Marico Q1 net profit falls 11.9% to Rs236 crore on GST-led de-stocking
Mumbai: Edible oil maker Marico Ltd on Tuesday reported an 11.9% decline year-on-year in net profit for the first quarter as wholesale, rural, and Canteen Stores Department (CSD) channels de-stocked in the weeks before implementation of the goods and services tax (GST) on 1 July, affecting sales volumes.
Marico’s net profit for the period fell to Rs235.94 crore while its revenue from operations fell 3.5% year-on-year to Rs1,692.38 crore.
Distribution trade channels reduced their inventory and stock taking particularly during June right before the new tax regime was implemented on 1 July. With this, Marico’s India business saw a 9% year-on-year decline in volume for the quarter, the company said in statement.
“The volume decline is attributable to steep pipeline correction across channels, especially wholesale and rural, leading to a decline in the stock turnover ratios (STRs) in trade,” the company said in a stock exchange filing. “The northern and eastern markets were impacted more than rest of India. Business with CSD (which contributes around 7% of India business) practically came to a standstill in the month of June declining by 15% for the quarter.”
Marico’s income from the India business stood at Rs1,327.51 crore during the quarter, down 4.31% year-on-year. This segment makes up 77% of Marico’s total turnover as per company financials for FY16-17.
Marico’s shares were trading at Rs323.20 at 2:23pm, down 3.10% while the benchmark BSE Sensex was at 32,538.41 points, up 0.07%.