Edible salt makers in organised sector grouse at margins

Despite a 30% rise prices over the past six-odd years, their profit margins have risen by only 10%

Despite a price increase of around 30% over the past six-odd years, from about Rs 14 a kg to Rs 18 a kg, edible salt makers in the organised sector such as ITC, Nirma, GHCL and Surya have seen their profit margin rise by only 10%.

Entities in the unorganised sector have 85%of the edible salt market and those in the organised segment say they find it difficult to post a bigger margin. India produces 27.6 million tonnes of salt a year, of which eight mt is the edible variety. Gujarat produces 22.7 mt a year, Rajasthan 2.4 mt and Tamil Nadu nearly two mt. 

“The current margins are minimal and retail prices are not increasing as compared to any other commodity.

 We feel prices should be higher, due to escalating power costs, fuel, packing material and other chemical inputs,” said Gopa Kumar Menon, head of the consumer products division at GHCL.

“The industry is dominated by unorganised players and organised ones are unable to maintain the price trend. On an average, an organised edible salt maker earns maximum margins of about 10%; it should be 15-20%," said Bharat Raval, vice-president of the chemicals division at Grasim Industries, and president of the Indian Salt Manufacturers’ Association.  “Ideally, salt rates should be 15-20% higher to garner expected margins,” said sources at Nirma.

Competition between organised players has also restricted the room to raise the price. "If we increase the price, we might lose the market," said Pradip Saxena, general manager at Surya Salt, part of the Saboo group of industries from Rajasthan.