Nestle India
The company, for its first quarter ended 31st March 2014 (year ending 31st Dec) posted a set of dismal numbers. It recorded a 7% (YoY) drop in net profit at Rs.259 crore on a 3% rise in net sales at Rs.2313 crore. On this sales, domestic sales rose 3% but exports declined over 4% mainly due to fall in exports to Russia and the capacity was then prioritized for domestic business. Margins were also adversely affected due to higher price of milk solids and increased demand generating spends on the base of a stronger quarter last year.
With inflation zooming high, many people are shifting from relatively expensive MNC brands to many ‘me-too’ bred domestic brands, which are cheaper. This fall in demand due to inflation is affecting companies like Nestle. The company’s brands – especially Maggi and Nescafe continue to lead the market but it is poor macro economic conditions and inflation which is keeping demand low. Once this improves or even when there is a change in the moods, a good harvest, maybe then these tough times will change. As at 31st March 2014, Nestle SA holds 34.28% while Maggi Enterprises holds 28.48%, a total of 62.76% is held by promoters. FIIs holds 13.70% and DIIs hold 5.27%.