Research Paper - Impacts of GST on FMCG sector with special reference to Cassandra Foods Private Limited Company(OPC). This paper is published in International Conference - Impact of GST organised by the Department Of BBA and Corporate, Loyola College, Chennai. Paper presentation: Done by: Mr. Vignesh & Mr. Sivakumar

1. A STUDY ON CHALLENGES FACED BY FMCG
SECTOR AFTER THE IMPLEMENTATION OF GST
WITH SPECIAL REFERENCE TO CASSANDRA FOODS
PRIVATE LIMITED (OPC)
Prof. M. Sivakumar* G. Vignesh**
*Assistant Professor, Department of Commerce-Shift II, Loyola College.
** III-B.com (General)-Shift II, Loyola College.
ABSTRACT
Fast moving consumer goods are the goods that are brought often that are either essential or
nonessential. The Fast moving consumer goods (FMCG) sector is an important contributor to
India’s GDP. Fast moving consumer goods (FMCGs) constitute a large part of consumers’ budget
in all the countries. GST has a significant impact on the FMCG sector. The new tax regime has
made the market go up in the shortest time by boosting the fast moving consumer goods (FMCG)
industry and bringing in different benefits to the economy. GST would have an impact on contracts
with vendors, processes, working capital, internal control and accounting. The objective of the
research is to study about the challenges faced by Casandra Foods Private Limited (OPC) who is
a producer of FMCG products after the implication of GST. According to the objective of the
study, the research design is of descriptive in nature. Both primary and secondary data was used
in this research. The primary data was collected through direct interview method. The CEO of the
Cassandra Foods Private Limited (OPC) was interviewed with the help of questionnaire that
includes various questions relating to GST and its impact on their products. The research findings
reveal that the FMCG sector especially Cassandra Foods Private Limited (OPC) faced many
challenges post GST (i.e.) after 1st
July 2017. However, there is huge hue and cry against its
implementation at the initial stage, the entrepreneurs and common public started accepting and
getting adopted to GST.
Key words: GST, FMCG sector, Challenges, Impact.
INTRODUCTION
The introduction of Goods and Service Tax (GST) is a very significant in the field of indirect tax
reforms in India. The GST has made a series of changes in the FMCG sector in the recent past in
our country. As per the old tax regime, FMCG has to pay many taxes like VAT, Service tax, Excise
Duty, Central Sales Tax. But in the current tax regime all the above taxes are brought under one
single point of tax in form of GST. The old tax rate for FMCG industry including all the taxes was
around 22%-24%. But now under GST the tax rate for the same is 18%. This has made a lot of

2. changes in the fast moving consumer good industry. This paper is purely based on the research
made on Cassandra Foods Private Limited (OPC) which is a Private (One Person Company)
incorporated on 13 April 2015. It is classified as Non-government Company and is registered at
Registrar of Companies, Chennai. The company involves in the production of desserts, cakes,
chocolates (FMCG goods) and they sell through restaurants, pubs, retail outlets and also through
online modes.
Name of the product produced by Cassandra Foods Private Limited (OPC) is The Table and the
flavors of the Regular and Premium is as follows,
REGULAR:
 Tiramisu
 Choco Lot
 Red Velvet
 Black Velvet
 Almost Baked
 Chocolate Mud
 Raspberry Heaven
PREMIUM:
 Trio of Chocolate
 Gianduja Mousse
 Oreo Chocolate Melt
 Classic Black Forest
 Salted Carmel Brownie
 Dark Chocolate Mousse
 Raspberry Truffle Shuffle
 Rum&Cake
 Belgien Bliss
 Whey They Go
 On The Chocs
Therefore, this paper reveals the challenges faced by the Cassandra Foods Private Limited (OPC)
after the implementation of GST. It also explains and reveals about the impacts of GST on their
products pre and post its incorporation.
OBJECTIVE OF THE STUDY
 To understand to concept of GST on FMCG sector.
 To identify the challenge faced by Cassandra Foods Private limited (OPC) after the
implementation of GST.
 To compare and analyze the effects of GST on the products produced by the Cassandra
Foods Private Limited (OPC) – FMCG producer.

