IMPACT OF BUDGET ON FMCG

SECTOR
BY:-
RENU ANTIL
SANTOSH PATHAK
PRACHI SINGH
PRERNA KAPUR
SHILPA KUMARI
NIMIKA GUPTA
FMCG Sector
FMCG sector is the 4th largest sector of Indian
economy and has a market size of about Rs 130,000
crore . It has been growing a healthy CAGR of 11% over
the last decade on account of strong domestic
consumption demand.
BUDGET MEASURES
Increase in tax exemption limit from Rs 160,000 to Rs
180,000 for individual tax payers.
Lowering of qualifying age of senior citizen from 65 to 60.
Enhancing the tax exemption limit of senior citizen from Rs
240,000 to Rs 250,000.
Focus on road and infrastructure development.
Raising the corpus of Rural Infrastructure Development
Fund from Rs 160 bn to Rs 180 bn, with the additional
allocation dedicated to the creation of warehousing
facilities.
Continued….
Providing Rs 3 bn to promote 60,000 pulses villages in
rainfed areas for increasing crop productivity and
strengthening market linkages.
Launch of The National Mission for Protein
Supplements in 2011-12 with an allocation of Rs 3 bn to
promote animal based protein production through
livestock development, dairy farming, piggery, goat
rearing and fisheries in selected blocks.
Continued…..
Setting up of 15 mega food parks.
Increase in MAT from 18% to 18.5%.
Reduction in excise duty on sanitary napkins and
diapers.
Withdrawal of excise exemption on writing or printing
paper for printing of educational text book.
Reduction of basic customs duty on Crude Palm
Stearin imported for the manufacture of laundry soap,
from 20% to nil.
BUDGET IMPACT
Focus on rural lending and increase in capital of rural
banks will help farmers access cheap loans. Further,
extension of repayment of loan and concession for
timely repayment helps reduce the burden on farmers.
Various schemes for rural development will help
improve the living standards in the rural area and help
provide better access to the rural heartlands.
Continued……
Readjustment of tax slabs will help increase the
disposable income in the hands of consumers.
Concessional duties and exemption of service tax will help
boost setting up of cold storages, cold units and
refrigeration units.
Reduction of excise duty on sanitary napkins and diapers
will help reduce prices on these items. ·
Withdrawal of exemption on excise duty on various
ayurvedic, paper and food items will increase their prices.
Focus on rural spending is a big positive for most company as they have
started targeting the rural sector. These include HUL, ITC, Marico, Godrej,
Dabur, etc
Spending on setting up warehousing and cold storages is a big positive as it
helps provide better logistics and lowering of wastes. The companies which
would benefit are Nestle, HUL, ITC, Britannia etc
Fall in duty for sanitary napkins is a positive for P&G as it will reduce the
price of its sanitary napkin. Similarly, fall in duty for diapers is a positive for
Godrej as it will reduce the price of its diapers.
Imposition of 1% excise duty on ayurvedic medicines is a negative for
companies making ayurvedic products like Dabur. Similarly imposition of
1% excise duty on various food products is a negative for companies like
HUL, ITC, Nestle, Tata Tea, Tata Coffee etc.
 Key announcements IMPACT
Continued spending on rural and social Positive for all
development FMCG companies
FMCG
No increase in excise duty Positive for all
FMCG companies
No change in excise duty on cigarettes No change in excise
duty on cigarettes
Positive for cigarette
manufacturers like
ITC, Godfrey Phillips

Government to set up fifteen additional Positive for food

mega food parks processing
companies
Customs duty on crude palm stearin for Positive for
manufacture of laundry soap reduced HUL
from 20% to 0%