Nestle India

Turnover at Rs 510.0 crore for the half year ended June 1996, was up by 23.10 per cent compared to Rs 414.3 crore. Robust growth in the instant foods division, the soluble beverages division and exports are largely responsible for the increase in revenues.

The successes of the premium priced chocolate Kit Kat and Polo have further added to the revenues.

Despite the increase in sales, net profits have stagnated at Rs 22.3, increasing marginally from Rs 22.2 crore last year.

Besides the high interest outgo, the capitalisation of various projects has led to a substantial increase in the depreciation charges which further eroded the earnings growth of the company.

 

Nestle has now identified the Indian chocolate and confectionery business as its future thrust areas. Future profitability would also depend to an extent on the success of the recently introduced brand extensions for Maggi in the form of soups, snack dressings, pizzas pastes and pickles. For the second half, however, sheer volumes should drive profits. Expansion of the distribution network and rapid product launches all augur well for the future, but margins could remain depressed.