Budget 2001: Full Coverage

The companies that will be cooking up new recipes of growth includeHindustan Lever (HLL), Nestle, Heinz, Godrej Foods, among others.Said HLL finance director D Sundaram: "The company appreciates theincentives given to fruits and vegetable processing industry by reducing theexcise duty from 16 per cent to nil. HLL believes that this will spurconsumption and is also very supportive to farmers for improving realisationof their produce."

However, edible oils have had a negative impact as import duties have beenhiked. Edible oil prices are thus bound to increase. According to GodrejFoods managing director Mohan Pusalkar: "We expected that the price ofedible oils will go up after the budget. With the increase in import dutieson edible oils, the price of refined oils will also go up now. As thefinance minister has raised the duty on edible palm oils from 25 per cent to75 per cent, consumers will now look at alternative products. After hearingthe provisions for processed foods-fruit or vegetable-based in the budget,we are trying to confirm whether beverages category such as Godrej Jumpin -a fruit based drink will fall under the zero excise duty segment. We aretrying to check it out now." According to Marico Industries chairman HarshMariwala: "The customs duty on edible oils has doubled that that will impactthe prices to the extent of 10 per cent to 20 per cent on MRP. Edible oilsforms nearly 30 per cent of Marico's sales. It is thus, a cause ofconcern.

The extra burden will fall on the domestic consumer. The removal ofprocessed foods from excise duties will help boost the industry. Pricereductions in these products should push up volumes.

Dabur Foods and Tropicana Beverages Company, the two Delhi-based players inthe Rs 100 crore pure juice market, are likely to announce a price reductionin their respective brands - Real and Tropicana - shortly. Coca Cola Indiais also expected to follow suit for its fruit based drink Maaza which wasrelaunched from a bottled mango drink to a 200 ml Tetrapak drink, last year."A substantial decrease in costs to us will lead to decrease in price to theconsumer," Tropicana Beverages Company country director Abhay Manglik toldThe Financial Express.

Dabur Foods, is likely to take a 6 per cent to 8 per cent price cut in itsReal brand portfolio and Hommade pastes as well. According to company CEOAmit Burman: "Removal of excise duty on fruits and vegetables based productswould help in faster growth in food processing industry. Real Fruit Juiceand Hommade cooking pastes would get the benefits which should help ingrowth of these categories."

The two companies among others will benefit directly by the exemption fromexcise duty announced by the government today. According to the new relief,all food preparations based on fruits and vegetables are exempt from exciseduty making wide range of products of common use like pickles, sauces,ketchup and juices cheaper.

Mr Manglik feels its a great move for the food processing industry. "On theface of it, the impact seems positive though we will have to work out thenet impact of the relief announced by the Minister," he said.However, Mr Manglik feels the price cut will result in a mere 10 per cent to15 per cent volume growth since the import duty on the basic product isstill as high as 38 per cent.

A Rs 100 crore category, organised pure juice market is currently at itsnascent stage with high price being one of the major obstacles in itsgrowth. While Tropicana is priced at Rs 68 for a 1 litre pack, Real ispriced at Rs 65. Both the companies have been taking frequent priceincreases in the past one year. Nestle India CMD Carlo S Donati said: "Inrecent times, I was a little apprehensive but I must say that the financeminister has done a very good job. Reduction in dividend tax is a welcomestep while abolition of corporate surcharges will revive industries and willgive a boost to the investment and trigger more jobs."