Lever Earmarks Rs 170-Cr Capex For Three Years
Hindustan Lever Ltd has earmarked Rs 170 crore for capital expenditure in the next three years, chairman K B Dadiseth announced at the company's 64th annual general meeting in Mumbai yesterday.
In the first AGM after the merger of Brooke Bond Lipton India Ltd, shareholders approved the investment of Rs 7.5 crore in its 50:50 joint venture with Dutch foods major, Gist Brocades International BV. The domestic foods company will make fresh yeast and instant dry yeast for the domestic market. Lever will pick up 75 lakh shares at Rs 10 per share in the joint venture called Lever Gist Brocades Pvt Ltd. The Dutch company will hold the rest.
In his AGM as chairman of Hindustan Lever, Dadiseth answered a wide range of queries regarding the company's operations, future plans, bonus, the recently solved preferential allotment tangle, recent changes in excise laws, and the possibility of merger of Pond's.
As south Mumbai's Nehru Centre overflowed with both Lever and erstwhile Brooke Bond shareholders, Dadiseth admitted that Lever will be hit by the change in excise payable from ex-factory price to 50 per cent of the value of MRP. This is applicable only to fast-moving consumer goods companies.
"The budget benefits will be neutralised by this measure. We are working on plans to minimise the impact," he told the gathering. he also announced that the company has shut down certain purely export-oriented operations like aquaculture, cat fish culture and textile exports as they were not profitable enough. Lever is also rationalising operations and has taken the first step by closing down Tomco's Mumbai plant. The plant has been idle even before the Lever takeover.
Like his predecessor, S M Datta, Dadiseth was non-comittal on a bonus despite a chorus of demand from shareholders. He dismissed it as "nothing more than a capitalisation of reserves."
He affirmed that with the conversion of optionally fully convertible debentures the company held in Lakme Brands, it would become joint owner of the company with Lakme-Lever.
On persistent queries as to why HLL had so many subsidiaries and why they were not being merged with HLL, Dadiseth said subsidiaries have specific roles as joint venture vehicles, as export companies or as trust companies for managing employees provident funds. He added that if they could be easily merged, the option would certainly be considered.
Lever's future thrust he said would be on ice-creams and culinary business. By 2010, ice cream and household products demand will grow three fold, that for culinary and hair care products six fold and demand for skin care products will grow by 8 per cent.
Regarding the Pond's merger, he said there was an overlap in exports and personal care products and even in the category of exports and personal care products. Dadiseth said " If the merger is in interests of the shareholders, we will certainly come back to you and do whatever is necessary."
Shareholders force Dadiseth to apologise
Our Corporate Bureau MUMBAI
A section of Lever shareholders disrupted proceedings at the AGM, marring chairman Dadiseth's first appearance at an AGM as chairman and forcing him to apologise for the inconvenience caused.
Shouting and walking up to the dais, they complained of mistreatment and inadequate arrangements made by company officials at the venue at Nehru Centre, Mumbai.
Before the meeting started at 3 p m, there was a long queue of shareholders waiting to get in as both Lever and erstwhile Brooke Bond shareholders jostled with each other to gain entry.
Between eight to ten shareholders gathered in front of the dais held up proceedings and did not allow the chairman, KB Dadiseth to speak for almost 15 minutes.
Shareholders said that HLL officials should have been aware that after the Brooke Bond merger, several hundred shareholders would attend the meeting. They also stressed the point that shareholders are the real owners of the company and should not be mistreated.