The Hindu : Modest rise in HLL's net profit

Online edition of India's National Newspaper
Wednesday, Feb 18, 2004

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Business

Modest rise in HLL's net profit

By Our Staff Correspondent

MUMBAI, FEB. 17. Hindustan Lever today proudly claimed that the six brands under its `Power Brands' umbrella joined the $100 million club. These are: Brooke Bond, Wheel, Lux, Lifebuoy, Fair & Lovely and Rin and have achieved more than $100 million in terms of sales.

Addressing the media here today, M. S. Banga, Chairman, HLL, said, "Our strategy of focussing on Power brands has put us firmly on the path of sustainable growth. In home and personal care (HPC), power brand growth has doubled from 3.2 per cent in 2002 to 6.5 per cent in 2003. In foods, power brands have grown 9 per cent after declining in 2002. The prospects of higher disposable income, aided by good economic growth augurs well and we are determined to relentlessly pursue growth in the face of competitive challenges".

The economic climate was likely to remain good and rural India, which had an `exceptionally good' monsoon and kharif crop last year, was likely to have an equally good rabi crop with the winter rains having been good, he added. "Demand follows rural incomes with some time lag," he said.

HLL announced a marginally higher net profit of Rs. 1,771.79 crores (Rs. 1,769.74 crores) during the year ended December 31, 2003 on net sales of Rs. 10,138.35 crores (Rs. 9,954.85 crores). The lower profit is essentially due to interest payable on bonus debentures issued to shareholders. The company has announced a final dividend of 3 per equity share of Re. 1 each. The final dividend along with the interim dividend declared in July 2003 aggregates Rs. 5.5 per share. The directors have also fixed June 1 as the record date for ascertaining the names of debentureholders who would be entitled to the payment of 9 per cent interest on secured fully paid non-convertible bonus debentures allotted on July 2, 2003.

Of sales, domestic fast moving consumer goods (FMCG), home and personal care segment contributed Rs. 6,734.08 crores (Rs. 6,436.80 crores) and foods (including ice cream) Rs. 1,692.81 crores (Rs. 1,695.30 crores). Exports were lower at Rs. 1,246.30 crores (Rs. 1,221.15 crores).

"FMCG exports, which are sourced to Unilever, grew 14.5 per cent during the year but overall, exports were affected by castor oil prices which were high in 2002 but tumbled in 2003. Also, Surimi (fish) exports to Japan were affected by currency change and trade stock adjustments. "We are carefully monitoring the situation on oils front as they are high now," said Mr. Banga.

Interest charges were Rs. 66.76 crores (Rs. 9.18 crores), depreciation Rs. 124.79 crores (Rs. 134.10 crores), current tax Rs. 427.36 crores (Rs. 458.94 crores) and deferred tax Rs. 60.94 crores (Rs. 20.91 crores).

For the fourth quarter ended December 2003, the company reported a net profit of Rs. 494.72 crores (Rs. 480.57 crores) on net sales of Rs. 2,583.48 crores (Rs. 2,634.50 crores).

Elaborating on the power brands, Mr. Banga said, "They cover all appeal segments we operate in and also cover all price points. The power brands list is not frozen and the HLL Network now joins the list of power brands. HLL Network has 2.5 lakh consultants covering a full range of products".

HLL's Project Shakti has had a successful experiment in Andhra Pradesh and is now a viable model. "We have an organisation in place in Madhya Pradesh, Gujarat, and Uttar Pradesh covering 15,000 villages and slowly during the current calendar across the country. It is a mega initiative for us over 2-3 years and we will contact 100 million people," said the HLL Chairman.

HLL has planned several innovations in foods. "We will see some innovations this year in processed foods and some more next year. This will be our next engine of growth. We have great ambitions for Knorr, Annapurna and Kissan. We are pushing the confectionery and Ayurvedic products range. We will enter the packaged water segment this year and will be test marketing the product very soon".

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