GST-transition related trade issues continued through October for FMCG players
Leading FMCG companies said that GST transition-related impact across the supply chain continued through October. Some players expect the trading conditions to stabilise in November-December period with new pack pricing getting more streamlined.
Ahead of the implementation of GST 2.0, players saw short-term disruption in sales during Q2 as traders focused on liquidating old priced stocks while cutting back on loading new stocks. Meanwhile, consumers also postponed pantry loading in anticipation of benefits due to lower prices. With the new GST regime coming into effect on September 22, FMCG companies pushed product packs with new MRPs as well as increased grammage on products, in accordance with lower tax slabs. However, they pointed out that packs with both new and old MRPs will be seen in the pipeline during the transition.
On the earnings call for Q2 FY26, Mohit Malhotra, CEO, Dabur India said that the GST impact was estimated at Rs.100 crore which was 3-4 per cent of revenue. “The impact (of GST transition) was not restricted to only September and has carried forward into the October month also. I will not say that all the inventory of the old price stock has been flushed out in the system because there’s a huge inventory. There will be around 30-day inventory sitting at the retail and 20 days with wholesalers and distributors.So all that is still getting flushed out. Once old price inventories get flushed out then we can say that things have kind of streamlined. Still a little bit of issues are there as far as the old prices are concerned with the trade and the intermediaries.”
