Reckitt's India sales decline 2% due to GST

British firm second after Colgate to indicate GST hit ops

Reckitt Benckiser, best known for making brands such as Dettol, Lizol and Harpic, on Wednesday said its India operations suffered loss of sales on account of the goods and services tax (GST) introduced in July.

The British consumer goods maker is the second firm after Colgate-Palmolive to indicate the indirect tax has hit local operations. 

On Monday, Colgate-Palmolive India said reported net sales in the September quarter declined 10 per cent due to changes in treatment of indirect taxes following the implementation of the GST. “While wholesale demand was soft at the start of the quarter, we saw a gradual recovery and expect continued improvement in the coming quarters,” the oral care major’s India Managing Director Issam Bachaalani said. 

Reckitt’s Chief Executive Officer Rakesh Kapoor, however, said his firm was unable to update stocks at many of its distributors in July, resulting in loss of shelf space and promotional slots in the September quarter. “India’s reported revenue was flat,” Kapoor, who was addressing investors over a call, said. “Customer stock levels were low heading into the quarter due to the GST regulation coming into force in July. And supply of inventory was also delayed due to the cyberattack, which resulted in lost sales,” he said.

For the September quarter, Reckitt saw its developing markets region, led by countries such as India, China and Turkey, show a reported topline growth of only one per cent. This figure takes into account a GST impact of two per cent for the quarter. 

Like-for-like sales growth, which excludes the impact of GST, for developing markets was three per cent for the quarter under review, Kapoor said.

The India-born CEO, who has been at the helm of Reckitt for six years, also said that Dettol had a weaker September quarter due to a cyber disruption in India, the brand’s biggest market.