Kwality Q2 net revenue up 11% at Rs 1,436 crore

Net earnings remained subdued growing 3.6% to Rs 37.9 crore

Dairy firm Kwality Ltd's net sales grew 10.5% in September, FY2016 quarter to Rs 1436 crore from Rs 1297 crore on a year on year basis. The company's net earnings, however, remained subdued - growing 3.6% to Rs 37.9 crore from Rs 36.6 crore during the same quarter last year - due to higher costs of finished goods and removal of tax exemption. During the quarter, Kwality's volume sales grew by some 7%.

While, its material costs went down to Rs 790 crore from Rs 919 crore - 14% lower than the second quarter last year. Higher expenses on purchase of finished goods offset the cost advantage. Its 'purchase of stock in trade' surged 60% during the quarter. The dairy company is currently in process to finish its seventh manufacturing unit in Haryana.

"Absence of tax exemptions under Sec 80 IB of Income Tax Act. has impacted the profit after tax, since the tax concession was available to us last year", Sunit Shangle, chief financial officer, Kwality Ltd. said. Lower growth at the bottmeline has resulted in a 20 basis points decline in Kwality's net profit margin during the quarter. Its earnings per share declined Rs 1.73 from Rs 1.8 on a year on year basis.

Commenting on the company's performance, Sanjay Dhingra, managing director, said, "The financial results for this quarter are in line with the company's strategy of achieving profitable growth. Our persistent focus on customers and quality of our products has helped us to take on the margin pressures, which resulted in the overall positive performance of the company. We are aggressively eyeing the retail market now which is sure to further propel the growth of the company."