HLL chairman Harish Manwani (third from left), finance director D. Sundaram (second from left), vice-chairman M.K. Sharma (extreme right), S. Ravidranath (extreme left), in charge of the foods business, and Arun Adhikari, head of the HPC segment, in Mumbai on Saturday. Picture by Hemant Mishra

Mumbai, July 30: Hindustan Lever has posted a 17 per cent rise in second-quarter profit at Rs 300.47 crore compared with Rs 256.40 crore a year ago.

Backed by improved sales, the company beat analysts’ projections by a wide margin and said it was committed to retain its winning edge in the market place.

Sales during the quarter attained a double-digit growth of 10.3 per cent at Rs 2,836.36 crore.

“The FMCG segment is reviving and our growth is now ahead of the market,” said chairman Harish Manwani. The progress was broad-based across categories, led by a robust growth in the laundry and hair care segments.

The company has declared an interim dividend of Rs 2.50 per share of Re 1 each.

“We have not fully neutralised the impact of high input prices. However, we have managed to control the rise in raw material costs due to high crude rates through cost management and selective price hikes,” said finance director D. Sundaram.

“Rising input prices driven by crude rates continue to be a challenge despite aggressive cost reduction plans,” he added.

HLL’s net profit was on a decline for five consecutive quarters as a result of high raw material costs, sluggish sales and a gruelling price war unleashed by competition in the detergents and shampoo segment. The company has managed to strike back by re-launching some of its products. It also benefited from tax incentives by re-locating its plants to states offering tax sops.

HLL shares have been on an upswing along with other FMCG stocks with its shares rising 1.6 per cent to Rs 166.95 on Friday.

The only sector that stayed behind was the foods business. “The segment is always a laggard in developing countries,” Manwani said.

Lever’s second-quarter revenues from the home and personal care segment rose 12 per cent. Revenue from foods ? a renewed area of focus ? rose 11 per cent. The impressive performance comes despite increased expenditure in advertising and promotion costs, which rose 12 per cent. Cost of raw materials rose 16 per cent during the year.

“We see an improvement in the market, particularly in the urban areas. The cumulative investment by the industry is also helping in the revival,” Sundaram said.

“Our investments in brand building, advertising and promotions is reflected in the numbers and our increased market share,” he added.

Lever should benefit from the value-added tax regime introduced in April as it provides a level-playing field for big consumer goods makers by forcing smaller rivals into the tax net. The crucial June-September monsoon rains are expected to be normal this year, boosting spending in villages, home to nearly 750 million people and the focus of Lever's recent efforts to increase market share.