It all started with a customer’s requirement first
One of our customers from Africa first posted this need of using (probably) a Battery operated vehicle for transportation of his Packaged drinking Water or Bottled Water. The main reasons why he was opting for this were :-
The Fuel costs in his country were very high
Electric operated vehicles will pollute the least , so he could grab some subsidy or taxation kind of benefits from his government.
We started digging deep here in India and found out from portals like the India Mart that , there were some players here . If you want to know a little more ,please refer to this article from wikipedia ,
But surely , it’s going to be a major step forward if you implement this for your Packaged Drinking Water Plant. As we know very well, that this industry is very cost sensitive , there are only two ways you can beat others :-
Using Electric Vehicles will be surely a major cost cutting norm. The companies have already started branding campaigns for this. Look at this news :-
Since long now, this packaged drinking water and other beverages MRP issue is going from here to there. But still, there’s a development. And government seems to be keeping paswan’s word of uniform MRP all over. At least Maharashtra seems to have begun with this.
According to a news in Hindustan Times, Controller, LMO, Amitabh Gupta told HT on Wednesday that they have instructed AHAR, the association of hotels and Restaurants in Maharashtra, that they can’t charge extra over and above the MRP to the consumers. As usual, the AHAR doesn’t object for charging uniform and same MRP while selling full Bottle, but strictly reserve the right to charge above for the “Opened Up” sales. This doesn’t much apply to packaged drinking water, but will be taken into consideration while selling packaged drinking water bottles to customers in Hotel rooms and lodgings.
Is VAT charged above the MRP?
Mr Shetty, from AHAR looks like talking sense when he says that in Mumbai, the VAT is above the MRP, and it’s to the tune of 43 % in case of five star hotels. We’re trying to look into this through our channels, but frankly, if you really have a look at the pricing of packaged drinking water bottle, the MRP is far away from the actual selling cost at which a water producer sells the bottle to a whole seller. And believe me, they sell to hotels and Restaurants at wholesale pricing. If you’re keen to look at the pricing of packaged drinking water, have a look here
So, why still higher greed?
In a legitimate way, I think Mr Gupta has a right suggestion. He recommends charging service charges separately in the bill, and not to load the profit in the bottle pricing in a percentage format. But this is against a fundamental issue a human being deals with. That is…. “Up-to what, and where to stop”
Are the merchants enough sensitive towards this aspect of real merchandise? Wait and watch. At least history doesn’t agree to this. And things sometimes (mostly) need to be forcefully implemented.
Consumer affair Minister Mr Ramvilas Paswan declared a mission kind of thing (at least he showed it) against differential pricing been observed , especially in the Packaged Drinking Water. You can read this post for details. So , there was a great confusion over this issue in all the F & B industry as such. Most disturbed were the Hotel & Restaurant owners and Malls , who do sell Packaged Drinking Water at a higher price (Rs.40/- per litre in some cases). Some time after it was made clear that the Hotels can sell at higher price , if the drinks are served at the table, that is after the bottle seal is opened. Read this article
Now one more development …
Now, there seems to be an other development in this (or another confusion ?). According to this article , Govt seems to control the differential pricing within the state. It says that if someone observes two different prices for the same bottle of Packaged Drinking Water , the one with the lower price shall be considered as the Correct MRP. This seems to be an action against the Malls more in particular , where Packaged Drinking Water Producers were giving differentely printed labeled bottles to them. Does it mean this ? probably yes. But still hotels will keep on enjoying higher rates.
Currently, in India, the packaged drinking water attracts VAT value added tax. Different states have different rates for the VAT. But very recently, the govt of India is strongly holding campaigns for implementation of the uniform GST and it’s almost certain that the GST will be fully operational from 2017 April. Packaged drinking water won’t be an exception it seems.
Some states have some concerns though
States like Tamilnadu does have serious concern on this issue. Tamilnadu alone has 1400 units of packaged drinking water. Currently the state government has exempted the packaged drinking water from VAT. In future too, they are looking for an exemption from the GST as packaged drinking water being a daily necessity. The packaged drinking water manufactures association claims that almost 80 % of the consumers are householders.
If there’s a GST applicable on water, it will be obviously a burden to the already very very competitive industry, hence it has to be passed on to the ultimate consumers. Can they afford the price? This is the debate point the association is putting forward. Read this article to read their full demands.
Reality is different
But in reality, if you see, does the manufacturer issue any bill, where VAT is not exempted? Because if a bill is issued, it will attract VAT and a common man won’t be ready to pay that. But a sad thing here is that these retailers, who ultimately sell the packaged drinking water to people, raise the prices with their will, as per the situation and do malpractice. What about that? We’ve even heard that majority of the packaged drinking water business happens in “Black” currency only.
Will GST bring a full stop to this? No idea, but it’s certainly a good step forward. And what’s the problem if a human being, becomes a tax payer? More tax payers is more stronger nation.
The Law won’t be applicable to restaurants and Hotels !
Very recently ,Consumer Affairs Minister Ram Vilas Paswan said that selling packaged drinking water above MRP could attract fine and a jail term. Read this article for details. Naturally , there was a lot of heat over this subject on the social media. Most important concerns were over
Selling the water at exorbitant prices (Rs. 40/- per bottle !) at some of the Malls over the counter.
Hotels and Restaurants selling Packaged Drinking Water at premium prices.
While reading out some comments we came to know that Hotels or restaurants , when serving the Packaged Drinking Water to customers on their tables, they can charge prices above the MRP. This was cleared by the The Hotel and Restaurant Association of Western India (HRAWI).
Packaged Drinking Water Bottle sold at inflated prices ….!
Have you noticed that Packaged Drinking Water Bottles cost more at certain locations ? The most favorite places are .. Malls on the highways , Multiplexes , Hotels, Hill Stations etc. I was really wondering as to why these sellers should charge more. Can it be an example of profiteering ? Is it morally , ethically right to exploit the situation ? The answers will be mixed. But most of you wouldn’t like to be charged for premium (unnecessary) cost for the same , normal product. Some vendors also charge for something like “Cooling Charges”. I haven’t come across some claim like this, but people are facing these issues.
What’s the solution ?
Solution is there should be some legal protection to consumers on this issue. Now, the Government is viewing this very seriously. Recently Union Minister of consumer affairs , Mr Ram Vilas Paswan said that those charging more than the MRP will be prosecuted to jail.Find details over here . Earlier this year , a lady from Ahmedabad, Gujarat had filed a complaint being charged for prices over MRP forPackaged Drinking Water Bottle. It was only that time, that Mr Paswan assured that there will be an action on this. It looks like he has taken some solid steps. You can watch a video here on this …
There is an other way ….!
But there is a smart way to escape the law now. Companies will get special prices for the Malls & other similar outlets. The MRPs themselves will change. What can be done to this ? Because , the production companies enjoy the liberty to price the bottle as per their wish. Something needs to be done on this scenario. It’s totally not understandable why a Grocery shop charges Rs. 20/- per bottle and same bottle is charged at Rs. 40/- at a Multiplex or a Food Mall just opposite to that.
The manufacturer doesn’t enjoy this benefit ..mind you !
If you are not aware of the cost per bottle, please refer to the Profit Margin details on this page. So , even with the jump increase during the last year from Rs. 15 to rs. 20 ; the manufacturing companies got just Rs.5-Rs 10 increase per box (of 12 Bottles). almost 70% market share of Packaged Drinking Water Segment is controlled by the big 3 : Bisleri, Kinley , Aquafina. Sufferers are not these 3 , but the rest.
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