Parle Products Private Limited: GST and Retaining Competitiveness
(6 pages of text)
Case (Pub Mat)
In July 2017, the government of India implemented goods and services tax (GST), which brought uniformity in the tax rates on all types of biscuits. Compared to the pre-GST regime, the uniform tax rate resulted in a higher tax rate on mass-market biscuits and a lower tax rate on premium biscuits. Parle-G, the most popular brand of Parle Products Private Limited (Parle), fell into the mass-market biscuit category. The Parle-G brand had 75 to 80 per cent market share in the mass-market biscuit category, and it contributed nearly 33 per cent of Parle’s total revenue. The brand was sold at a very low price point and was highly price sensitive. To mitigate the tax rate increase, one option was to raise Parle-G prices; however, any price increase or change in package size for a product in the highly price-sensitive category could reduce company revenue. Therefore, new business strategies were needed under the new tax regime and amid the country’s overall changing business and economic scenario so that Parle’s margins and leading position were retained.
This case is designed for a postgraduate business environment or for an economics course that includes topics such as indirect tax, value-added tax (VAT), GST, or reforms in tax structure and their impact on business decisions. The case can also be discussed in a strategy course that illustrates the use of strengths, weaknesses, opportunities, and threats (SWOT) analysis and Boston Consulting Group (BCG) matrix analysis for business strategies or decisions. After completion of this case, students will be able to
- understand the VAT and GST;
- analyze the impact of changes in tax structure on business decisions;
- understand the impact of price sensitivity on business decisions; and
- devise a business strategy on the basis of a SWOT analysis and BCG matrix analysis of a company.
India, Large, 2017
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