FMCG companies are optimizing and rationalizing their operations ahead of the July 1 GST (Goods and Services Tax) roll out.
For instance, Nestle is evaluating the realignment of its warehouses and supply chains, besides exploring locations to set up hubs and shutting down some distribution centers.
Presently, consumer goods companies end up having warehouses in every state to avoid paying 2% CST (Central Sales Tax) for inter state sales of goods.
Coca-Cola is also looking at depot consolidation and setting up mother depots in 3-4 states. In each state, they have 2-3 small warehouses, which may be phased out if they don’t fit into the business after GST’s implementation.
Companies will have a complete relook at their business operations after the GST roll-out. This will impact their financials and operations in a huge way. This way they may have to incur expenses in short run but in the long run, it will hugely benefit the company.