3. SOURCES OF DATA
Primary source of data: The research design is of descriptive in nature and the data were collected
through interview method. The CEO of Cassandra Foods Private Limited (OPC) was interviewed
directly with help of questionnaire in order to find the challenges faced by the owner post GST.
Data over the past three years were only collected in order to know the differences between pre
and post of GST incorporation.
Secondary source of data: Information from internet searches constitute the secondary data.
The data collected from these sources have been compiled and interpreted as per the objective of
the study.
LIMITATIONS OF THE STUDY
 This study has got its own limitations as it focuses only on Cassandra Foods Private
Limited (OPC) - FMCG producer. Hence generalizations may not be applicable to other
companies. The opinions of the interviewee were used for the study without any
discrimination.
 Data had to be collected within a short time
DATA ANALYSIS AND FINDINGS
Analysis refers to breaking a whole into its separate components for individual examination. Data
analysis is a process of obtaining a raw data and converting it into information useful for decision
making by users.
Here the data collected from the CEO of the company through Interview Method is analyzed and
explained. The analysis in different aspects are as follows,
1. SALES AT CASSANDRA FOODS PRIVATE LIMITED DURING THREE DIFFERENT
FINANCIAL YEARS:
This analysis is done to know the differences in the sales rate in three different financial years.
Three years’ sales rates were compared and analyzed to know the differences. This explains the
fluctuations in the sales at Cassandra Foods Private Limited (OPC) before and after incorporation
of GST.

4. FIGURE: 1
SALES AT CASSANDRA FOODS PRIVATE LIMITED DURING THREE DIFFERENT
FINANCIAL YEARS.
Source: Primary Data.
The above given figure: 1 shows the percentage of sales during three different financial year (i.e.)
from 2015-16 to 2017-18. It is a starting stage for the company and it had an average sales rate of
45% during the year 2015-16. It had very less sales rate in the initial stage and met the growth with
lot of efforts. In the next year (i.e.) during 2016-17 the company had an average sales rate of
55%.We can notice that the sales during the months of December and January are high as it has
more demand due to festive season. It even had good growth in sales rate during the beginning
months of the current financial year (2017-18). But in the month of July the company faced a
drastic change in sales due to the incorporation of GST. The sales rate got decreased and this made
the company to face many challenges. Later the company faces a slow increase in sales because
people started accepting the price and started consuming the product.
Thus, the figure shows the drastic change in the sales rate during the year 2017-18 due to the
incorporation of GST.
25
55
70
40
65
30
65
75
60
10
20
30
40
50
60
70
80
90
100
2015-16 2016-17 2017-18
SALES
YEAR
(FINANCIAL YEAR)
SALES DURING THREE DIFFERENT FINANCIAL YEARS
APRIL-JULY AUGUST-NOVEMBER DECEMBER-MARCH

5. 2. SALES AT CASSANDRA FOODS PRIVATE LIMITED POST INCORPORATION OF
GST:
This analysis is done to know the differences in the sales rate in different months after the
implication of GST. This analysis clearly explains the fluctuations in the sales at Cassandra Foods
Private Limited (OPC) after incorporation of GST. We can notice a high fluctuations here.
FIGURE: 1
SALES AT CASSANDRA FOODS PRIVATE LIMITED POST
INCORPORATION OF GST
Source: Primary Data.
The above given Figure: 2 is related with the figure: 1. Figure 2 shows a clear picture on how the
sales rate of Cassandra Foods Private Limited had a fluctuations after the implementation of GST.
This figure is based upon the impact of GST with the sales perspective. The moth June which is
before GST had an average sales rate of 75% and in the next months we can notice the drastic
decrease in sales. It is because of GST implication. During July the company faced low sales rate
and started increasing slowly.
Hence the above given figure clearly shows the fluctuations in sales rate at different moths after
incorporation of GST in Cassandra Foods Private Limited (OPC).
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
100
Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18
SALES
MONTHS
(POST GST)
SALES -POST GST
SALES LINE

6. 3. PROFITS OF CASSANDRA FOODS PRIVATE LIMITED DURING THREE
DIFFERENT FINANCIAL YEAR:
This analysis is done to know the differences in the rate of profit in three different financial years.
Three years profits rates are compared and analyzed to know the differences. This explains the
fluctuations in the profits at Cassandra Foods Private Limited (OPC) before and after incorporation
of GST.
FIGURE: 3
PROFITS OF CASSANDRA FOODS PRIVATE LIMITED DURING THREE
DIFFERENT FINANCIAL YEARS.
Source: Primary Data.
From the above given Figure: 3, we can clearly notice the differences in the profits of the company.
In the year 2015-16, the profits of the company is around 45%. As it’s the starting stage of the
business it had less profit. When it comes to next year (2016-17) it had an increase in profit rate
as the company had an increase in customers. Later in the year 2017-18, we can notice that the
profits are decreased to some extent due to the implementation of GST. When the price of the
products got increased the consumers decreased their number of purchasing times. Due to which
the company had to face less profits during the financial year 2017-18.
Thus, the profits of the company got decreased in the financial year 2017-18 due to the
incorporation of GST.
0
10
20
30
40
50
60
70
80
90
100
2015-16 2016-17 2017-18
PROFITS
YEAR
(FINANCIAL YEAR)
PROFITS DURING DIFFERENT FINANCIAL YEAR
PROFIT

