Inventory is valued in different methods like FIFO, LIFO, weighted average etc.
So suppose Hawkins had 500 cookers(say) in June left with it as inventory, 500 more were added in last quarter and 500 were sold. Now the change in inventory will signify the increase/decrease of inventory in hand.
So in FIFO (First in First Out), the cost of material for first 500 will be considered, and higher RM cost of later 500 will increase your inventory cost. Basically the COGS is mentioned as COGS = (Beginning Inventory) + (Purchases of Inventory) - (Ending Inventory) which is Expenses a) b) and c) combined in case of Hawkins.
Hence, a positive figure on "Changes in Inventories of FG,WIP,SIT" will indicate destocking of earlier stock as Vipul mentioned. Thus the +8.8Cr in Sep '13 quarter signifies destocking.
This expense line item "Changes in Inventories of FG,WIP,SIT" is a negative figure meaning stocking up which reduces the COGS as seen in Hawkins June quarter.
As mentioned in the AGM speech of 2013, there was price hike in April hence a lot of distributors built up inventory by late March, hence the June quarter had an inventory build up and pooreroff take, which was cleared off in September quarter as pointed by you.
Looking at the half yearly numbers, clearly shows this as there is hardly any sales growth 206 Cr (H1FY14) vs 199 Cr(H1FY13) or a sales growth of 3.6% only. What however has changed is that overall expenses has reduced from 87% of sales to 85% sales, this additional 2% flowing to the bottom line pulling NPM up by 2% from 7% to 9%.
Thus a mere 3.6% jump in half yearly sales has resulted in a half-yearly profit jump of 21% - classic operating leverage at play.
What's promising is the good offtake of earlier inventory and coupled with higher push sales on multiple channels (as compared to earlier pull sales on limited channels) makes us hope again for the next two quarters
Your views please.