Companies reduce supplies ahead of transition to GST

Consumer goods and food firms are opting to slow down dispatches of products with longer shelf life.


NEW DELHI/MUMBAI: A leading consumer appliances maker will stop taking fresh orders from its dealers starting Thursday. This will ensure that the company clears all pending orders in the next two-three days and spends the following four-five days to update its system for transition to the goods and services tax (GST) from July 1+ . Between June 25 and 30, the company’s dispatches will either stop or slow down to a minimum.

Companies across several sectors have decided to stop dispatches or keep them to a minimum during the last days of June to ensure they are ready for the switchover to GST+ and their dealers and distributors are not saddled with excess stocks. For products dispatched before July 1 but sold after that date, dealers will have to bear an additional tax burden+ . Transition rules allow dealers to get credit for only 40-60% of excise duty paid on goods that remain unsold in their showrooms on June 30.

“This time we have been told that the quarter will end a few days early,” said an executive at Godrej Appliances who did not wish to be identified. However, there are unlikely to be shortages in the market as most dealers are maintaining adequate stocks.

 All organisations which have ERP (enterprise resource planning software) will undergo a black out of the systems for three-four days. There will be no invoicing, stock transfer and supply orders till the systems go live again from July 1. So, for all practical purpose we may see stoppage of sale, purchase and stock movement for almost seven-eight days,” said Rituparno Mukhopadhyay, executive director at consulting firm PwC.

“We are not shutting down production by the end of this month, however, there will be a two-three day hiatus in invoicing and procurement processes for the IT systems to change over to GST+ ,” said Marico CFO Vivek Karve.
Consumer goods and food companies are opting to slow down dispatches of products with a longer shelf life.

“Though there is no major change in production due to GST transition, we do foresee a slowdown in production in some category of products,” Dabur CFO Lalit Malik said. TOI also reached out to HUL, ITC and Bisleri who said their companies are ready for the transition. But transporters are already complaining. Janta Roadways, which has a fleet of around 200 trucks that carry automobiles, says around 120 of his vehicles are parked idle. A Honda Cars official said the company has been reworking supplies for two months or so.


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