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Lever net up 7% at Rs 443 cr

Mumbai, Oct. 30: Hindustan Lever Ltd (HLL) has reported a marginal rise of 7.3 per cent in net profit at Rs 443.22 crore for the third quarter ended September 2003 compared with Rs 413.29 crore in the same period previous year.

The net sales for the reporting quarter were up at Rs 2,467.49 crore against Rs 2,367.46 crore in the third quarter of 2002.

Company officials attributed the marginal growth in profit to the high interest outgoing paid to bonus debenture holders, a scheme pioneered by HLL to reward its shareholders last year. It had to incur an outgo of Rs 29.96 crore as interest on bonus debentures, taking the overall interest costs to Rs 31.3 crore.

The Indian subsidiary of Anglo-Dutch Unilever plc, which had faced slow consumer spending due to poor monsoons in the past few years as well as low-cost competition, expects a turnaround in fortunes. An upbeat economy after one of the best monsoons in a decade may fuel an upsurge in rural consumption, comprising over half of the company’s sales.

HLL chairman M. S. Banga said, “Good monsoons and the resultant feel-good factor augurs well for growth in the coming months, particularly in rural markets.”

“The power brand strategy is accelerating the company’s growth even in the face of low-price competition. The power brands registered a sales growth of 9.8 per cent,” he added.

The beverages business also recorded a 9 per cent growth. The foods segment recorded a 20 per cent growth. Brook Bond brand grew 22 per cent on the back of a successful re-launch. Coffee grew by 16.7 per cent, driven by a 35 per cent growth in Bru, he added.

“An accelerating growth across categories is being achieved through innovations, marketplace activity and superior advertising coupled with judicious pricing,” Banga said.

Head of research of K. R. Choksey Jigar Shah said the results were in line with expectations. “The full effect of the booming economy will be seen in HLL's sales when its beverages, exports, foods and ice-cream segment will drive its topline,” he added.

“HLL's growth will not be fuelled by the traditional segment of personal products, soaps and detergents, which comprise over 65 per cent of its sales, Shah said.

HLL's focus on 30 power brands to drive revenues and profits have paid off so far.

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