Hindustan Unilever’s strong margin expansion shows consumption is one bright spot in the Indian economy

The fast moving consumer goods company posted robust results and the stock has hit its 52-week high, buoyed by higher sales and lower advertising expenditure

Hindustan Unilever (HUL), a fast moving consumer goods (FMCG) company has posted strong margin expansion, indicating that consumers are flocking to stores and buying basic goods like soaps and detergents, which is a healthy sign for the Indian economy. India’s economy has been facing strong headwinds in the last few months, with high inflation, high fiscal deficit and a weak rupee. During the fiscal, the operating profit margin of HUL grew from 12.63% to 14.14%, helped by higher sales and lower advertisement expenditure. Sales grew 17% to Rs22,987 crore while ad spend declined by 4% to Rs2,696 crore during the year. Sales was boosted by the Home and Personal Care division, which saw its revenues rise by 19% for the period, while the foods division grew at 13%.

Almost all its divisions saw increased sales during the March 2012 quarter, which is a confirmation that consumption is broad-based and not confined to a particular product segment, and has begun to pick up. Soaps and detergents grew 28%, beverages grew 8%, which was helped by double-digit growth in coffee, personal products grew 17% led by strong volumes, packaged foods grew 10%—buoyed by Kissan and Kwality Walls.

The company has reported a rise in its net profit for the fiscal 2011-12 to Rs2,691 crore, up 17%. For the overall year, the domestic consumer business grew by 18% with 9% underlying volume growth. The stock has hit its all-time high of Rs433.8 on the National Stock Exchange (NSE). The strong fiscal results was helped by a strong March 2012 quarter, with a rise in net profit of 21%, to Rs687 crore. The quarter saw robust domestic consumer business grow at 20% with underlying volume growth of 10%.

The company had sold off its property, Gulitha, located on Worli Seaface in Mumbai, to the Piramals, for Rs452.5 crore. This one-acre property, which was used to house a training centre and private residences of senior executives of Unilever's Indian arm, has now been shifted to its Andheri headquarters.

According to the press release, other exceptional items for the March quarter also include profit on sale of properties Rs3,473 lakh, loss on sale of a stake in a subsidiary Rs68 lakh, provision for retirement benefits of Rs578 lakh arising out of change in actuarial assumptions, restructuring costs of Rs73 lakh, write back of provision against advance to a wholly owned subsidiary of Rs668 lakh, loss on capital reduction of a wholly-owned subsidiary of Rs613 lakh.

The board of directors recommended a final dividend of Rs4 per share, for the financial year ended 31st March, 2012. Together with the interim dividend of Rs3.50 per share, paid on 22 November 2011, the total dividend for the financial year ended 31 March 2012 works out to Rs7.50 per share of Re1 each. The earnings per share (EPS) stood at Rs10.53.



Anil Agashe

5 years ago

It just goes to show that advertisement expenditure does not necessarily lead to higher sales. I hope the company learns the lesson and reduces advertisement expenses further and focuses it better. This will improve profits and make shareholders happy. Marketing people have only one answer to all problems-more advertising which is not true.Actually good products should require less advertising! And look at the brads the co advertises the most the ones which are doing well!

Regulatory uncertainty to impact future of telecom industry: Bharti

Recent regulatory developments in telecom sector will have significant implications on the future of telephony and broadband says Sunil Mittal, the chief of Bharti Airtel

New Delhi: Recent regulatory developments, which have led to huge uncertainty, could have significant implications for the future of telecom sector and impact India's global competitiveness, telecom giant Bharti Airtel's Chairman Sunil Mittal said on Wednesday.

"The recent regulatory developments in India will have significant implications on the future of telephony and broadband, as well as India's global competitiveness," Mr Mittal said in a release announcing the company's results for FY12.

Meanwhile, Bharti Enterprises deputy group CEO and MD Akhil Gupta told reporters at a conference, "This was perhaps the most disturbed year (2011-12) on the regulatory front...The uncertainty not only continues but it is huge."

Mr Gupta said the Indian government should take pro-customer and pro-industry decisions with regard to the spectrum pricing.

The comments follow the Telecom Regulatory Authority of India (TRAI) recently issuing recommendations for the sale of spectrum, after the Supreme Court order that cancelled 122 licences for 2G (second-generation) telephony.

TRAI has suggested a base price of Rs3,622 crore for a megahertz (MHz) of pan-India spectrum, which is around 10 times higher than the price at which 2G licences bundled with 4.4Mhz spectrum were allocated in 2008 under the then Telecom Minister of India A Raja.

According to TRAI, a minimum of 5Mhz spectrum should be allotted, which means that pan-India airwaves in 1800MHz band will cost Rs18,000 crore.


SC allows Enrica Lexie, Italian marines and crew members to leave India

The apex court also directed the ship owner to execute a bond of Rs3 crore as a surety for the presence of crew members and the vessel whenever required by the Indian authorities

New Delhi: The Supreme Court on Wednesday ordered the release of Italian merchant navy ship Enrica Lexie which was seized after two of its marines had allegedly killed two Indian fishermen off Kerala coast in February this year, reports PTI.

The apex court also allowed four marines and six crew members on board it to leave Indian shores after the Italian government and the ship owner assured it that they will be available when required by Indian legal authorities.

A bench headed by Justice RM Lodha directed the ship owner to execute a bond of Rs3 crore before the registrar general of the Kerala High Court as a surety for the presence of crew members and the vessel whenever required by the Indian authorities.

The bench directed that the crew members should be made themselves available before the authorities within five weeks after receiving summons or notice.

It also directed that the vessel be brought before the legal authorities within seven weeks after receiving summons or notice.

The bench, however, made it clear that its order would not affect the right of the Kerala government to conduct the investigation and the prosecution of two marines accused of killing two fishermen.

The apex court had earlier sought the replies of the Centre and the Kerala government on Italian government's plea to quash the criminal cases against its two merchant navy personnel.

In its petition filed under Article 32, the Italian government had asserted that the Kerala Government has no locus standi to register any criminal case as the alleged offence ought to be treated under international law and covenants as India is a signatory to the UN charter.

On another petition by Enrica's owner Dolphin Tankers too, questioning the Kerala High Court's order staying the release of the vessel, the apex court had sought the replies of the Centre, the Kerala government and two relatives of the slain fishermen gunned down by two marines on 15th February.

A division bench of the Kerala High Court had earlier, while setting aside a single judge's order, stayed the release of the vessel detained off Kochi port since February.

The fishermen, allegedly killed by Italian marines in firing by them at their fishing boat off off Kollam coast were identified as Valentine Jalstine and Ajesh Binki.

Marines Latore Massimiliano and Salvatore Gironi have been arrested and charged with murder and lodged in the central prison in Thiruvananthapuram under judicial remand.



Guptan Veemboor

5 years ago

Why the Supreme Court has made the stipulation that the ship Enrica Lexie should be brought to the presence of any authorised legal authorities if asked to? Earlier another division bench of SC has told that the ship is in no way concerned with the crime and why it is being detained? Then why this stipulation? If the ship was chartered by the marines to come to the Indian waters or nearby and kill the fishermen then ship is the vehicle used for the crime. Here this was not a premeditated murder and the ship was not used for that exclusively? And not even the ship did smash the boat and sink it as it had happened in the case of MV Prabhu Daya. In fact this stipulation should have been made before releasing Prabhu Daya as it was the instrument used for the crime. So to me to call the ship at any time during the trial is quite illogical.

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