Pesticides ruckus set to dent excise mop-up

Poor cola, bottled water sales to spoil FY04 target

The pesticides controversy, which already took its toll on the cola giants' sales this year, is also expected to hit government's excise collections from soft drinks and bottled water firms in 2003-04.

Senior government officials said in April-October 2003, excise collections from the softdrinks and bottled water industry fell 42.5 per cent from Rs 454 crore to Rs 261 crore.

This, of course, does not take into account the adjustment for Cenvat credit. Figures for Cenvat credit filed for the year to October stood at Rs 282 crore as against Rs 202 crore in the corresponding period last year.

"Collections were certainly high till the pesticides controversy broke out in July. In fact, volume sales were growing at 25 per cent in the first quarter. Thereafter, there has been a steady decline," sources said, adding that the government does not expect the soft drinks industry to touch last year's excise figures as the peak season does not begin before April 2004.

The drop in excise collections should also be seen in the light of the fact that the government reduced excise on aerated drinks from 32 per cent to 25 per cent in the budget, hoping that a lower price positioning will push volumes leading to higher collections.

In the whole of 2002-03, excise collection from aerated and bottled water stood at Rs 932 crore.

The sources also pointed to the fact that excise collection from other industries, for which the rates were cut last year such as passenger cars, air-conditioners, will actually be higher year-on-year.

Excise collection from the passenger car industry is Rs 1,002 crore (cash) and Rs 1,941 crore (credit) against Rs 1,283 crore (cash) and Rs 1,555 crore (credit).

But industry has produced data to support its views that cash revenues will increase by the end of the year.

Sources said that Pepsi and Coca-Cola, which met government officials recently to press for a duty cut in the ensuing Budget, also admitted that the pesticides controversy dented their sales and there were no signs of a turnaround before April.

The two companies also did not submit any projections for the year to the government saying that it may not be able to do so until the on-going investigations by the Joint Parliamentary Commitee (JPC) are concluded.

They have also informed the government that sales have been hit maximum in the home consumption segment, which primarily comprises largest pack sizes

While Coca-Cola has informed the Securities & Exchange Commission (SEC) in the US that its September quarter sales in India fell 11 per cent year-on-year, rival Pepsi maintains it did not lose significant business as a result of the dispute.