India’s Dabur sees early demand revival after tax-cut disruption

Indian consumer goods maker Dabur said on Monday it has seen signs of demand recovery in the third quarter, after consumers had deferred purchases ahead of the government’s tax cuts that took effect in September.

The company expects third-quarter consolidated revenue to grow in the mid-single digits, compared with a 3% growth a year earlier.

“During the quarter, early signs of demand recovery were witnessed, aided by GST rate revisions,” Dabur said in a statement, adding that consumer sentiment improved in both urban and rural areas after trade stabilisation.

Indian consumer firms, including Dabur, have struggled with higher commodity costs and muted urban demand for several quarters, with the tax cuts disrupting sales in the second-quarter as consumers deferred purchases until the lower prices kicked in.

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Favourable macroeconomic conditions and recent tax reforms are expected to help improve Dabur’s revenue trajectory in the coming quarters, it said.

The Indian federal government announced cuts to its GST system in August, making everything from toothpaste to small cars cheaper from September 22.

Dabur has earlier said 60% of its portfolio, which includes key categories such as oral care products, juices, hair oils and shampoos, which was taxed at rates of 12% and 18%, now face a levy of 5%.

The company now expects double-digit growth in the third quarter for products such as honey, toothpaste, hair oils, fruit juices and coconut water.