Nestle India’s Q2 profit more than doubles to Rs269 crore
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Nestle India Ltd, the local arm of the Swiss food company, on Friday said net profit more than doubled in the quarter ended 30 September, signalling that it has overcome the setback it suffered from a ban on its popular Maggi noodles last year.
Net profit rose to Rs269.39 crore in the quarter, from Rs124.20 crore in the year-ago quarter, the company said. Net sales rose to Rs2,346.18 crore, a 35.1% increase from Rs1,736.20 crore reported in the year-ago period.
“Results for the quarter and nine months ended 30 September 2016 are not entirely comparable with the results of the corresponding periods due to the Maggi noodles issue in 2015 and rebuild of the Maggi noodles business in 2016,” Nestle India said in a statement to the BSE.
In the same quarter last year, Nestle India could not sell Maggi noodles after the Food Safety and Standards Authority of India (FSSAI) ordered the company to withdraw the snack item, which accounted for about 30% of the company’s revenue.
The FSSAI order, which was overturned by the Bombay high court in August 2015, was based on allegations that Maggi noodles contained monosodium glutamate, and lead in excess of prescribed limits.
In the quarter just gone by, Nestle India’s domestic market grew 37.9% and exports increased by 5.1%.
“Our growth was broad-based across categories aided by a spate of innovations and renovation of over 25 new products launched in the recent past. We are now clearly in the leadership position in the instant noodles category, which vindicates consumer confidence and trust in Brand Maggi. In addition, the newly launched Maggi Hot Heads range has also accelerated our growth in the value-added segment,” Suresh Narayanan, chairman and managing director, Nestlé India, said in a statement.
Maggi noodles now has a 57% share of the instant noodles market in India, according to Nestle India.
In the quarter ended March 2015, Maggi had an 80.2% share, according to a May 2015 report published by Nomura Financial Advisory and Securities (India) Pvt. Ltd.
In November, when the company relaunched Maggi, it had a 10.9% share of the market.
During the months when Maggi noodles were off shop shelves, ITC Ltd’s Yippee noodles and Wai Wai noodles from Nepal’s CG Foods gained market share. Yoga guru Baba Ramdev’s Patanjali Ayurveda also launched its own atta (wheat) noodles.
In the latest quarter, the company’s tax expenses jumped 130%.
“Effective tax rate has increased largely due to decrease in contribution of income from tax-free bonds in the total income,” the statement said.
Nestle India’s shares closed at Rs6,960.50, up 0.52%, on the BSE, on a day the benchmark Sensex ended 0.09% up at 27,941.51 points. The results were announced after close of trading.