FMCG companies resume stock supply post GST shift break

NEW DELHI: After a four-day shutdown to migrate to the new goods & services tax ( GST) structure, consumer behemoths such as Hindustan Unilever and Coca-Cola have resumed dispatches to their stockists and distributors, easing concerns of retail point availability. Reckitt Benckiser, HUL, Dabur, Coca-Cola, Marico and Parle Products said they have started sending fresh stocks to trade channels after ensuring GST-compliant invoicing.

While some of the fresh stock is either priced lower or is coming with increased grammage, prices of some products will remain unchanged for at least a month. Aspokesperson for HUL, maker of Lux soap and Surf detergents, said: “Our systems have transitioned and we have started despatches from factories and depots. Most of our distributors will be starting normal despatch of our products shortly.” Beverage maker Coca-Cola, too, said it has transitioned to GST.

“Hindustan Coca-Cola Beverages (HCCB) has carried out enablement, sensitisation and capability building sessions for its 4,000-strong distributor base. Implementing changes has not been an easy task,” an HCCB spokesperson said. Dabur, maker of Real juice and Fem bleaches, and had stopped primary sales from June 29, will start invoicing of primary sales from Tuesday, a company official said.Meanwhile, distributors of Reckitt Benckiser, Parle Products and HUL said they have not received fresh stock from the companies since GST kicked in since July 1.

“Supply has not been so robust for the last few weeks and since implementation, we have not received any stock,” said a Delhi-based distributor working with multiple firms. Another distributor of a large FMCG company said that “while supply has been irregular, we still have old stock that we are sending to retailers. There is no shortage of goods in the market.” Tax expert Abhishek Rastogi said consumer goods firms have been facing a dual problem.

“One is the issue of pricing where they need to be careful of the anti-profiteering clause, and second, clearance of products on which taxes of the pre-GST regime were paid. As old stock in shops gets cleared, demand is expected to increase and supply will resume. All of this will hopefully get sorted within this month,” said Rastogi, a partner with taxation consulting firm Khaitan & Co.

Eligible closing balance of tax credits in the previous regime will transition into opening balance for the GST era. In case the invoices are not there, the wholesalers and retailers will be able to claim input tax credits on unsold inventory to the extent of 40-60 per cent. The government has given a time frame of six months for clearing the old stock and availing this benefit. There are provisions which have been incorporated for high-value items of more than Rs 25,000 for which the credit can be given by way of the credit transfer document.

However, price changes will start reflecting in new stocks starting Tuesday only partially. An official at biscuit maker Britannia said the company plans to drop prices of some brands like Good Day, but will take a price increase on entry-level brand Tiger.

“We will action price decrease in the first fortnight of July,” said the official. Reckitt Benckiser too plans to drop prices of Dettol soap or increase grammage on fresh stock from this week. Others such as Parle Products, Dabur, Godrej Consumer Products and Bisleri said any price changes would take at least a month.