Companies

‘Positive effects of GST will be visible once teething issues get sorted out’

Abhishek Law Kolkata | Updated on January 27, 2018

Amritanshu Khaitan, MD, Eveready Industries   -  Debasish Bhaduri

The positive effects of GST rollout will be visible by the end of this year, once teething issues are sorted out.

According to Amritanshu Khaitan, Managing Director, Eveready Industries, there are issues that dealers and people on the ground are witnessing post the rollout.

“GST is beneficial. However, there are some teething issues that are being faced by dealers and people on the ground. I think, by the end of this year things will be ironed out and only then one will see the benefits,” he told BusinessLine.

Eveready, the country’s largest dry-cell battery maker, has had to initiate a 10 per cent price hike in flashlights with the category coming under 28-per cent tax slab. The effective rate on flashlights under the previous VAT regime was approximately 16 per cent.

“We have represented to the government for reducing the tax,” he added. Flashlights account for 15 per cent of Eveready’s revenues, while batteries account for nearly 55 per cent.

Trade channels improving

In the first half, the company, like most FMCG firms, witnessed destocking across trade channels and segments and that took a toll on numbers.

Eveready posted a four per cent year-on-year drop in revenues to ₹358 crore during the June quarter while net profit dropped 39 per cent to ₹13.56 crore.

According to Khaitan, disruptions were expected post-GST rollout, but trade channels are now recovering. The second half of the fiscal is likely to be better.

The impact was most prominently felt in the battery segment, wherein de-stocking translated to a 10 per cent drop in volumes.

“We are expecting demand to improve in the second half. We have seen some recovery taking place in the second quarter across our categories,” he said.

Growth in H2

In the second half, Khaitan said growth will be driven by lighting and small appliance categories. “We are targeting ₹100 crore from the appliance categories and the business is on track,” he said.

Appliances will also help improve the “brand connect”. “The aim for me is to make Eveready a consumer durable brand,” he pointed out. The company will also ramp up its lighting portfolio with a focus on B2B offerings.

“We will bid for government tenders and are getting our act together,” Khaitan said adding that retail sales (in lighting), however, will continue to be its mainstay in the segment.

Published on November 02, 2017

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