: India Inc is in the last leg of its earnings season for the quarter ended June 30, 2017. Every other consumer-oriented company is blaming destocking in the runup to the implementation of goods and services tax (GST) for tepid performance in Q1FY18.
However, Finance Minister Arun Jaitley on Sunday said the rollout of GST was ‘extremely smooth’ in the country. “It has been an extremely smooth turnover without any disruption,” he said.
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Here are 15 companies that took a hit from the new tax regim
FMCG major Britannia Industries posted 1.41 per cent year-on-year fall in consolidated net profit at Rs 216.12 crore for the quarter ended June 30, 2017 against Rs 219.21 crore in the corresponding quarter last year. Varun Berry, Managing Director, Britannia Industries in a release said, “It has been a good quarter in the face of challenging market environment and de-stocking in trade due to GST. While GST created a short-term impact, it is expectedgenerate a positive momentum going forward.”
Diversified conglomerate ITC reported 7.37 per cent rise in standalone net profit to Rs 2,560.50 crore for the first quarter ended June 30, 2017, driven mainly by revenue growth from FMCG and cigarettes business. It had registered a net profit of Rs 2,384.67 crore for the April-June quarter a year ago, ITC said in a BSE filing. “The company delivered steady performance during the quarter against the backdrop of a challenging business environment marked by continuing pressure on the legal cigarette industry, sluggishness in demand for FMCG products exacerbated by de-stocking in trade channels ahead of implementation of GST,” said ITC in a statement.
DaburBSE -1.39 % India
FMCG major Dabur India posted a 9.80 per cent fall in consolidated net profit at Rs 264.86 crore for the first quarter ended June on account of de-stocking by trade partners ahead of GST rollout. “Sales plunged in June across all consumer categories in view of the massive de-stocking by trade channels just ahead of the implementation of the GST. The overseas markets also continued to face severe headwinds with currency devaluations and economic turmoil in key geographies,” Dabur said.
Marico reported an 11.92 per cent fall in its consolidated net profit to Rs 235.94 crore for the first quarter ended June 30 on account of reduction in sales due to transition to the GST regime.
FMCG major Emami Ltd posted 98.16 per cent drop in consolidated net profit at Rs 1.04 crore for first quarter ended June 30, hit by destocking ahead of GST implementation in domestic market and overseas inventory correction. Emami Director Mohan Goenka said the first quarter is not representative of the business outlook of the company as apprehensions of GST led to substantial destocking in domestic market.
Asian Paints registered 20.23 per cent decline in consolidated net profit to Rs 440.74 crore for the first quarter ended June 30, mainly on account of higher expenses. “The decorative business in India registered low single digit volume growth in the current quarter with the business getting impacted, especially in the month of June due to GST rollout from July 1,” Asian Paints Managing Director and CEO K B S Anand said.
Mahindra & Mahindra
The auto major reported a steep 20 per cent fall in net profit to Rs 766 crore in the June quarter as sales were crimped by GST transition while revenue inched up 3.3 per cent to Rs 12,335.56 crore. “We’ve taken full impact on the loss on account of GST. We’ve compensated our dealers for the pre-GST inventory. We’ve made an appeal to the GST Council not to let us lose this transition amount,” M&M managing director Pawan Goenka said.
Maruti Suzuki posted over 4 per cent rise in net profit at Rs 1,556.4 crore for the first quarter ended June 30 as high commodity prices and GST-related expenses took a toll on its bottomline.
“During the quarter, there was a one-off impact of compensation for dealers due to the tax loss incurred on vehicle stock at the time of switchover to GST,” Maruti Suzuki said.
Apollo Tyres reported 72 per cent decline in its consolidated net profit at Rs 88.3 crore for the quarter ended June 30, due to pre-GST destocking by trade partners and higher expenses. The tyre maker had posted a net profit of Rs 315.54 crore during the same period of the previous fiscal. The company said the first quarter revenue in India was subdued because of the “pre-GST destocking by the company’s business partners, and confusion over switchover from III to BS IV emission norms in commercial vehicles.
Ceat reported a 98.6 per cent fall in its consolidated net profit at Rs 1.38 crore for the June quarter due to destocking by trade partners ahead of the GST rollout and higher expenses.
Textile and apparel player Arvind Ltd posted 22.55 per cent drop in consolidated net profit at Rs 56.75 crore in the quarter ended June 30. The company had posted a net profit of Rs 73.28 crore in the corresponding period of last year. “First quarter was a challenging quarter with GST implementation impacting demand in June … going forward, we believe GST will continue to have an impact on demand in the next few months as the wholesale (channel) adjusts to the new tax regime,” Arvind Director and CFO Jayesh Shah said.
Bajaj Electricals reported a decline of 10.36 per cent in net profit to Rs 20.50 crore for the first quarter ended June 30, 2017 as sales of its consumer products segment was impacted on account of GST rollout. “The performance of consumer products segment was impacted primarily on account of drop in sales ahead of GST rollout on July 1, 2017 and drop in margin as a result of one-time compensation that the company has to pay to its dealers/distributors for losses incurred by them on account of introduction of GST,” said Bajaj Electricals CMD Shekhar Bajaj.
V-Guard Industries reported a 46 per cent decline in its net profit to Rs 23.25 crore for the first quarter ended June 30. The company said destocking by trade due to GST led to drop in volumes and consequent drop in margins.
Drug firm Lupin registered 59.40 per cent decline in consolidated net profit to Rs 358.06 crore for the quarter ended on June 30, 2017. Commenting on the results, Lupin MD Nilesh Gupta said that the first quarter results have been below our own expectations due to higher than anticipated price erosion in select products like Glumetza, disruption on account of GST implementation in India and appreciation in the rupee.
Eveready Industries reported 39.36 per cent decline in standalone net profit to Rs 13.56 crore for the first quarter ended June 30, hit by de-stocking in trade channels ahead of GST implementation. The inferior first quarter performance was due to market conditions being impacted in the run-up to the implementation of GST, particularly due to a general trend of de-stocking in the trade channels, the company said.