Rediff Logo Business IDBI Find/Feedback/Site Index
February 15, 1999


HLL's Q4 net up 54 pc to Rs 2.29 billion; no bonus shares, future forays into branded fruits, veg products, says Dadiseth

Email this report to a friend

The financial results of Hindustan Lever Limited for the fourth quarter ended December 31, 1998, have been announced.

The turnover increased by 16.4 per cent to Rs 23.43 billion and the net profit increased by 54.8 per cent to Rs 2.29 billion.

The gross turnover of HLL for the year ended December 31, 1998, has touched Rs 102.15 billion, up 22.4 per cent over Rs 83.43 billion in 1997.

Profit before tax has gone up by 33 per cent while net profit increased by 43.8 per cent to Rs 8.05 billion. The total dividend announced by the company is Rs 22 per share.

The HLL board met in Bombay today and proposed a final dividend of Rs 12.40 per share, taking the total dividend to Rs 22.

Export turnover increased by 33 per cent to Rs 1.66 billion during the year. Earning per share on annualised basis for the quarter was Rs 41.79, representing an increase of 40.4 per cent over the same quarter last year.

HLL chairman K B Dadiseth has expressed his cautious optimism over the prospects of increasing demand of personal products and consumer goods from the rural areas following the expected agricultural growth rate of 4 per cent in the current year.

Describing the year 1998 as a difficult year following the slowdown in economy and negative growth rate in agriculture, Dadiseth said that with an expected swing of six per cent in rural growth (which includes two per cent fall in 1998), there would be an inflow of Rs 120 billion from rural income into the economy.

"We are positioning ourselves to face this emerging demand. The rural market which is a key volume driver, decelerated progresseively during 1998, reflecting the decline in the overall agricultural output," he said.

Although the statistics suggest that 1999 would be a better year, Dadiseth said that the year would be a difficult one because the lag effects of the rural decline were still affecting offtake and the performance of the corporates would be impacted by the adverse trading conditions.

He also criticised the government's decision to impose eight per cent excise duty on packaged tea and said that this has created policy discrimination on the same product particularly when the country is focusing more on food processing industry.

Dadiseth said HLL did not think it appropriate to announce any bonus shares in spite of strong expectations from the market. "I do not find any reason to give bonus shares when we can go for splitting the shares and give higher returns to the shareholders," observed Dadiseth.

The company recorded an increase of 30.4 per cent in earnings per share in 1998 and the return on net worth from 46 per cent to 48.9 per cent during the year. The company posted a turnover (net of excise) of Rs 94.81 billion, a growth of 21.3 per cent and a net profit of Rs 8.05 billion, an increase of 43.8 per cent.

While the branded packet tea sales were adversely affected by the differential excise duty between packaged and loose tea, Dadiseth said that the company would continue to focus on volume growth and market development through consumer relevant innovations and promotions.

Strong growth was recorded in personal products, culinary products, branded staple foods and exports, while soaps and detergents grew moderately but ahead of the market in spite of the difficult market conditions.

HLL launched 41 new products and relaunched another 41 product innovations during 1998 and in the area of distribution, initiatives have been mounted to double the rural reach through village-based stockists by the year 2000.

The company may also go in for branding fruits and vegetable products in the next 10 to 15 years in order to sustain growth. "We will be driven by innovations not only in production but also in processing, packaging and marketing," he said.

Meanwhile, media reports quoted him as saying that the company will be decentralised into 50 to 60 independent units based across the country, with smaller executives getting bigger responsibilities to make them profitable by focusing on niche segments, and to cut costs.

HLL which contributed five per cent in the worldwide sales of Unilever, has started a major rural home-to-home operation to introduce personal products to non-users in 22 million households. Ten new factories have been set up, among them two each for packet tea and personal products and one each for soaps and detegents.

Desspite the ongoing recession, the company posted a growth rate of 30 per cent in export business, particularly in branded products. It continued to a leader in export of tea, coffee, digital thermometers, leather and agro products.

On chemicals business, Dadiseth said that the company was still looking for one or more matching partners to form joint ventures with international know-how and technology. Unlike its parent company Unilever, it has no plan to do away with its chemical business in India which recorded substantial growth during the year.

The company continues to review its existing portfolio of businesses and decided to divest the dairy and animal feeds business subject to commercially attractive terms to provide greater focus to categories where it has strength and competence. "We would like to park our business in the best interest of stakeholder including employees," Dadiseth said.

In research and development, the company's research centre provided invaluable support to the HLL's various businesses with technically sustainable and clearly perceived benefits to meet Indian consumer needs and habits. Besides research in nickel catalysts, aroma chemicals, biopolymers and oleo-chemicals, excellent progress was made in developing technologies for adhesives.


Business news

Tell us what you think of this report