Trade worried over stock, losses in run-up to GST
Consumer durables makers say the run up to GST implementation has caused 'discomfort' among their trade partners who are busy clearing old stock to avoid losses before the new indirect tax regime kicks in next month.
The manufacturers expect normalisation of operations to take at least 2-3 months after the GST implementation.
"GST has caused a sense of discomfort amongst the traders as they are worried over the cash flow that might occur during GST implementation therefore, consumer-centric offers are being introduced," Panasonic India Head-Channel Operations Ajay Seth told PTI.
Explaining the current situation in the industry value chain, Godrej Appliances Business Head and Executive Vice President Kamal Nandi said that if distributors were to carry carry forward stocks to the GST regime from VAT regime, they would lose around 3-4 per cent margin.
"Right now they are liquidating their stock. If they do not have any stock, they are purchasing it. They are not upstocking anything," he added.
According to the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the situation could take up to three months to normalise after the implementation of GST.
"Business will be normalised over the next two-three months of operations," CEAMA President Manish Sharma.
Nandi ruled out any panic in the market saying informed decisions and planned strategies are being executed, and companies are supporting their dealer partners.
"We have given some sell out schemes to reduce stocks and they (trade partners) would purchase from July 1," he added.
Expressing similar views, Videocon COO C M Singh said traders are focusing on liquidating their stocks.
"In order to help out traders in the given situation, we are extending the excise paid bills," he added.
Under the Goods and Services Tax regime, to be rolled out from July 1, most of the home appliances and consumer durables will attract 28 per cent levy barring some items such as air coolers which are under the 18 per cent bracket.