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Soft drink makers in Delhi want VAT rollback
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Friday, 07 May, 2010, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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Soft drink and ice-cream makers are feeling the heat this summer as higher value-added tax (VAT) rates and raw material costs have hit their profit margins.
The sales have failed to match the rising temperature, the reason given is that frequent power cuts have prevented ice-creams to be stocked at the retail stores.
Generally summer months bring in more business and added sales but this summer the sales have failed to rise, reported The Economic Times.
The food business operators are lobbying for VAT rollbacks which according to them is the biggest dampner for profit margins.
Companies like PepsiCo and Coca Cola, which were already hit by rise in sugar prices, had to suffer additional setback in Delhi region with VAT being raised from 12.5% to 20%.
The soft drink prices are already up by 20% catering to a demand that is growing by 20-30%. An additional price rise will obviously affect the demand.
The soft drink makers are persuading the state government to rollback the VAT hike which would in turn affect the price for consumers.
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