Patanjali Foods Ltd on Friday reported 64% drop in first-quarter profit as high costs dented margins and also due to a fall in prices of cooking oils.
The Ruchi Gold oil maker’s net profit after tax fell to Rs 88 crore for the quarter ended June 30, from Rs 241 crore a year earlier.
Total revenue from operations increased 7.7% to Rs 7,767 crore, while total expenses rose 9.3% due to higher purchases of stock-in-trade and employee costs.
Demand for consumer goods has been under pressure in rural India, with higher prices of everyday items from milk to wheat flour forcing people to cut back spending on both other essentials and discretionary purchases.
The edible oil segment recorded sales of Rs 5,890.73 crore. “Despite edible oil revenue degrowth, the sales volume increased by 1.4 lakh tonnes registering a growth of 35.80 per cent year-on-year,” the Ramdev-backed company said in a stock exchange filing.
The edible oil industry was impacted by significantly lower prices than the previous quarter due to a sudden fall in prices which left the industry with high price inventory in hand, as well as stock in transit, the company said.
”Further, Government intervention for lowering prices in spite of holding high priced inventory impacted profitability negatively during the quarter. However, the company is of the view that this is purely cyclical in nature and on account of events that the industry witnessed in the quarter,” Patanjali Foods said.
Revenue from Patanjali’s packaged foods business that sells a range of products, including honey and juices, rose more than three-fold, while its revenue in the edible oils segment fell nearly 13%.
The company also said the edible oil industry was impacted by significantly lower prices than the previous quarter, which left the industry with high price inventory in hand, as well as stock in transit.
Government intervention for lowering prices in spite of holding high-priced inventory impacted profitability negatively during the quarter, the company added.
Patanjali’s stock closed nearly 2.3% lower at Rs 1,293.4 ahead of the results. The stock rose nearly 23% in the April-June quarter.
Other consumer goods companies have reported mixed results for the first quarter, with KRBL posting an 19% rise in its profit, while Venky’s (India) profit plunged more than 60%.
Incorporated in 1986, Patanjali Foods (formerly known as Ruchi Soya Industries Ltd) is one of the leading firms in edible oils segment and is aiming to become a major player in FMCG and FMHG as well. It sells products under Patanjali, Ruchi Gold, Nutrela brands.
”Our Food & FMCG segment is performing in line with our targets. We have been growing at a healthy rate and our new product launches will boost our growth further. We see Food & FMCG segment to be a major contributor to our revenue as well as margins,” Patanjali Foods CEO Sanjeev Asthana said.
With inputs from agencies
