A few months after glucose biscuit manufacturers reduced pack sizes to deal with rising input costs, they will once again be increasing the pack sizes. The decision to do so comes of the back of the excise exemption announced in the Budget last month. The Budget provides for excise exemption on biscuits priced up to Rs 50 per kg, which includes all brands of glucose biscuits and certain brands of marie and milk biscuits.
Maria Iyer, president, Biscuit Manufacturers Welfare Association, said the move would result in a Rs 180 crore benefit to the industry and that the whole concession would be passed on to the end consumer. “Packs with up to six per cent additional biscuits will hit the shelves by the first week of April,” she said.
The organised biscuits market in India is pegged at Rs 6,000 crore and is the largest packaged food segment in the country. In volume terms, the size of the industry is 1.2 million tonne. Over the past year, the industry has been reeling under increased input cost with a weighted average increase in input costs of raw materials of 75 per cent. As a result, margins in low priced biscuits has gone down to 0.33 per cent.
Agricultural inputs form up to 50 per cent of the MRP. According industry estimates, wheat, sugar and vegetable oil worth Rs 3800 crore is used by the biscuit industry.
Ranjit Sawhney, president, Federation of Biscuit Manufacturers of India added that the industry has asked the Finance Minister to extend across the board excise duty exemption on all categories of biscuits. With many manufacturers making both low priced and premium products, it is a challenge to maintain separate accounts for inputs, said Sawhney.