Piruz Khambatta in Calcutta on Monday. Picture by Kishor Roy Chowdhury

Calcutta, April 18: The bottomline of Rasna Pvt Limited will be hit because of a 12.5 per cent VAT on food products.

The Rs 275-crore Ahmedabad-based soft drink concentrate company will not be able to increase the price of its low-end products (Rasna sachets of 50 paise) for the masses where volumes are high. Increasing prices of high-end products may not always prove profitable for the company.

Chairman and managing director Piruz Khambatta said, ?All the FMCG companies will be hit by this high rate of VAT. Inspite of assurances, the VAT rate has increased from the originally proposed 6 per cent and 8 per cent to 12.5 per cent and it has turned out to be the last-point tax. A tax of 12.5 per cent at the last point is equivalent to 15 per cent to 16 per cent at the first point, which is double in most cases. It was originally proposed that VAT for items with MRP should be 8 per cent and the 4 per cent central sales tax on these articles should be abolished.?

Unveiling the growth plans of the company, Khambatta said it may consider entering into products for children such as confectionery. ?We are looking into the possibility of entering into this sector to leverage our brandname ? Rasna,? he added.

Rasna, which enjoys a 93 per cent market share in the soft drinks concentrate, has announced its plans for summer 2005.

To kickstart its summer plans, Rasna has signed on Bollywood actor Hrithik Roshan as its new brand ambassador.

Buoyed by the success of Rasna Cola Cola, the company has set a target of selling 100 crore glasses of Rasna Cola Cola by the end of 2005-06.

It has also expanded its product portfolio with the launch of the ?Rasna ghar ka? range that offers consumers traditional refreshers ? ghar ka nimbupani, ghar ka jaljira and ghar ka ampanna.

The company will also strengthen its presence in the export markets.

At present, Rasna sells products to 40 countries across five continents. ?Nearly Rs 50-55 crore of our turnover comes from exports,? Khambatta said.

The company is now looking at emerging markets like CIS and South America for exports. Rasna also has offices in the US, Dubai and Bangladesh and a manufacturing base in the UAE.

The company has no immediate plans to set up a manufacturing base in any of the exporting countries.