Dodla Dairy says will pass GST levy on curd to customers

In an exclusive interview with ET Now-Dodla Dairy's managing director Sunil Reddy stated that the recent GST levy of 5 percent on curd, and lassi will be immediately passed on to the customers. However, the industry is expected to send representation for revoking the aforementioned levy.
New Delhi: In an exclusive interview with ET Now-Dodla Dairy's managing director Sunil Reddy stated that the recent GST levy of 5 percent on curd, and lassi will be immediately passed on to the customers. However, the industry is expected to send representation for revoking the aforementioned levy.
Consumers still prefer packaged curd for consumption. The management stated that value-added products like curd and lassi contribute almost 25 percent of the total revenue. For other dairy stocks like Hatsun Agro, Parag Milk Foods and even Heritage Foods curd, lassi products contribute between 15-15 percent of the total revenue.
ICICI Securities expects a 2-3 percent impact on the financial statements of dairy companies, as they will be able to avail input tax credit on the costs incurred such as packaging material, freight & transportation and ad-spend.
The GST rate on curd and lassi is expected to be levied at 5% from nil currently. Considering the rising milk procurement prices as well as the new likely levy of 5%, dairy companies need to pass on additional costs to end consumers via price hikes.
Reddy did say that the Q1FY23 milk procurement prices were high and will wait for the prices to correct. All the dairy companies have taken some price hikes between 5% to 8% over the last two years.
Reddy stated that Dodla Dairy is not seeing much pressure from online players yet and if the company will enter the e-commerce space if the cost permits. He also added that post Rs 50 crore acquisition of Shri Krishna Milks, the combined capacity will be at 20lk litre per day capacity. In terms of expansion, the focus will be on South Karnataka and Goa.
ICICI Securities sees a low possibility of losing curd volumes to unorganized players even with a higher difference in pricing of organised vs unorganised. However, there is still no GST on packaged milk.
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