Shares of Nestle (ISIN: INE239A01024) are likely to be in focus as the Goods and Services Tax (GST) rate on biscuits has been reduced to 5%, potentially impacting the company's pricing strategy and market position.

GST Rate Reduction

The government has announced a significant reduction in the GST rate for biscuits, bringing it down to 5%. This move is expected to have implications for major biscuit manufacturers like Britannia Industries, one of India's leading food companies.

Previous Tax Rates

There appears to be some confusion regarding the previous GST rate on biscuits. Reports suggest conflicting information, with some sources citing the earlier rate as 12%, while others mention 18%. This discrepancy in reporting highlights the complexity of the GST structure for different categories of biscuits.

Potential Impact on Britannia

The reduction in GST rates could have several implications for Britannia Industries:

1. Pricing Strategy: The company may need to reassess its pricing strategy in light of the reduced tax burden.
2. Market Competitiveness: Lower taxes could potentially lead to reduced prices, which might boost demand and market competitiveness.
3. Profit Margins: Depending on how Britannia adjusts its prices, the tax reduction could impact profit margins.

Industry-Wide Effects

The GST rate cut is likely to affect the entire biscuit industry, potentially altering market dynamics and competition among major players.

Investors and analysts will be closely watching how Britannia Industries responds to this tax change and its potential impact on the company's financial performance in the coming quarters.

It's important to note that the full implications of this GST rate reduction will become clearer as companies in the biscuit industry, including Britannia, provide official statements or reflect the changes in their upcoming financial reports.

Nestle India Limited held an Extraordinary General Meeting (EGM) on July 24, 2025, where shareholders overwhelmingly approved two key resolutions aimed at enhancing shareholder value and improving stock liquidity.

Bonus Share Issuance

The first resolution, passed with 97.76% approval, authorizes the issuance of bonus equity shares in a 1:1 ratio. This means shareholders will receive one new equity share for each existing share held, effectively doubling their shareholding without any additional cost.

Increase in Authorized Share Capital

The second resolution, which received 97.78% approval, allows for an increase in the company's authorized share capital from ₹100.00 crore to ₹200.00 crore. This will be achieved by creating an additional 100 crore equity shares of ₹1 each.

Financial Implications

To facilitate the bonus issue, Nestlé India will capitalize up to ₹96.42 crore from its retained earnings. As of March 31, 2025, the company's retained earnings stood at ₹4,008.95 crore, which includes ₹837.43 crore reclassified from General Reserves in 2023.

Impact on Shareholders

The bonus issue is expected to benefit over 45,000 members holding single shares, significantly broadening the company's shareholder base. This move follows a 10:1 stock split implemented in January 2024, which had already tripled the retail shareholder base from approximately 1.8 lakh to over 5.5 lakh.

Meeting Details

The EGM was conducted virtually, with 221 members holding a total of 606,914,845 equity shares participating through video conferencing. Key management personnel, including outgoing Chairman and Managing Director Suresh Narayanan, participated from various locations.

Management's Perspective

Mr. Narayanan stated, "The Board's decision to issue bonus shares aims to further improve share liquidity and broaden our shareholder base while recognizing the steadfast support and loyalty of our investors throughout the company's growth and transformation journey."

Looking Ahead

With these resolutions passed, Nestlé India is poised to implement the bonus issue, subject to necessary regulatory approvals. The company will also proceed with the increase in authorized share capital and the consequent alteration to the Capital Clause of its Memorandum of Association.

This strategic move by Nestlé India underscores its commitment to enhancing shareholder value and improving stock accessibility for a broader investor base.