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FMCG major Nestle India respects the order by the National Anti-Profiteering Authority asking it to deposit Rs 73.15 crore with Consumer Welfare Fund for not passing GST rate reduction benefit to consumers, and will examine the next course of action to be taken, said Suresh Narayanan, Chairman and Managing Director, Nestle India Ltd.
Speaking to reporters on the sidelines of the Confederation of Indian Industry’s National FMCG Summit 2019, Narayanan added, “I respect the authority for the order that they passed. But, it is very unfortunate that despite all the evidence that we had provided them, in terms of the changes in grammage (and) the changes in prices that we had affected, we have received this order. I think as a company, we were very transparent, we went to the authority voluntarily, suo moto, saying that we have some part of the GST money that we are not able to pass on, so where should we deposit this money. That's how the discussion started and then we gave them exactly the methodology, but there is no existing methodology. So we told them pragmatically what we can do in terms of price change and in terms of grammage change.”
The NAA, which is the profiteering watchdog under the GST regime, had held last week that Nestle’s methodology of passing reduction in the tax was arbitrary. It rejected Nestle India's claims that it has passed on benefits of Rs 192 crore by reducing maximum retail price.
The company had said in a statement then that the benefits largely had been passed on by way of reduction of Maximum Retail Price (MRP) or by way of increase in grammage. Further, on SKUs where it was not practicable to pass on the benefits, say for example NESCAFE single serve packs for Rs 2/- or MAGGI Noodles Rs 5/- packs, the benefit has been passed on other pack sizes within the same product category.
Talking about this, Narayanan said, “And there are products which are let's say (priced at) Rs 2 and Rs 5. If the benefit is 25 naya paisa, 50 naya paisa or 45 naya paisa, we don't have those coins in the country. So, how will I be able to pass on all these benefits, even if I want to pass on those benefits?”
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