Temporary sales hit from GST rate cuts drags Q2 profit even as revenue rises 4 per cent
Godrej Consumer Products or GCPL reported a decline in quarterly profit as temporary sales disruptions following the government’s recent tax cuts weighed on performance.
The FMCG major’s consolidated net profit slipped 6.5 per cent year-on-year to Rs 459 crore in the quarter ended September 30, compared with Rs 491.31 crore in the same period last year. Revenue from operations grew 4 per cent to Rs 3,825.09 crore, while total expenses rose 6.4 per cent to Rs 3,233.27 crore, according to the company’s regulatory filing.
GCPL also said that it will acquire the FMCG business operating under the Muuchstac brand from Trilogy Solutions for nearly Rs 450 crore through a slump sale.
“In India, sales grew 4 per cent and volumes by 3 per cent. The recent GST rate reduction is a welcome structural reform that will strengthen long-term consumer demand. However, this transition led to short-term trade disruptions as the channel adjusted to new pricing and cleared old inventory, particularly impacting soaps and hair colour,” said GCPL Managing Director and CEO Sudhir Sitapati.
The company noted that while the transition caused short-term disruptions, the tax reforms are expected to boost demand in the longer term.
Several other consumer goods companies, including Hindustan Unilever and Colgate-Palmolive India, also reported temporary sales disturbances towards the end of the quarter as retailers rushed to clear higher-priced inventory purchased before the tax adjustments.
GCPL, which owns popular brands such as Cinthol and Goodknight, had earlier indicated that order inflows were delayed as trade partners worked through older stocks, with the soaps and hair colour segments seeing the sharpest impact.
