Kishore Biyani's Future Group has said it will cut prices of private labels across all product categories, countering the move of Hindustan Lever (HUL), Marico and other FMCG companies’ decision to hold prices even after the government’s decision to cut excise duty to stimulate demand in the economy.
The Union Government on Sunday announced a 4 per cent cut in Cenvat (central value added tax) with the expectation of companies passing on the benefit to consumers. Automobile companies, including two-wheeler makers, have announced price cuts, while fast moving consumer goods (FMCG) companies said they would take a final decision later because of operational reasons.
''We will announce price cuts in a day or two" said Damodar Mall, group customer director at Future Group without specifying the quantum of price cuts. "The savings are real (due to the excise cut) and we can see a lot of benefits in raw materials and packing items, which we can pass on to shoppers at our stores.’’
The Future group has already cut prices of utensils, plasticware, and synthetic textiles after the sharp drop in prices of raw material inputs like metals, chemicals, and crude oil among others. Prices of metals such as steel and copper have gone down by 30-40 per cent and prices of crude oil-based plastics like Ethylenes and Polypropylenes have dropped by as much as 70 per cent in the last quarter.
"They should have announced price cuts after the reduction in excise duties," Mall said. The Future Group has recently announced its plans to become a Rs 10,000-crore consumer products major in the next four years by launching new brands in the FMCG, consumer durables, electronics and apparel space in anticipation of down-trading as the economic growth slows and also to take advantage of a slump in commodity prices.
The Future group has brands such as John Miller, Bare, DJ&C, Indigo Nation in apparels and Tasty Treat, Fresh n Pure in the FMCG category and Dreamline in general merchandise, Sensei and Koryo in consumer durables and electronics category among others.
The company also has brands such as Sach and Dreamline, which revolve around celebrities such as Sachin Tendulkar and Hema Malini. The group is expected to spend around Rs 200 crore by 2012 on marketing of its brands.
As part of the plan, Future Brands, the group's wholly-owned subsidiary, plans to launch sportswear, lingerie and beauty products in the next 3-4 months along with FMCG products such as toothpaste, soaps and detergents among others.
