NEW DELHI, Apr 28: The board of directors of Nestle India Ltd on Wednesday recommended an interim dividend of Rs 3.50 per equity share for 1999 on a 31 per cent rise in net profit at Rs 20.50 crore during the first quarter ended March 31, 1999. Turnover, however, dropped Rs 29.80 crore to Rs 340.10 crore during the period under review as export sales slumped 55 per cent to Rs 47 crore from Rs 105 crore in previous corresponding quarter. Domestic sales were up 11 per cent to Rs 293.10 crore from Rs 264.90 crore.The company blamed the poor export performance on the continuing economic crisis in Russia and the devaluation of the Brazilian currency, making Indian coffee exports less competitive. The interim dividend of Rs 3.5 per share is proposed to be paid in May along with the final dividend of Rs 2 per equity share for 1998. The company has decided that in future, dividend payments will be made only once a year by clubbing the final dividend of the previous year, if any, with the interim dividend of thepayment year.
According to the company, the increase in net profit was achieved under difficult and depressed market conditions due to effective cost control.There was a significant reduction in interest costs during the quarter from Rs 11.7 crore to Rs 7.6 crore, due to higher efficiences resulting from better supply chain management as also due to reduced interest rates.
Gross profit after interest but before depreciation and taxes stood at Rs 35.90 crore compared to Rs 32.50 crore in the first quarter of 1998. Total expenditure was lower at Rs 298.10 crore compared to Rs 329.30 crore.
A press release issued by Nestle said the company is closely monitoring the developments and believes that exports of processed coffee from India could become more competitive globally if two critical cost factors are addressed.
The company exports the value-added processed coffee under the brand name Nescafe which has a higher realisation than commodity green coffee exports. But the company has to pay taxes leviedon the green coffee it purchases to manufacture value-added instant coffee for export purpose while no such taxes are levied on commodity green coffee, said the company release.
Similarly, a floor price has been imposed for importing tin plates which is significantly higher than prevailing international prices. Because of this high cost, packaging can not be done as per the international quality standard. These factors are proving detrimental to exports, said the company. It has made a representation and is hopeful that the Government will take appropriate measures.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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