Baba Ramdev-led FMCG company Patanjali Foods today reported a 31.6% YoY drop in its standalone Q2 net profit at Rs 112.28 crore amid pressure on margins in the edible oil business. Its September quarter revenue, however, jumped 42% YoY to Rs 8,514 crore.
The company, which was earlier known as Ruchi Soya, blamed the pressure on margins, which dipped to 2.3% from 5.5% in the year-ago period, to a sharp drop of $400-500 per ton in global prices of various edible oils in these 3 months.
“Due to the macro factors affecting demand-supply situation in edible oils, there was a steep decline in edible oil prices during the quarter. Declining price trend left industry with high price inventory in hand, although all major players including Patanjali Foods Limited passed on the benefit of lower prices to the consumers,” the FMCG company said in a BSE filing.
Besides, currency depreciation and inflationary pressure on operating cost also impacted its margins. “However, this is purely cyclical in nature and on account of events that the industry witnessed in the quarter,” it said.
During the quarter, PFL’s foods business achieved sales of Rs 2,399.66 crore, contributing 37.18% to the total branded sales of the company. The branded sales, including the institutional segment, achieved sales of Rs 6,453.45 crores contributing 77.02% of the total sale of products.
The business mix of the edible oil and food business improved to 74.66% and 28.18%, respectively, as against previous year quarter’s numbers of 94.20% and 11.76%.
“The overall performance continues to show an uptrend due to the robust execution of our strategy to grow the food & FMCG business by driving its penetration through the distribution strength of the edible oil business and induction of ‘Food portfolio’ from PAL,” the company said.
Patanjali said its focus for the next few quarters is to continue the accelerating growth of the highly profitable food vertical, which shall ensure overall growth of the EBIDTA margin.
“PFL is confident of maintaining its growth momentum with complete reflection of the acquired foods business in the coming quarters,” it said, adding the food business with large portfolio of products and robust brands across categories such as ghee, chywanprash, honey, juices etc shall continue to grow at a higher pace keeping in mind the growing distribution network and wider availability across retail shelf.
Shares of the company, which has given multibagger returns in the last 5 years, had ended 2% lower at Rs 1,267.95 on Friday.