Sales growth got impacted due to the roll out of the goods and services tax (GST) during June, the company told the Bombay Stock Exchange (BSE) in its regulatory filing on Wednesday.
While announcing its quarterly financial results, Suresh Narayanan, chairman and managing director of the firm said: “Revenue growth was negatively impacted by softer trading in June ahead of the rollout of GST.”
In the June quarter, Nestle’s net sales increased by 7.3 per cent YoY to Rs 2,469 crore, from Rs 2,301 crore.
“I am pleased with the momentum on volume-led growth during the quarter,” said Narayanan in a statement while adding that the company’s business faced softer trading conditions in June, prior to the introduction of GST with trade destocking and postponing purchases.
The transition into the new tax regime has, however, been “smooth” so far, he said.
Nestle’s domestic sales outpaced import sales– 8.8 per cent compared to 12 per cent negative growth in import sales. Growth in domestic sales was backed by new product launches, better sales of Maggi noodles and improved realisations.
Profits were hit by an increase in the prices of milk and milk derivatives that had to be partially absorbed, which in turn led to an increase in the ratio of cost of materials consumed versus net sales, the firm said. The ratio increased by 41 basis points YoY, from 39.59 per cent last year to 40 per cent in 2017.
* Growth in domestic sales was backed by new product launches, better sales of Maggi noodles and realisations
Financial performance of Nestle India in June quarter
|Apr-Jun, 2016||Apr-Jun, 2017||Change|