FMCG sector to record 25-50 per cent drop in warehousing cost: Crisil

As most of the sectors are reeling with the historic transformation in the tax system, FMCG is buckling up to celebrate an added benefit through the GST roll out. With most of the products in the sector have been placed under the tax slab of 18 per cent, other than some exceptions such as 28 per cent tax for the home care products, the sector has secured higher gains post the implementation of GST.
 
Adding to the good news, rating agency Crisil has suggested in a report that the FMCG sector is set to witness a 25-50 per cent reduction in its warehousing cost on the back of GST and tax benefits. The report also said that some states such as Haryana and Assam will also emerge as new warehousing hubs for the FMCG sector in the coming quarters. While, Haryana ’s central location in NCR and cheaper land costs will attract more warehousing opportunities, Assam benefit from the extendtion of excise duty benefits in North East.
 
Indian FMCG majors such as Asian Paints, ITC, Godrej Consumer Products and Hindustan Unilever are likely to reap benefits from the reduced warehousing cost in the coming quarters. On year-to-date basis, Asian Paints has recorded a return of 27.70 per cent, ITC 8.86 per cent, Dabur 25.71 per cent, Godrej Consumer Products 31.01 per cent and Hindustan Unilever 63.18 per cent, respectively.