The impact of the second wave will not be as bad as last year: HUL CMD Sanjeev Mehta

Packaged consumer goods maker Hindustan Unilever Limited (HUL) said the second wave of COVID-19 pandemic would not harm the company and the overall FMCG market as it was a year ago thanks to rural growth rates and better preparedness. Share of companies.

“HUL’s Chairman and Managing Director Sanjeev Mehta said in a press conference after the announcement,” Rural development is still going on and in the first two weeks of April we have seen the same pace as seen in the March quarter. Results for the quarter ended March. In the fourth quarter of fiscal year 2011, HUL posted a year earlier. Consolidated net profit growth of a percent.
Rural development was strong in the last financial year as initially the spread of the virus was mostly in big cities. Despite farmer opposition, India is eyeing a record production of 108 million tonnes of rabi wheat, Reuters reported on Thursday. Nevertheless, there are some concerns that the epidemic spreading in rural India may derail development.

According to Mehta, while there has been some turmoil in the market in the last two weeks, it is not close to the disintegration of the FMCG industry last year as the government announced a nationwide lockout to investigate the spread of the epidemic.

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“While there may be some impact on demand due to mobility issues, our factories are running and the supply chain is still ongoing. At this stage, I firmly believe that this is not as bad as it was in the June quarter of last year.
FMCG companies were relieved of supply-chain challenges last year due to migration of migrant populations and delays in regulatory approvals to operate their manufacturing units. Consumers lost their hands on hoard products after the sudden lockdown was announced.

According to market research firm Nielsen, FMCG reported a 19 percent contraction in the April-June 2020 quarter. However, as the situation eventually improves, this segment expects to grow 0.9 percent and 7 percent over the next two quarters.

Strong earnings

The HUL continued to grow in the January-March quarter as per performance. During this period it recorded a 16 percent volume increase from a year earlier.

The domestic consumer business grew by 21 percent year-over-year (excluding the impact of the merger of GSK Consumer Healthcare and the acquisition of ‘VWash’).

As a result, HUL reported a revenue growth of 35 percent to Rs 12,433 crore. Consolidated net profit increased to Rs 2190 crore from 44.8 percent a year ago.

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Development was broad based. Abneesh Roy, executive vice president of Edelweiss Securities, Institutional Equities, said all major verticals – health, hygiene and nutrition – grew in double digits for the third consecutive quarter, while discretionary and out-of-home categories improved.

Mehta’s claim is credited that 80 per cent of HUL’s products are in the health, hygiene and nutrition categories. These are listed as ‘required’ by most states and are therefore expected to be minimally affected by lockdown.

Ankur Bisen, Senior Vice President, Retail and Consumer Products, Technopak, said, “HUL’s categories represent need-based consumption and have not been affected by the lockdown as states have not imposed any restrictions on the movement or sale of these categories is.” .

He further stated that it is expected that these products will not face disruption due to the lockdown.

Also read : COVID-19 second wave | SEBI gives listed companies more time to report the results.

Future preparedness

Several state governments including Delhi, Maharashtra, Karnataka and Chhattisgarh have implemented lockdown to prevent the rapid spread of Kovid-19 epidemic. As the restrictions are not nationwide and localized in nature, it is challenging for many logistics companies to deliver goods. On the other hand, companies are also facing labor and manpower shortages due to their employees falling ill.

Mehta said that it is not a matter of concern at the moment.
“We’ve built capacity for the long term and even if demand fluctuates, we’re going to pull it back,” he said.

In a presentation to investors, the company stated that its capacity is now 1.3 times higher than pre-COVID levels and that it has adopted various models such as giving liquidity support to distributors to ensure continuity of supply to distributors.

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According to Mehta, the company’s efforts such as Project Shakti, and its B2B app Shikhar will also help them move forward, if any, in difficult times. As part of its Shakti project, HUL claims to have created a rural distribution network of 136,000 women micro-entrepreneurs.

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