Organised sector sees rise in activity after GST woes

Experts expect consolidation in trade, further easing of filing norms

After a temporary disruption in the trade channels caused due to destocking ahead of the implementation of the goods and services tax (GST), the consumer goods industry has seen a month-on-month improvement with large companies in the organised sector announcing new product launches over the last one month. Some of them include Emami, Dabur, Procter & Gamble, Colgate, Parle, Modelez India, Kellogg’s and Danone. With trade slowly returning back to normalcy, experts believe that the pace of new launches would also gather pace in the coming months.

“Amidst disruption in the trade channels with the implementation of GST, consumer companies have been cautious on the pace of new launches. We expect a pick-up in the pace of new launches starting Q4FY18 as trade stabilises,” global investment bank Jefferies said in a report.

“Our interactions with various trade partners suggest that things have improved on a month-onmonth basis but still some wholesalers are not back in the business — worried about possible IT raids if they file return under GST. Procedural hassles remain in terms of filing GST returns, which should start easing given recent relaxations by the government. We expect some consolidation in the trade and things to normalize completely by Q4FY18,” it added.

While there has been little change in pricing with a select few products passing on the benefits of lower GST rates to final consumers, analysts at Kotak Securities pointed out to the recent uptick in the number of new product launches.

According to it, Emami has rolled out Emami Diamond Shine Luxury Creme Hair Colour in the national market while Dabur has launched new range of Vatika Shampoo and FEM Gold Creme Bleach and relaunched Dabur Anmol Gold Jasmine in new packaging with disruptive pricing.

Meanwhile, P&G has launched Ariel Matic liquid detergent and Pantene oil replacement formulation while Parle has launched a new Rusk variant and Mondelez India has relaunched its premium chocolate range under Cadbury Dairy Milk Silk. Even quick service restaurants such as McDonald’s, Burger King, Cafe Coffee Day and Starbucks have extended the range of food options on their menu.