While biscuit maker Parle has been harping on slowing sales of its five-rupee biscuits for some time now, Finance Minister Nirmala Sitharaman’s corporate tax cuts have brought in relief to Parle-G maker.
While biscuit maker Parle has been harping on slowing sales of its five-rupee biscuits for some time now, Finance Minister Nirmala Sitharaman’s corporate tax cuts have brought in relief to Parle-G maker. The sluggish sales situation has also improved as demand has revived owing to Diwali festivities, Mayank Shah, senior category head, Parle Products told CNBC TV18 in an interview. Parle’s current effective tax rate stands over 30%, which is higher than the new effective tax rate of 25.17%. The company stands to benefit from the new regime and the announcement will provide a cushion to Parle which is allegedly reeling under a slowdown, the news channel reported citing Mayank Shah.
Parle has been witnessing a demand slowdown, which it said was due to an ongoing economic slowdown and high GST tax on biscuits. Parle Products, one of the oldest biscuit manufacturers in India, has been a vocal voice against high GST slab on standard biscuits which are taxed at 18%. Parle also reported a drop of 7-8% in sales of its Marie, Glucose and Milk biscuits. These biscuits sell for less than Rs 100 per kg and account for volume sale of 40-42% and total 25% of value, Mayank Shah had earlier told Financial Express Online in a separate interview. Parle had then also said that the company could be compelled to lay off 10,000 employees if sales situation persists because of high GST and slowdown.
The company, along with other biscuit manufacturers like Britannia, had requested the government to lower the GST rates so that demand could uptick. However, the same didn’t materialize and in the GST Council Meet, the government rejected the plea to bring down tax rates on standard biscuits from existing 18% to pre-GST rate of 5%.
Even then, the recently revised corporate tax rates for manufacturers will help the biscuit maker. For Parle, the same means lower effective corporate tax in the range of about 5-10%. Some other FMCG companies will not see any benefit of corporate tax cuts announcement as they are already enjoying lower rate thanks to various tax holidays. This includes Dabur which is availing fiscal benefits, Lalit Malik, CFO, Dabur Ltd., told Financial Express Online in an interview recently.