Mid-sized firms with considerable share of the organised portion likely to benefit from GST

MUMBAI: Mid-sized companies with considerable market share of the organised portion in their respective sectors, which also face steep competition from the unorganised players, are likely to benefit from the implementation of the Goods and Service Tax (GST). They include Exide Industries (largest battery maker in the country), Crompton Greaves (largest fan maker), Bata India (largest footwear manufacturer), PVR (largest multiplex operator), Supreme Industries (large pipe manufacturer), Greenply Industries (largest pure-play panel product maker), Symphony (largest air-cooler maker) and Cera Sanitaryware (largest sanitary ware manufacturer).



The ease of evading a sizeable portion of direct and indirect taxes makes the unorganised sector offer goods and services at cheaper prices compared with their organised counterpart. After the implementation of GST, the price advantage of the unorganised sector is expected to wane as integration of government departments will make tax evasion difficult. As a result, buyers may find prices of products from mid-sized companies with established brands and dominant market share more attractive.

Total indirect taxes paid by companies in the organised space is in the range of 23-24%. If a GST rate of 18% is assumed, total indirect taxes paid by companies in the organised sector would be lower by 4-5%. This may prompt companies to pass on some or all of the benefit to consumers, which may support demand. Majority of these companies operate in sectors where the unorganised sector’s share is fairly high between 40% and 70%.