Difficult to pass on GST rate cut benefits on ₹2 or ₹5 packs: Nestlé

Nestlé India MD Suresh Narayanan has said it is a challenge to pass on GST rate cut benefits on ₹2 or ₹5 packs. Nestlé was recently fined ₹90 crores for not passing on GST benefits.

The National Anti-profiteering Authority (NAA) on Wednesday termed Nestle’s methodology on GST rate-cut as “illogical, arbitrary, and illegal, which has resulted in unfairness and inequality while passing on the benefit of tax reduction”.

The maker of products like Maggi, KitKat, Munch, Nescafe, the company said it had also explained its methodology to the NAA. The NAA order said Nestle needed to deposit Rs 73 crore only as it had voluntarily deposited Rs 16 crore in the Consumer Welfare Fund last year. “The amount of Rs 73 crore shall be deposited within the next three months from the date of passing this order,” the order said.

“There is no existing methodology and we told them (NAA) pragmatically what we can do in terms of price and grammage changes. But there are products which are priced at ₹2 and ₹5. For such products, the benefit is ₹25 paise or ₹50. We don’t have those different coins. How will I pass on these benefits even if I want? Therefore we gave (the benefits) at the overall product level because for the smaller packs, it is very difficult,” Narayanan said on the sidelines of the CII’s National FMCG Summit ‘Growth Wapsi: Revving Up FMCG Growth’.

Narayan also said the company has seen a steady performance in the last one despite the slowdown in the consumption across the country, particularly in the rural areas. “As far as we are concerned we are fairly stable. If some of measures that the government is contemplating lead to more money in the hands of the consumers, and hopefully it should lead to improvement. I hope this happens sooner than later,” he said.