Giant FMCG retailers like Hindustan Unilever Ltd (HUL), Godrej Consumer Products Ltd (GCPL) and Dabur India Ltd have come up to support and assist its trading channels in battling down the fears of losses which is in the talks within the community of dealers, distributors and trading channels due to the upcoming goods and service tax scheduled to be implemented from July 1st this year.
The major fear lies in the community of distributors, retailers & channel partners is that the old stock lying under the vicinity will incur losses while selling it after the GST implementation as speculated by some insiders. On this issue, Sachin Menon, partner and head, tax, KPMG India mentioned that “Channel partners are returning goods to manufacturers and reducing their inventory levels so that they have no loss, therefore some manufacturers are guaranteeing compensation.”
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Hindustan Unilever Ltd (HUL) which is also considered as the nation’s biggest consumer packaged goods organization which also deals in Lux soaps, Surf detergents and Knorr soups by the means of sales forwarded a mail to all its trading partners provided soothing words upon the implementation of GST. The email which was forwarded to all the partners had contained that, “a possibility of differential tax incidence on the closing stock when the cut-over from current taxes to GST happens, ..the same will be reimbursed subject to fulfillment of necessary conditions and documentation as will be intimated.”
However, a spokesperson also met with media and mentioned that “As a matter of policy, we do not comment on mutual terms of trade with our distributors and other business associates. Hence, we have no specific comments to offer on your questions.”. Sunil Kataria, business head for India and Saarc at GCPL said that even if in case any de-stocking prevails for the time being, it will be replenished by the middle of the July. He also mentioned that “There is uncertainty in the retail and wholesale channel, We are in talks with channel partners and will do what is in the right interest of our partners and our business.”
Lalit Malik, chief financial officer of Dabur India also added that “We will be supporting our distributors and trade partners for a smooth transition to GST by helping them liquidate their transition inventory while ensuring that there is no loss of sale at the retail level.”
The distributors and retailers also the channel partners fears that they might incur losses on the old stock on which the excise duty invoice is not available and apart from that the GST rate is also higher than the VAT rate. Anil Talreja, a partner at consulting firm Deloitte Haskins and Sells said that “There is certainly going to be turbulence around pricing until the new pricing comes in.”
Vivek Karve, chief finance officer, Marico Ltd also mentioned that “There is a planning cycle which involves the new MRP to be printed among other things, It will happen in the second quarter but it’s premature to discuss the timing.”