Sale promos to be impacted: Nicholas Piramal

N Santhanam, CFO, Nicholas Piramal feels that sales promotion in pharma companies will be affected with the amendments in the FBT. He said, "In the Pharma companies, particularly the drugs which are given as samples to the doctors, we are not sure if the samples will be considered as sales promotion."

Excerpts from CNBC-TV18's interview with N Santhanam:

On the impact of FBT on pharma:

Sales promotion in the pharma companies will be hit. Particularly the drugs which are given as samples to the doctors, as we are not sure if the samples will be considered as sales promotion. (We haven’t yet seen the fine print of the FBT and we need to take proper views).

Other than that, there are redeeming features particularly the tax beam the government has recognized. The traveling and conveyance for pharma particularly because lot of medical representatives travel 22-23 days of the 30 day month and that travel and conveyance has been bought down to 5% and this is really a redeeming feature.

I think, the impact will be around 1 to 1.5% only. The main thing is also contribution to the superannuation because now no exemption, no relief has been given, so people are saying instead of my company contributing to the superannuation fund which is getting taxed, and from there he gets the pension which is also taxed, then why should I not pay it directly in cash to the employee.

If this was removed, then the burden is not much. The only burden, which is affecting us is sales promotion, which is 20%, which is disallowed and on that 33% tax will have to be paid.

On the company's performance:

April sales are getting better. Whatever we had lost are slowly recuperating. I am sorry I won’t be able to give you the ball park figure.

Net impact of FBT on the company:

Not much of an impact and not a significant change in that.

Are you invested in the top performing mutual fund?  click here

For a quick guide to Financial Statements -  click here
To evaluate your life insurance needs - click here
To view the latest mutual fund NAVs - click here