Nestle India clocks double-digit sales growth in Q3, plans Rs 2,600 crore investment over 3-4 years

New Delhi: FMCG major Nestle India on Friday announced its plans to invest Rs 2,600 crore over the next three to four years to augment its manufacturing capacity in the country, terming the move as “vindication of confidence and trust” the company has in its India journey. The company, which saw a robust 10.23 per cent growth in its domestic sales in the July-September quarter, said its production units have returned to “normal output” post lockdown.

As per Nestle’s plan, the new investments are aimed at expansion activities of the existing units and towards the construction of its new upcoming unit in Sanand, Gujarat.

Meanwhile, the FMCG major — which follows January-December financial year — posted a marginal 1.37 per cent drop in its net profit at Rs 587.09 crore in the third quarter ended September 30, 2020.

Its net sales, however, were up 10.19 per cent at Rs 3,525.41 crore during the period under review, the company said.

Domestic sales in July-September moved up 10.23 per cent to Rs 3,350.10 crore as against Rs 3,039.09 crore in the year-ago period.

Nestle, which presently operates eight production units in India, said its factories have returned to normal output and witnessed growth driven by an improved supply situation.

“Total sales and domestic sales both increased by 10.2 per cent driven by volume and mix,” Nestle India said in a post earnings statement.

Its export sales were up 9.41 per cent to Rs 175.31 crore as against Rs 160.22 crore in the corresponding quarter a year ago.

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Commenting on the results, Nestle India Chairman and Managing Director Suresh Narayanan said: “The quarter witnessed growth driven by an improved supply situation, as our factories returned to normal output.”

Nestle, which has a 108-year long association with India and nearly six-decade long manufacturing journey, announced to deepen it by announcing further investments.

“As a vindication of the confidence and trust in the Nestle journey in India, I am pleased to share that we plan to invest Rs 2,600 crore over the next three to four years to augment our existing manufacturing capacities, as well as towards our new under construction ‘state of the art’ factory in Sanand, Gujarat,” he said.

Nestle India said its profit before tax was up 12.40 per cent at Rs 786.50 crore over the same period a year ago.

“Tax expense for the quarter ended September 2020 is not comparable. The cumulative effect of lower tax rate made applicable from April 1, 2019 was adjusted fully in the quarter ended September 2019. Net profit after tax and earnings per share are also not comparable for the same reason,” it said.

According to Nestle, this quarter was boosted by double-digit growth in the in-home consumption of its key brands such as Maggi Noodles, Maggi Sauces, Kitkat, Nestle Munch, Nescafe Classic and Nescafe Sunrise.

Besides, demand in ‘Out of Home’ channels improved during the quarter but continues to be impacted due to the overall environment.

“We continued our strong performance in the e-commerce channels, which grew by 97 per cent and now contributes about 4 per cent of domestic sales,” he said.

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Meanwhile, Nestle India in a separate filing informed that its board in a meeting held on Friday declared an interim dividend of Rs 135 per equity share of Rs 10 each for the year 2020 on the entire issued, subscribed and paid-up share capital.

Nestle India board also approved the appointment of Matthias C Lohner, as whole-time director, designated as ‘Executive Director – Technical’ of the company with effect from November 1, 2020, for a term of five years, subject to requisite approvals.

Earlier this week, its Swiss-based parent company Nestle while announcing its July-September quarter result had said: “India posted strong mid-single-digit growth, with good momentum in Maggi, Nescafe and KitKat.”

The Indian market was ranked at number 13 in terms of contribution to Nestle’s global revenue in 2019.

Shares of Nestle India Ltd on Friday settled at Rs 15,863.00 on the BSE, down 0.30 per cent from the previous close.



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