“Bullish across our portfolio”: Godrej Consumer’s Sudhir Sitapati hails GST rationalisation
Calling the changes “meaningful and material” for both Godrej Consumer and the FMCG sector, Sitapati said the current fiscal could outperform earlier expectations.
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Godrej Consumer Products expects a significant boost to consumption across sectors following the government’s recent income tax cuts and GST rationalisation, according to its Managing Director and CEO, Sudhir Sitapati, who also serves as Chairman of the CII National Committee on FMCG.
“I would like to thank the government. Both the income tax cut and the reduction in GST across the board will spur consumption,” Sitapati said. “Consumption has been a bit soft for a few years, but we have no doubt that this combination of income tax and GST measures will boost growth across sectors. I say this not just for Godrej Consumer, but wearing my CII FMCG hat as well.”
For Godrej Consumer, soaps—accounting for about 35% of its business—stand to benefit the most. “The soap category has been growing volumes at about 2% a year for the last four to five years. With the GST cut, the category growth may go up by a couple of percent,” Sitapati noted. He added that soaps form a substantial part of household spending at the bottom of the pyramid, and reduced GST will free up money for other consumption categories.
Sitapati stressed that the benefits would extend beyond categories where tax rates were directly reduced. “One of the advantages of GST rationalisation is that not only the categories where rates have been reduced will benefit, but even categories where GST has not been reduced will see an uptick, as the overall available spend on consumption and discretionary expenses goes up. So, we are bullish not just on soaps, but across our portfolio,” he said.
However, Sitapati acknowledged some short-term challenges. “The FMCG sector operates on an MRP regime, and stocks that dealers and companies are sitting on today are at higher MRPs. Simply passing on money to trade does not guarantee that it reaches consumers directly. It will take a little time before new MRPs flow into the market. By early or mid-next month, consumers will start seeing reduced prices on FMCG products. September may therefore be somewhat choppy, with pipeline changes and stock adjustments, but this is temporary. From Q3 onwards, we expect stronger growth momentum,” he explained.
Calling the changes “meaningful and material” for both Godrej Consumer and the FMCG sector, Sitapati said the current fiscal could outperform earlier expectations. “While near-term factors such as heavy rainfall in parts of the country did cause some disruption, the GST changes will have a far greater impact on shaping demand in the months ahead,” he said.
On consumer behaviour, Sitapati outlined three likely effects: “First, there will be a little more consumption of essentials such as soaps and hair oils, though these categories are not highly elastic. Second, because essentials make up a large share of household spend, lower GST frees up money for other consumption. Third, as seen during GST 1.0, a lot of the unorganised sector, which does not pay tax or operates illegally, will either come into the tax net or lose competitiveness. This strengthens branded players like us who comply with tax laws.”
Looking ahead, Sitapati reaffirmed the company’s outlook. “Our earlier guidance of high single-digit revenue growth and double-digit EBITDA growth for FY26 remains on track. India margins are expected to move to the mid-20s in the second half of the year, and we will continue to evaluate as the benefits of GST rationalisation play out,” he added.
