Eveready Industries India Ltd has reported a dip in net profit at Rs. 13.81 crore in the second quarter to September 30, 2015 from Rs. 17.64 crore in the corresponding period last fiscal.
The company said this was because total expenses had gone up to Rs. 343.05 crore (Rs 324.89 crore). Though finance cost during the year remained largely unchanged, the increased spend on advertising and promotion (6.2 per cent of the net sales) for LED lighting products was one of the main reasons for lower profit.
The company said: “Spends will normalise to around 5 per cent of the net sales for the whole year; thus the following 2 quarters will see significantly lower spends.”
The leading dry cell battery producer also said that there was a mark-to-market loss of Rs. 3.9 crore on hedging zinc import prices in dollar terms during the quarter. The loss was due to fall in zinc prices.
“The fall in key raw material prices was a good news and the M-T-M loss may get neutralised over the coming months,” said Amritanshu Khaitan, MD of the company.
The impact of fall in rupee value against dollar had been quite substantial during the quarter. However, the company managed the negative impact by price rises. It said another price increase in certain select batteries accounting for nearly 40 per cent of battery sale value has been planned in the third quarter.
An erratic monsoon caused 12 per cent drop in flashlight sales and battery segment saw flat growth owing to “dumping” of poor quality products from Chaina and Vietnam, the company said.
The regulatory counter measure by the Director General of Antidumping & Allied Duties in initiating investigation on import of dominant dry cell battery category (AA – accounting for 70 per cent of market) could bring in positive impact on sales in future, the company said.
The Rs-5 Eveready stock ended the session at Rs. 274 on BSE, down 1.07 per cent.