Indian retailer Pantaloon Retail has seen bottom-line gains trail sales growth during its second quarter.

Revenues rose 31.2% in the second quarter of fiscal 2011.

However, Pantaloon said that post-tax profits rose just 5.5% to INR4.22bn (US$90m), as rising costs, inflation and pricing actions eroded margins.

The company revealed that margins fell 147 basis points, dropping to 8.6%.

Nevertheless, Pantaloon remained upbeat on its ability to manage margins. “Inflation will continue to be a permanent reality and we are developing strategies to benefit from it,” the group insisted.

Looking ahead, Pantaloon said that it would focus on “upgrading customers at higher price points” as well as balance sheet improvements through debt reduction measures.

For Pantaloon’s full financial release, click here.