FMCG major Dabur on Tuesday cut prices of its existing stock by 9 percent in an attempt to pass on the benefits of the reduction in Goods and Services Tax (GST) rates. Dabur has reduced prices of products by 9 percent where the GST rate was slashed to 18 percent from 28 percent.
Dabur has cut prices across product categories like shampoos, skin and home care, air freshner constitute about 15-17 percent of the total revenue of the company, Dabur's CFO Lalit Malik told CNBC-TV18.
The move comes after the Central Board of Excise and Customs Chairperson Vanaja Sarna, on Monday, asked FMCG companies to immediately revise MRP as per the new tax rate.
The price reduction has been done for existing stock, but the company will also have new, reduced MRP for its fresh production. This will be communicated to excahnges soon, Malik said.
"We have communicated with channel partners, to ensure that all the trade benefit has to be passed on. Even in distribution systems, we have got monitoring control that they are passing it on further in the chain," Malik said adding that the company has taken all action in terms of communicating price reduction to ensure it is passed on.
At the same time, Dabur plans to use advertisements to educate and communicate with the consumers to ensure benefits reaches them, he added.
The reduction is unlikley to impact Dabur's margins as it is the rate benefit which has been passed onm, Malik said adding that efforts will be taken to maintain margins.
Dabur will continue to maintain its high single-digit volume guidance. Malik expects some positive impact on overall demand with the price reduction in place.
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