7. 4. COST OF THE PRODUCTS BEFORE AND AFTER INCORPORATION OF GST:
This analysis is done to impacts in the cost of the products. Price of the products are (before and
after GST) are considered and compared to know the real impact due to the implementation of
Goods and Service Tax.
TABLE: 1
COST OF THE PRODUCTS BEFORE INCORPORATION OF GST
SI.NO PARTICULARS COST OF THE
PRODUCT
PERCENTAGE
OF TAX
(VAT)
TOTAL
COST
1. Regular 181 5% 191
2. Premium* - - -
3. Large 340 5% 357
Source: Primary Data. *product was not there before GST.
TABLE: 2
COST OF THE PRODUCTS AFTER INCORPORATION OF GST
SI.NO PARTICULARS COST OF THE
PRODUCT
PERCENTAGE
OF TAX
(GST)
TOTAL
COST
1. Regular 175 18% 207
2. Premium 210 18% 248
3. Large 330 18% 390
Source: Primary Data.

8. The above given Table: 1 shows the cost of the product before incorporation of GST. The tax
levied on the products was VAT pre GST. The percentage of VAT was 5%. The base price of the
regular and large was Rs.181 and Rs.340 respectively. With the inclusion of 5% VAT the total
cost of the regular product was Rs.191 and for large it was Rs.357.
The above given Table: 2 shows the cost of the product after incorporation of GST. The tax levied
on the products is GST from July 2017. The percentage of GST is 18%. The base price of the
regular, premium and large is Rs.175, RS.210 and Rs.330 respectively. With the inclusion of 18%
GST the total cost of the regular product is Rs.207, Rs.248 for premium and Rs.390 for large
Both the table shows the cost of the products. But the cost in table 1 is before GST and Table 2 is
after GST. You can notice that the basic price of the products is decreased due to the increase in
the rate of tax. When it was 5% VAT, the basic price was fixed accordingly. When GST came into
existence the rate of tax has got increased to 18%. Due to immediate hike in price the customers
decreased their number of purchasing times. The company faced less sales rate. Considering the
customers, the CEO of the company decided to decrease the basic price of the products in order to
have a reasonable price. When this was done the cost of the product decreased to the reasonable
extent. Now the sales rate is increasing slowly and the CEO believes that there will be increase in
sale rate once the confusions among the customers due to GST gets solved.
RESEARCH FINDINGS
The study has made to know the challenges faced by Cassandra Foods Private Limited (OPC)
after the implementation of GST with reference to FMCG sector. It has also made to know the
impacts of GST on FMCG sector. The research was able to bring forth the following major
findings with the data collected.
 The cost of the products are increased due to the increase in the rate of tax( from 5%
VAT to 18% GST).
 There was a drastic change in the sales rate of the products of the company at the initial
stage of GST
 The company found difficulties to fix the price of the product post GST
 Profits of the company were decreased at the initial stage.
 There is a slow increase in the sales rate of the products after few months of GST
implementation.
 The regular customers has decreased their purchasing quantity.
 GST has an impact on every aspects the business operations.

9. CONCLUSION:
One of the biggest taxation reforms in India- the Goods and Service Tax (GST). The overall
structure of GST rate for the FMCG sector has most likely seen mixed impacts. We can find a
lots of challenges face by the company after the incorporation of GST in many aspects like sales
rate, profit rate, cost of the product, etc…But these are not the permanent ones. Hence, the
challenges faced by the entrepreneur of Cassandra Foods Private Limited (OPC) are likely to be
solved in some period of time. Thus, GST transition is not just a transition of tax. It impacts
every aspects the business operations and therefore it requires a whole of business approach to
ensure a smooth transition.
Finally, it can be concluded from the above research that the GST has an impact in each and
every aspects of the business.
REFERENCES
1. Cassandra Foods Private Limited (OPC)- thetable.co.in
2. Sony Pandey- Tax Researcher- impact of GST on FMCG sector.
https://www.hrblock.in/blog/impact-gst-fmcg-sector-india/
3. https://cleartax.in./s/gst-consumer-fmcg
4. Webtel – A Brand of Eminence
gstinindia.in/GST-on-FMCG-sector.aspx
5. http://en.m.wikipedia.org