Varun Beverages, the bottling partner of PepsiCo in India, expects recent goods and services tax (GST) cuts to boost demand in its water and juice categories. Chairman Ravi Kant Jaipuria said the company will pass on these benefits to consumers and plans to expand capacity to meet future growth.

Jaipuria explained that the reduction applies to about 30% of the company's volumes. "We have got huge benefits on water, which has come down from 18% to 5%, and in juice, which has come down from 12% to 5%. This is about close to 30% of our volume, which we are going to pass to the consumers," he said.

The rate on carbonated soft drinks (CSD) remains unchanged. "It used to be 40% - 28% plus 12%, and the government has again put it at 40%, so there is no change in the CSD market. We would have hoped it could be even more positive by getting some reduction on CSD. But we are very happy with the rate cut overall," he added.

The company expects demand to pick up by the end of the current quarter. "It will be very positive for the whole industry. This effect will only come by the end of this quarter," Jaipuria said. He added that while heavy rains affected sales in the second and third quarters, "even with the rained-out quarters, we are still looking at flattish numbers, which are very good for the industry."

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Varun Beverages is also expanding its retail reach. "We are adding about 8-10% more outlets every year, which is about four to five lakh outlets. The scope is so large for everyone, Campa, ourselves, Coke - everyone to grow this industry," Jaipuria said, noting India's low per-capita beverage consumption.

Margins remain stable, supported by new large plants. "We've always said margins in 20 to 25%, but we've had very good margins, and if we can continue with these margins and with the growth coming, we'll be very happy," Jaipuria said.

Varun Beverages, which has a market capitalisation of ₹1,60,237.32 crore, has seen its shares fall more than 21% over the last year.

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