GST good for economy, organized sector in long term
B Y A N U J SIN G H A L,
LA TH A V E N K ATESH &
S O N IA S H E N O Y
CNBC-TV18
s the fast-m oving con
A sum er goods (FMCG)
in d u stry gears up for
the introduction of Goods and
Services Tax on 1 July, som e
glitches are expected but those
will be transient, said Saugata
Gupta, managing director and
chief executive of Marico Ltd.
In an interview , G upta said
Marico would pass on the ben
efits o f GST to custom ers.
Edited excerpts:
Have you done the calcu
lations and in general the
belief is that the GST will
benefit FMCG com pa
nies, the large ones.
Would you pass on the
benefits there?
I believe th e way th e gov som ething which is going to be
ern m en t has treated the four
slabs, it is both revenue neutral
for th e governm ent, its infla
tion p roof for the consum ers
and th ere are certain cases,
obviously we will pass on the
ben efit to th e consum ers. I
believe th a t over th e lo n g th ere will be a cut-off from 3 0
term it provides level playing
field for organised players. It
g iv e s m uch
m ore simplified INTERVIEW
w ay o f d o in g
business. T h ere are enough
opportunities for optim ising
netw orks and supply chain
w here there are current ineffi change over to new system s
ciencies because of th e fact
th a t th ere are som e re stric of July as th e GST kicks in, we
tions, interstate sale and other
things, w hich will go. So over cu re from all o u r v en d o rs,
all long-term , its good for the
econom y, good for organized
players. T here w ould be some
Saugata Gupta, chief executive and MD o f M arico.
short-term hiccups bu t that is 1think the immediate environ
m ent to ecosystem; obviously
very transient. w e are en su rin g that th ere is
How long will the hiccup 100% preparedness. F u rth e r
last. Do you expect this dow n th e chain especially in
disruption to last long? w ho lesale and trad e, th e re
T h ere is a trade destocking w ould be continue to b e some
th a t is h ap p e n in g across, in disruptions. But having said
m ost o f th e sectors. 1 guess th at, over th e m edium -term
organized players will benefit.
Ju n e to 1 July. It m ig h t take It is good for th e consum ers, it
som e tim e fo r b u sin ess to is good for th e g o v ern m en t
c o m e b ack as because w e believe th a t th e
usual. com pliances will increase and
As fa r as we th e ta x c o lle c tio n s w ill
are concerned, o u r p rep ared increase and business in term s
ness should be thatobviously o f supply chain and o th er n et
it will take couple o f days to w orks will becom e simpler.
But in the near term, the
b u t w ithin the first th ree days likely impact on Q1 and
Q2?
Right now it is difficult to
should b e in a position to p ro
give a perspective because all
en su re th at we are able to do depends on w hat happens in
transfers o f stock and able to th e last 10 days.
invoice to all o u r distributors. Q u a rte r o n e; obviously
A B H IJI T B H A T L E K A R / M IN T
th e re w ould be an im p act,
especially in June. As far as Q2
is concerned, it d e p e n d s on
how soon things get back into
norm al business operations. 1
believe th a t d e p e n d s o b v i
ously on how quickly som e of
th e trade gears up to th e new
system, new regime.
1 do not see post July w hen
GST kicks in, th e re is a c o n
sumption loss. T here will obvi
ously a onetim e supply chain
netw ork loss.
However, over the medium-
term I think som e of th e chan
nels like w holesalers and all
have to rediscover th eir b usi
ness m odel an d co m p an ies
w ith m uch m ore direct distri
bution will have less reason to
w orry th a n people w ho have
significant am ount of w hole
sale distribution.
Where does all this leave
you? You guided for
8-10% volume growth in
FY18. Will that be hit at
all in HI?
I think so. As 1 said that we
do not have a com plete visibil
ity of Q2 right now, th e level
w hen things get back to n o r
mal bu t having said th at if th e
w ay th e m o n so o n is, food
inflation continues to be low,
econom ic grow th is decent. I
b e lie v e s tro n g ly th a t w e
should be able to deliver that
in th e second half o f the year.
Will you make up for the
lost ground in the second
half?
No, I am talking of deliver
ing 8-10% in term s o f second
half. I do not know how m uch
you can m ake u p because it
will be very difficult to make
u p som e of the losses w hich
have happened in th e first half
of th e year. H aving said that I
believe things will get back to
norm al, hopefully, som etim e
tow ards the e n d of Q2.
Is there a downside risk
to your 8-10% volum e
grow'th gu id an ce for
FYT8?
I would think so but as I said
it is too early an d all I can tell
you is there is som e stress as far
as q u a rte r is co n c e rn e d , in
term s o f June w hen th ere has
b een significant disruption in
business across all sectors but
w e are p re tty confident th a t
once things g e t back to n o r
mal, th e seco n d h alf will b e
back to norm al and once GST
comes in there could be poten
tial ad v an ta g es for certain
players in te rm s of w ho have
m ore direct distribution, w ho
are m ore organized and who
are m uch m o re prepared for
GST and transiting into GST in
a sm o th er m anner.