February 10, 2012

As over production in industry hurt realisations in its poultry and poultry products business as well as rise in input costs, Venky's India's third quarter net profit plunged 81% on-year to INR2.93 crore (US$593,000).

The Pune-based processed chicken maker reported net sales of INR250.28 crore (US$50.6 million), up 19% from a year ago.

"Our profits have been affected mainly by the poultry business. Realisations in poultry business were lower during the quarter. Also our interest costs have increased and raw material costs have also gone up," AG Bauskar, CFO, told moneycontrol.com.

Venky's tumbled 10% post the disappointing results. At 13:30 hrs, the stock was down 8.6% at INR432.70 (US$8.75) on NSE. Bauskar said over-production in the market had led to 10-15% lower realisations for poultry and poultry products.

In the poultry & poultry products business, profit before interest and tax (PBIT) halved to INR8.76 crore (US$1.8 million). The segment revenue was up 24% from a year ago to INR182.9 crore (US$36.9 million).

The company is seeing some pickup in realisations in the current (January-March) quarter, he said. Realisations apart, Venky's cost of raw materials went up near 25% from a year ago to INR158.84 crore (US$32.1 million) in the third quarter.

Its interest costs more than tripled to INR3.37 crore (US$681,412) in the quarter. Interest costs have increased as interest rates have as such gone up over the last one year and its quantum of borrowing also rose, Bauskar said.

Venky's other businesses too saw profits decline. Its PBIT in animal health products was down 15% on-year to INR3.92 crore (US$791,996), while revenue rose 3% to INR23.66 crore (US$4.8 million).

PBIT in Venky's oilseed business dropped 11% to INR3.7 crore (US$747,405). Oilseed revenue was up 9% to INR62.02 crore (US$12.5 million).