BackNestlé boosts capex to scale up capacity
The Maggi maker plans to invest ₹2,600 cr over 3-4 years
PremiumNestlé India on Friday said it will invest ₹2,600 crore over the next 3-4 years to expand its manufacturing capacities , including setting up a plant in Gujarat as demand for packaged foods soars.
“We plan to invest ₹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," said Suresh Narayanan, chairman and managing director, Nestlé India.
The investment amount includes ₹700 crore the company earmarked last year for setting up a new plant to make Maggi noodles. The maker of Nescafe coffee reported its September quarter earnings on Friday.
The company benefitted from a significant uptick in in-home consumption with brands such as Maggi, Kitkat, Maggi sauces and its portfolio of coffee brands witnessing double-digit growth. Supplies normalized and factories returned to normal in the September quarter, the company said.
Its profit for the September quarter fell 1.37% to ₹587 crore from ₹595.27 crore a year ago. The figures are not comparable as the cumulative effect of lower tax rate made applicable from 1 April 2019 was adjusted fully in the quarter to September 2019, the company said. Profit before tax rose 12.4% to ₹786.5 crore in the September quarter. Nestlé India follows the calendar year.
The company posted a 10.1% increase in sales to ₹3,525 crore, beating analysts’ expectations.
“Nestlé reported a very strong September quarter; it was a beat on all fronts. Double-digit sales and Ebitda growth are back after just one quarter of covid," said Abneesh Roy, senior vice-president (research), Edelweiss Securities. Ebitda, or earnings before interest, taxes, depreciation and amortization, is a measure of profitability.
Demand in ‘out-of-home’ channels improved during the quarter as India moved to further relax its lockdown guidelines, but it continues to be impacted by covid, the company said.
“The quarter saw growth driven by an improved supply situation as our factories returned to normal output," said Narayanan.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
