NEW DELHI: Defying the ongoing economic slowdown, FMCG major Nestle India Ltd posted a doubledigit sales growth. Net profit rose 33.46 per cent to Rs 595.41 crore in the quarter ended September 30, the company said.
The company, which follows the January-December period as the fiscal year, reported a 9.4 per cent rise in revenue from operations at Rs 3,215.81 crore in the third quarter this year. Total sales grew by 9.5 per cent, while domestic sales grew by 10.5 per cent.
However, export sales dropped by 7.1 per cent due to lower coffee exports to Turkey, it added. Nestle was also able to skirt the nation’s consumption slowdown as demand softened for everything from soaps to snacks during the three months to September by selling higher volumes at the expense of its margin. Suresh Narayanan, chairman and managing director, Nestlé India said the company sustained the momentum of volume and mix led growth.
The company said that its key brands such as Maggi, Kitkat, Nestle Munch and Nescafe RTD delivered strong performances in the third quarter. “The quarter witnessed higher commodity prices particularly in milk and its derivatives, which are likely to continue in the near term future,” he further said. Lower tax expenses and a tax reversal, from the corporate tax rate cut, also helped aid profitability.
The company further said that the net profit includes a one-off credit of Rs 72.5 crore accrued due to computation of tax expense at a lower tax rate in accordance with the Taxation Laws (Amendment) Ordinance 2019. The impact of this change, including that of the previous quarter, has been recognised in the current quarter. The company also enjoyed a deferred tax reversal of Rs 19.4 crore. Another aspect working in favour of Nestle was its focus on urban markets.
Rural India, where the slowdown is much deeper, contributes only 20-25 per cent of sales for Nestle, Narayanan had said in August. Noting that there will be “period of low growth” for the fastmoving consumer goods (FMCG) industry, he further said that the world will not come to an end if growth slipped from 10 to 12 per cent to eight to nine per cent.