State of the Economy 2018

Cash-Starved

The food industry has taken a hit  on the bottomline, while several other industries face a severe crunch in Rajkot

Photographs by Vishal Koul

If there was one thing that the world knows about Gujaratis, it is that business sensibility runs in theirblood. And Rajkot, is an apt representation for the same. While the veparis there are passionate about their business, their love for food knows no boundaries. Right as you enter the city — the main business hub — the aroma of food almost lures you, towards its delicious Gujarati cuisine from farsans like ganthia to a kathiawadi thali. As hardworking as they might be, lunch breaks are sacrosanct — dare you call or set up a meeting between 1 PM and 3 PM. “Even if you try to call me during that time, you won’t reach me, or any businessman in this city. We take our lunch breaks very seriously,” laughs Rajan Vadalia, managing director, Vadalia Foods.  

Speaking of food, Rajkot is known for its mouth-watering namkeen with one of the biggest players in the industry, Balaji Wafers, based there. But the implementation of the Goods and Services Tax (GST) has not spared even this 36-year-old company that clocked revenue of Rs.1,600 crore in FY17. More than anything else, the food industry, which paid VAT of 5%, now pays GST of 12%. “Most players have passed on the GST to their consumers, but we haven’t increased our prices,” says Chandubhai Virani, founder, Balaji Wafers. 

However, absorbing the GST disruption and rise in taxation was tough for newer players like Vadalia Foods. The company that was set up in 2014, clocked a turnover of Rs.70 crore in the last fiscal year, but due to the implementation of GST, achieving their FY18 target of Rs.100 crore, will be tougher. “We cater to the labour class — mainly factory workers. And for their 5 PM tea break, companies would provide our snacks. However, post GST — these factories shut down by 4 PM and there are two weekly offs, instead of one. Hence, the larger chunk of our customers have stopped consuming our products,” explains Vadalia .

Meera Wafers, an even smaller company, wit

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