Cost Cuts, Better Supplies Prop Up Hll Bottomline

Fast-moving consumer major Hindustan Lever (HLL) has managed a double-digit growth in net profit for eight consecutive quarters despite a single-digit growth in sales income.

A conscious effort to reduce costs and better the supply chain management helped to improve the bottomline performance.

It was during the quarter ended June 1999, that the company had last reported a double-digit growth of 10.8 per cent in sales income with a net profit growth of 24.9 per cent.

Meanwhile for the second quarter (Q2) ended June 2001, HLL reported a second lowest net profit growth of 20.9 per cent to Rs 346.7 crore, backed by a third-lowest sales income growth of 1.79 per cent to Rs 2,913.3 crore.

For the quarter ended September 2000, HLL had reported a lowest-ever sales income and net profit growth of 0.42 per cent and 16.12 per cent.

Total expenses was restricted with a increase in inventories, lower salary expenses and a marginal rise in raw material for the quarter ended June 2001.

Total expenses increased by 0.18 per cent to Rs 2,539 crore during Q2. Interestingly, salary cost that accounts for 5 per cent of sales income was reduced by 14 per cent, while raw material costs, that account for 35 per cent to sales income, increased by a marginal 2.9 per cent in Q2.

The current quarter performance is though not strictly comparable, the adjusted previous year's quarter numbers see the company reporting a sales income growth of 2.2 percent and a 21.5 per cent rise in net profit.