Nestle India June qtr net up 20% at Rs 195 cr

Food and beverage maker Nestle India today reported a 20.3 per cent increase in net profit to Rs 194.8 crore for the quarter ended June, 2010.

Driven by higher volumes and product price hikes, the company's net sales touched Rs 1,466.7 crore during the quarter, translating into a growth of 21.3 per cent over the same quarter last year.

The company also said its board has approved the appointment of Swati A Piramal as a non-executive director of the company and Christian Schmid as a whole-time director.

Commenting on the results, Nestle India Managing Director Antoio Hello Waszyk said: "Despite the challenging environment of high commodities prices and food inflation, our long-term strategy to prioritise volumes with selective and staggered prices has started to show results while continuing to deliver healthy margins."

The company, however, expects the pressure on agro-based commodities to ease with a better monsoon and expects a pragmatic approach to food taxation under the proposed GST regime.

Nestle's domestic sales have increased by 20.2 per cent, while exports grew by 36.2 per cent, largely on account of sales to Russia. However, earnings were adversely impacted by the appreciation of the Indian rupee against the US dollar.

In the statement, Nestle said that while net profit margins have been positively impacted by the reduction in income tax rates, material costs remained high due to soaring commodity prices, especially milk solids and sugar.

According to analysts, the numbers indicate decent growth despite the challenges such as high input prices and logistics costs.

"The domestic growth has been strong and the profitability is intact, despite high materials costs. The company seems to be on a right track," IDFC SSKI Securities Managing Director Nikhil Vora told PTI.

"Even the product line has been very innovative," he added.

The company is also setting up a new plant to manufacture culinary products at Nanjangud in Karnataka.