Hindustan Lever Ltd (HLL), the country's number one player in the packet tea segment, will have to pay an additional Rs 120 crore as excise duty annually on account of the 8 per cent levy on branded packaged tea announced in the budget for 1998-99.
The major part of the excise payout has been passed on to the tea consumer by the multinational. It will pass on the rest in a month's time if no clarification comes from the government on the levy within this period.
HLL has raised by Rs 10 a kg, the prices of branded packaged tea. "We need to raise prices by Rs 12 a kg to pass it on fully to the consumers", a highly placed official in the company said.
For the time being the company has passed on about Rs 100 crore to the consumers, while the remaining Rs 20 crore has been absorbed by the company.
Pending a review on the matter by the Centre, HLL would pass on to the consumers the full impact of the impost.
If the government does not bring down the levy or does not impose it as specific duty instead of ad valorem, prices, which have been raised by Rs 10 a kg by HLL, will be raised by another Rs 2.
For HLL, tea sales net of excise, amounting to Rs 1,659 crore, accounted for 18.4 per cent of the company's total business.
