Biscuit makers' margin under pressure

The Biscuits Manufacturers Association (BMA) in Hyderabad claimed that margins for the organised biscuit manufacturers in the country have declined by more than 70 per cent in the last 10 years.

From around 50 paise per kg in 1996, it has come down to 13 paise on account of steep rise in the cost of raw material, packaging, logistics and marketing.

Since 1996, BMA said that the price of wheat flour has increased by 70 per cent, sugar by 36 per cent, vanaspati by 15 per cent and diesel by 367 per cent. Taxes have added to the burden "� 8 per cent excise duty and 12.5 per cent value-added tax.

According to BMA, the manufacturers could not increase prices due to intense competition. The BMA members have appealed to various state governments to bring biscuit under the category of food items and exempt them from excise duty and VAT.

The association said at present there were 12 big biscuits manufacturing companies in the country with a turnover of Rs 100 crore per annum, 130 medium companies with a turnover of over Rs 5 crore and 2,000 small companies with a turnover of less than Rs 5 crore.

It further said that the tax burden might result in redundancy for small manufacturers.