers' Association), "There is unlikely to be a major impact on the prices of soaps or toiletries, since the level of imports is not that high on these products. Besides, individual companies will be affected in different ways depending on their level of imports."

A cross-section of FMCG makers that

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spoke to held the view that prices of their goods were unlikely to go up. It also helps that the Budget has reduced duties on plastics and packaging material.

According to Mr M.Y. Verma, Executive Vice-President (Sales & Marketing), GIL (Godrej Industries Ltd), "Since the import duty on paper has gone down, packaging costs may come down. This would have a bearing on the prices of cartons whereby the price may come down by 3 to 4 per cent."

According to Mr Hoshi Press, Executive Director & President, GCPL, "While there are two positives with peak customs duties and FBT being brought down, the flip side is that MAT and countervailing duties and service taxes have been increased. There will be a `netting' out effect as a result of which prices of FMCG goods will be more or less stable."

A view again endorsed by Mr Milind Sarwate, CFO, Marico, who stated that the Budget is by and large "neutral" for Marico. Which could mean that Marico would not look at hiking prices for its array of brands including Parachute and Saffola. Mr K.S. Ramesh, Executive Director & CEO, CavinKare Pvt Ltd, was of the opinion that the measures in the Budget will at least ensure that prices of consumer goods wouldn't go up. So, you can breathe easy, for now.

(This article was published in the Business Line print edition dated March 1, 2006)
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