The goods and services tax (GST) profiteering watchdog, National Anti-Profiteering Authority (NAA) imposed a penalty of Rs 90 crore on Nestle India for not passing on the benefit of rate reduction to consumers.
Responding to this, the company issued a statement saying that Nestle India announced that with it is a responsible corporate citizen and has passed on the benefits of GST to consumers and will consider appropriate actions post studying the order by the NAA.
Nestle said that the benefits largely have been passed on by way of reduction of Maximum Retail Price (MRP) or by way of increase in grammage. Further, on SKUs where it was not practicable to pass on the benefits, say for example NESCAFE single serve packs for INR 2/- or MAGGI Noodles INR 5/- packs, the benefit has been passed on other pack sizes within the same product category.
In some situations where the benefit could not be passed on instantly by reduction in MRP or increase in grammage, the amount was set aside, to be subsequently passed on and was not reckoned either in our sales or profits.
The company said that at its request, the NAA, through its communication had advised it to provisionally deposit the amount computed by Nestle amounting to around Rs.16.5 crore in the Consumer Welfare Fund, which had been done by it suo moto.
The company said, “The information regard ing passing of GST rate reduction benefit together with substantiations had been provided to the (NAA). However we are disappointed that NAA has not accepted the methodology adopted by us to pass on the GST rate reduction benefit.”
The stock price has reacted positively to the clarification issued by Nestle. As against yesterday’s close of Rs.14,068.15, it opened today at Rs.14,114.10, rising to an intraday high at Rs.14,220.15.
What has also added to the positive vibe on the counter is its parent company selling its USA ice-cream business that includes Haagen-Dazs for $4 billion cash.