Mumbai: Profit at Godrej Industries Ltd in the December quarter fell to a fifth from a year ago, hurt by export-driven chemicals business and losses in beverages and foods business.
Late on Tuesday the company, with interests in animal feed, consumer products and properties, posted a net profit of Rs5.04 crore, down 81.5% on net sales of Rs7.97 billion. Sales grew 20%.
Before interest and tax, the chemicals business, which exports to over 65 countries and supplies to industries such as pharmaceuticals, cosmetics and rubber, posted a loss of Rs24.4 crore.
“October-December was rather (a) meltdown period for the global economy and this is quite an export-oriented business,” Chairman Adi Godrej said. The business brought in about a fifth of Godrej Industries consolidated revenue in the third quarter.
A sudden drop in global demand from October meant the division was stuck with higher-priced raw materials purchased earlier in the year, cutting margins, he added.
The company’s beverages and foods business, which includes juices, pulp and confectionary posted an operating loss of Rs2.26 crore before interest and tax.
“Godrej Hershey is in investment mode so it is not doing as well,” he said.
Consumer businesses the company is associated with include Godrej Sara Lee, which makes household insecticides and soap maker Godrej Consumer Products Ltd.
“Chemicals business will still suffer but not as much as in the third quarter,” he said, referring to the last quarter of the year. “But our other businesses will more than make up for it.”
He expects consumer businesses and property to improve in the last quarter.
The property unit reported a 47% fall in operating profit during the quarter over last year.
It “is suffering from a slowdown because consumer confidence is low. We have good advance sales done for the fourth quarter so the fourth quarter will be better than the third,” Godrej said.
Most of its projects have been sold and the unit will only look at new projects once the market improves, he said.
However, its listing plans still face uncertainties, given the turmoil in the stock markets and the sector, a far cry from 2007 when property firms mopped up a third of all funds raised through IPOs in India.
Early in 2008, Godrej Industries, which owns just over 80% in Godrej Properties, said it planned to list the real estate unit, bringing its stake to 72%.
“We are funding it internally so we have alternate methods. We are not very dependent on the IPO for our progress,” he said.
At 1.16 p.m. shares in Godrej Industries, which rose as much as 6% in morning trades, were trading up 0.83% at Rs60.90 in a firm Mumbai market.