Published On:October 24 2020
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Nestle India to invest ₹2,600 crore in scaling capacity.

Nestle India to invest ₹2,600 crore in scaling capacity.

Packaged foods company Nestle India recently said it is set to invest ₹2,600 crore in India over the next three-to-four years to expand existing manufacturing capacities, apart from setting up a new plant in the state of Gujarat, as demand for packaged foods benefits from strong in-home consumption.

“As a vindication of the confidence and trust in the Nestlé journey in India, I am pleased to share that we plan to invest ₹2,600 crore over the next three to four years to augment our existing manufacturing capacities, as well as towards our new under construction ‘state of the art’ factory in Sanand, Gujarat," Suresh Narayanan, chairman and managing director, Nestlé India said on Friday. The investment includes ₹700 crore the company announced last year in setting up a new plant for its packaged noodles brand Maggi.

Recently, the maker of Maggi noodles and Nescafe coffee posted its September quarter earnings. The company benefitted from significant uptick in in-home consumption with brands such as Maggi, Kitkat, Maggi sauces and its portfolio of coffee brands witnessing “double digit" growth. Supplies normalized and factories retuned to normalcy in the September quarter, the company said in a statement to the media.

Its profit for the September quarter stood at ₹587 crore, down 1.37% year-on-year from ₹595.27 crore the company reported in the year ago period. However, the company said net profit is not comparable as the cumulative effect of lower tax rate made applicable from 1 April 2019 was adjusted fully in quarter ended 30 September 2019. Profit before tax rose 12.4% to Rs786.5 crore in the third quarter. Nestle India follows a calendar year.

For the three months ended 30 September,2020, the company posted a 10.1% year-on-year jump in sales at ₹3,525 crore ahead of analyst expectations. “Nestle reported very strong September quarter, it was a beat on all front. A double digital sale and EBIDTA growth is back after just one quarter of covid-19," said Abneesh Roy, senior vice-president (research), Edelweiss Securities.

Demand in ‘out-of-home’ channels improved during the quarter as India moved to further relax its lockdown guidelines but it continues to be impacted by covid, the company said.

“The quarter witnessed growth driven by an improved supply situation, as our factories returned to normal output. Boosted by an increase in in-home consumption, our key brands like Maggi Noodles, Maggi Sauces, Kitkat, Nestlé Munch, NESCAFÉ Classic and NESCAFÉ SUNRISE witnessed double digit growth. Demand in ‘out of home’ channels improved during the quarter but continues to be impacted due to the overall environment. We continued our strong performance in the e-commerce channels, which grew by 97% and now contributes about 4% of domestic sales," said Narayanan.

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