Patanjali Foods profit slumps over 60%

India’s Patanjali Foods on Friday reported a 63.6% drop in first-quarter profit as high costs dented margins.

The Ruchi Gold oil maker’s net profit after tax fell to 877.5 million rupees ($10.60 million) for the quarter ended June 30, from 2.41 billion rupees a year earlier.

Total revenue from operations increased 7.7% to 77.67 billion rupees, while total expenses rose 9.3% due to higher purchases of stock-in-trade and employee costs.

Demand for consumer goods has been under pressure in rural India, with higher prices of everyday items from milk to wheat flour forcing people to cut back spending on both other essentials and discretionary purchases.

Revenue from Patanjali’s packaged foods business that sells a range of products, including honey and juices, rose more than three-fold, while its revenue in the edible oils segment fell nearly 13%.

The company also said the edible oil industry was impacted by significantly lower prices than the previous quarter, which left the industry with high price inventory in hand, as well as stock in transit.

Government intervention for lowering prices in spite of holding high-priced inventory impacted profitability negatively during the quarter, the company added.

Patanjali’s shares closed nearly 2.2% lower ahead of the results. The stock rose nearly 23% in the April-June quarter.

Other consumer goods companies have reported mixed results for the first quarter, with KRBL posting an 18.90% rise in its profit, while Venky’s (India) profit plunged more than 60%.

($1 = 82.7910 Indian rupees)