MUMBAI: Consumer companies are likely to plough savings from India’s biggest corporate tax cuts into building new factories and expanding operating assets instead of immediately slashing sticker prices of branded apparel, home appliances, cookies or other grocery items. “A lower tax outflow definitely means higher free cash flow, which could lead to better working capital and more money for expansion,” said Rakesh Biyani, joint managing director, Future Retail that owns Big Bazaar, Central and EasyDay. Hindustan Unilever, Colgate, ITC, Britannia and Nestlé will benefit since their effective rates are 30-35%, higher than the recent announcement of 25%. Stocks of Britannia, HUL and Nestlé climbed between 6% and 9% on Friday. Companies said the move would help spur investment, although the jury is out on immediate revival in consumption demand. “A change in income tax slabs would have given money into the hands of the consumers, translating into immediate consumption. Here, some of the companies are, in any case, strapped for profit,” said J Suresh, MD, Arvind Lifestyle Brands, which runs about two dozen brands such as Gap, Arrow, Children’s Place and Sephora. A Credit Suisse report said it expects most consumer companies to retain gains, or at best spread them… Read full this story
- Who really wins in the murky world of corporate tax cuts?
- Tax cuts to jazz up Q2 bottomlines of Nifty50 even as revenue growth slows
- Why an income tax cut may not work like a magic bullet during a slump
- Finance Minister Nirmala Sitharaman introduces Bill in Lok Sabha to cut corporate tax
- Cut in corporate tax rate important for investments: CEA Krishnamurthy Subramanian
- Democrats' wealth tax numbers don't add up
- AT&T Continues Laying Off Americans After Profiting Billions from Tax Cut
- India needs sector-focused demand stimulus, not income-tax cut: Suvodeep Rakshit
- Finance Minister introduces bill in Lok Sabha to cut corporate tax
- UPDATE 2-India's central bank cuts rates to near decade lows to revive growth
India’s biggest corporate tax cuts: Consumer companies may add to cart before cutting prices have 312 words, post on economictimes.indiatimes.com at September 21, 2019. This is cached page on ReZone. If you want remove this page, please contact us.