Bengaluru: Biscuit maker Britannia Industries Ltd’s net profit declined marginally in the April-June quarter due to a short-term impact from the government’s implementation of the goods and services tax (GST) that led to destocking of goods among traders.
Britannia’s net profit for the period fell 1.4% year-on-year to Rs216.12 crore, according to the firm’s filing with the BSE on Monday. Revenue rose 6.21% to Rs2,375.01 crore. The Bengaluru-based company’s net profit missed analysts’ expectations of Rs217.5 crore, according to a Bloomberg survey, but revenue beat estimates of Rs2,226.7 crore.
“It has been a good quarter in the face of challenging market environment and de-stocking in trade due to GST. While GST has created a short term impact, it is expected to generate a positive momentum going forward," Varun Berry, managing director of the company said in a statement.
Biscuits attract a higher 18% rate under the GST regime. That has impacted traders and distributors who initially did not stock up on goods leading up to the implementation of the new tax regime on 1 July.
But Britannia, in particular, has also had to deal with a different kind of issue arising from GST. The company has gone to court against its distributors in Kerala alleging that they resorted to unfair trade practices to extract higher margins after GST, according to a source-based story reported by Economic Times last month.
The company has so far not responded to requests from Mint seeking updates on its Kerala distribution challenge.
Britannia will continue to focus on its innovation drive, which it began with renewed vigour after Berry took over four years ago, and will launch a spate of new products in the coming months, the firm added in its filing.
Key raw material prices stayed high in the quarter with an inflation rate of around 6%, while its international businesses continued to be hurt by deteriorating geopolitical situations and currency fluctuations in the Middle East and Africa, Britannia said.
Growth in its dairy business was subdued due to its focus on value-added products rather than the mass market, everyday commoditized products, it added.