The net profit of leading FMCG company Eveready Industries India dipped sharply during the second quarter of the current fiscal, ending at Rs.3.04 crore compared to Rs.13.50 crore in the same quarter of the previous fiscal year.
Marginal drop in sales
Net sales were marginally lower at Rs.255.93 crore against Rs.262.03 crore in the comparable period.
The company said its operating performance during the quarter was inferior to that of the previous year as net sales remained stable but profitability was hit. The company, whose two main product segments include dry cell batteries and flashlights, took a hit on both these segments which showed a poor growth and at times ‘degrowth'.
Added to this were all round cost increases.
These were on account of overhead costs as well as a rise in the price of key input materials such as zinc.
Material costs ate away 65 per cent of the net sales realisation, putting an increasing pressure on margins.
The company explained its results by saying that these adverse impacts could not be fully passed on to the market leading to a squeeze on margins and lower profitability.
The B M Khaitan group company in which the promoter group has a equity share of 40.78 per cent is not holding out many promises on the company's outlook.
It said that although with the growth in the device population battery sales have to improve, it felt that given the fluctuation in the rupee and given the large size of the company's import basket profitability will remain volatile.
It said that efforts were on to cushion the impact through improved sales of its packet tea business and its lighting product business.
