Nestle India enters the Rs 10,000 crore club

Maggi Controversy ? Demonetisation ? GST ? Nestle India seems to have put these problems behind it. The company reported sales in excess of Rs 10,000 crore in 2017, putting it in the same league as Hindustan Unilever and ITC.

The Swiss consumer goods giant, which set up its first factory in India in 1961, has traditionally been content to grow at a somewhat conservative pace. It’s only in the past decade or so that it has become aggressive about growing its footprint in India.

And then came the Maggi ban in 2015, following which Nestle India reported its first quarterly loss in more than 15 years. Suresh Narayanan, chairman and managing director, Nestle India, had been parachuted into the country to manage the Maggi crisis and put Nestle back on the growth path.

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In its annual results announced earlier this week, Narayanan has demonstrated his success. Total sales stood at Rs 10,135.11 crore, up 7.71% from Rs 9,409.60 crore in 2016. Net profit increased to Rs 1,225.19 crore, up 22.35% from Rs 1,001.36 crore in 2016. This was despite the hit the company took thanks to a change in the tax structure with the introduction of GST. On a quarterly basis, net profit rose nearly 60% to Rs 311.83 crore in Q4, 2017 from Rs 195.41crore during the corresponding period of 2016 .

“It is extremely pleasing that we ended 2017 on a strong note by reaching a historic milestone of over Rs 10,000 crore in revenue, in a year where we had to adapt to significant changes in the external environment,” said Narayanan in a statement after the results.

Narayanan has cause to be pleased. In barely three years, he has pulled the consumer goods giant from the brink of an abyss, strengthened the brand’s position, and launched a slew of new products.

"For management, the Maggi issue is now a thing of the past and Nestle is focusing on growth in various categories by stepping-up aggression in new launches, promotions and enhancing penetration," notes brokerage Edelweiss.

The results come at a time when the consumer goods sector is looking up. This year, analysts foresee robust growth as the sector settles down to GST, and as consumer demand is likely to go up with government moves like Operation Green and the increase in the support prices to farmers.