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Soaring sugar makes things bitter for biscuit makers

business Updated: Aug 21, 2009 22:45 IST
Saurabh Turakhia
Saurabh Turakhia
Hindustan Times
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Faced with a sharp rise in wheat, sugar and butter, biscuits manufacturers want help from the government.
Biscuit makers like PriyaGold, Cremica, Anmol, Sobisco and Parle will meet on August 22 at the annual general meeting of the Indian Biscuits Manufacturers Association (IBMA) to discuss the issue.

There have been efforts to touch base with the government officials concerned to take stock of the situation and address the problem as well, they said.

Shekhar Agarwal, director, Surya Food and Agro Ltd, which owns the PriyaGold brand of biscuits and makes Rs 400 crore from the business said, “We will urge the government to lower the VAT (value added tax) for the biscuits industry whose rate varies from 12.5 to 14 per cent across states. We also object to the hoarding of stocks and the speculation done in the forward trading business of wheat and other items.”

Throwing light on the plight of biscuit manufacturers, Agarwal said, “Butter needed to make biscuits is not available. Its price has gone up from Rs 145 to Rs 200 per kg.

Similarly, price of sugar has gone up from Rs 20 to Rs 32 per kg and that of wheat has gone up from Rs 12.5 to Rs 14.5 per kg. Additionally, packing material has also become expensive by 25 per cent.”

FMCG analyst at Angel Broking Anand Shah said that it would be difficult for the players to go for a price hike and may probably resort to grammage reduction initially.

“The Rs 12,500 crore industry is facing tough times. However, we are neither planning price-hikes or reducing grammage and trying to manage the situation by working on cost-efficiencies,” said Mayank Shah, group product manager, Parle Products. He added that overall, on a year-on-year basis, the price increase of all the inputs has been to the extent of 30 per cent.