Nestle India net up 27%, inks pact to form JV with Dr Reddy’s
NEW OFFERING. FMCG major to launch premium coee brand Nespresso by 2024-end
Nestle India posted a net profit of ₹934.17 crore in the March quarter, up 27 per cent year-onyear, on the back of strong growth momentum across its product portfolio. Revenue from operations rose 9.05 per cent to ₹5,267.59 crore. The company announced that it has inked a definitive agreement with Dr. Reddy’s Laboratories to form a JV company in the nutraceuticals space.
The company’s board has recommended a final dividend for the (15 months) financial year ended March 31, of ₹8.50 per share amounting to ₹8,195.3 million.
SALES
The joint-venture company, which is expected to become operational in Q2 of FY25, will see Dr Reddy’s holding 51 per cent stake and Nestle India holding 49 per cent stake. Nestle India will have a “call option” to increase shareholding up to 60 per cent after six years , while Dr Reddy’s will continue
Nestle said India emerged as the largest market worldwide for Maggi in FY24
to hold at least 40 per cent stake, the statement added.
Nestle India’s total sales and domestic sales grew by 9.3 per cent and 8.9 per cent, respectively, in the March quarter.
Suresh Narayanan, Chairman & Managing Director, Nestle India said, that the company delivered double-digit growth despite challenges posed by rising food inflation and volatile commodity prices. “We have witnessed a strong growth momentum across our product portfolio led by a combination of pricing and mix.
Our domestic sales crossed ₹5,000 crore this quarter,” he added.
Noting that prepared dishes and cooking aids portfolio saw strong growth, Narayanan added that “India emerged as the largest market worldwide for Maggi, in FY24.” Confectionery portfolio also delivered “strong performance”, making India the second-largest market for Kitkat globally, he added. The company’s beverage business recorded “robust growth” performance. “Nescafe has introduced its coee to over 30 million households in India in the last seven years,” Naryanan said. Meanwhile, by 2024-end,the company will begin selling its premium coee brand Nespresso’s product portfolio through its distribution network, online channels, and boutiques.
COMMODITY OUTLOOK
Nestle India said that the company is seeing “unprecedented headwinds in Coee and Cocoa with all time high prices and an ongoing price rally.” Cereals and grains are going through a structural cost increase backed by MSP.
Narayanan said the JV agreement will allow Nestle to bring its “science-backed nutritional solutions” to more consumers in the country leveraging Dr Reddy’s retail and distribution network. The partnership will “bring together” the global range of nutritional health solutions as well as vitamin, minerals, herbals and supplements of Nestlé Health Science (NHSc) with the “established commercial strengths” of Dr. Reddy’s in India, the company noted.