A customer looks at food containers inside the Ikea store in Hitech City on the outskirts of Hyderabad. (Photographer: Udit Kulshrestha/Bloomberg)

Firms Should List Products’ Manufacturing Cost With MRP: RBI Board Member Satish Marathe

In a unique suggestion, an central board member of the Reserve Bank of India said companies should disclose the manufacturing cost of a product along with the maximum retail price so that a consumer gets to know the margins the company is pocketing.

Satish Marathe, appointed by the government to the central board of the RBI in August, said, "it is high time that apart from printing MRP on products, companies should also start giving the (manufacturing) cost of products. Only then, will we really know the margins of profit."

Addressing an event of the Institute of Cost Accountants, he sought to drive the point of excess profits being made by companies, saying a piped gas company recently signed an agreement to supply gas to residential areas at a 16 percent margin.

Admitting that such a high margin could be justified in initial days, he wondered how can it be justified once volume picks up.

Marathe is closely associated with the co-operative banking sector and has served as the chairman and chief executive of United Western Cooperative Bank.

Wondering whether any country has benefited from free-trade pacts, he called for the need to take a relook at free trade agreements to better protect the interest of the domestic industry.

Confidence In The Banking Sector

Marathe said the domestic banking sector has gone through a "rough patch" after the ongoing asset quality review by the RBI, but exuded confidence that the system will come out healthier.

He also said the state-run banks under prompt corrective action will eventually come out of the restrictions imposed on them.