As the managing director of food major Britannia Industries, Varun Berry says the goods and services tax (GST) rate of 18 per cent on biscuits, its key category, is tax-neutral. He says in an interview to Viveat Susan Pinto that the government is making efforts to smoothen the GST process and the pain points will eventually ease. Edited excerpts:
Britannia reported a nearly six per cent volume growth for the September quarter in a period that saw GST coming into force. This also came after three quarters of flat volume growth for the company. Your views.
The way the (September) quarter panned out, the first month (July) was almost flat because destocking (due to GST) continued. The second and third months, however, saw volume growth pick up. Of course, under six per cent of volume growth for the September quarter is a refreshing change from what we’ve been seeing. That it came in a period that saw a shift in the tax regime is a big plus.
Do you see volume growth improving in the forthcoming quarters?
It should. We have not taken price hikes because the 18 per cent GST on biscuits is tax-neutral. This coupled with the stable environment on the commodity front ensured we did not need to increase product prices for a few quarters now. While inflationary pressures are growing especially on the crude front, I don’t think we will raise prices for the next six months.
While the rate reduction announced last week does not directly affect you, are you happy with the effort the government is putting in to ease the pain of industry?
The government is doing a lot of good work to make sure that the GST process is smooth. While we still have some distance to go on that front, delaying GST would not have helped either. So the earlier it was rolled-out, the better. At the same time, the government is responsive to clearing the GST hitches and glitches. That is a good sign.
There is a view that the rate reduction on chocolates from 28 per cent to 18 per cent announced last week could aid growth of that category, hurting biscuits. Is this a concern factor for you?
With the GST rate coming down for certain food categories, this could be disadvantageous to biscuits because those players may slash prices making it enticing to the consumer. This is a competitive advantage for these categories. We would have to wait and watch to see how the scenario evolves.