MAM
Ad spends at Hindustan Unilever shrink marginally in Q1-2017
MUMBAI: Hindustan Unilver Ltd (HUL) shaved off Rs 13-odd crore in advertising spends in Q1-2017.
According to its latest quarter (30 June 2016) financials reported yesterday, the FMCG megacorp spent Rs 879.73 crore on advertising and promotions (A&P) as compared to Rs 892.73 crore in the previous year’s corresponding period. At this level, A&P is at 11 per cent of sales and is down 60 basis points, says the company.
Since April 2016, the company has reorganized its businesses under four main categories: home care, personal care, foods, and refreshments with a residual segment called “others” and has even reconstituted its management committee based on this structure.
It has also started reporting its results in compliance with the Ind AS (Indian accounting system) since Q1-2017.
HUL reported revenues of Rs 7987.4 crore as against Rs 7712.74 crore in Q1-2016. Chairman Harish Manwani said that the market conditions were challenging with growth slowing down in both volume and value terms. HUL, however, tracked ahead of the market with an improvement in its margins, he said. Both in value and volume terms, the company grew four per cent, even as operating margin swelled by 70 basis points. Operating profit in Q1-2017 stood at Rs 1542.60 crore (Q1-2016 Rs 1437.08 crore) while net profit was at Rs 1,173.90 crore in Q1-2017 (Rs 1069.17 crore in Q1-2016).
HUL’s re-categorisation of its product portfolio means that:
Home care includes: fabric wash, household care, water (Surf Excel, Rin, Active Wheel, SunLight, Comfort, Vim Domex, Cif and Unilever Pure).
Personal Care includes personal wash, skin care, hair care, oral care, deodrants, cosmetics (Lux, Dove, Pears, Rexona, Hamam, Lifebuoy, Fair & Lovely, Pond’s, Vaseline, Lakme, St Ives, Clinic Plus, Sunsilk, Tresemme, Indulekha, Closeup, Pepsodent, Ayush and Axe).
Refreshment includes: Tea, Coffee, ice-creams and frozen desserts (Taj Mahal, Red Label, 3 Roses, Taaza, Lipton, Bru, Kwality Walls, Magnum).
Foods includes ketchups, jams soups and instant noodles (Kissan, Knorr, Annapurna.)
The standout during the quarter was the home care segment, which saw sales expanding by seven per cent. It was followed by refreshment which grew by five per cent, food by four per cent and finally personal care which expanded by two per cent.
The home care segment, according to the company, is witnessing growth in the fabric wash category primarily from the premium products with Surf doing well, even as the Unilever Pure water devices are reporting traction in off take.
The refreshment segment reported a healthy growth in green and natural teas, even as ice cream and frozen desserts grew robustly in Q1-2017.
In the foods segment, Kissan Ketchups expanded healthily, even as Knorr soups and noodles reported robust growth, says the company.
The personal care segment witnessed a shrinkage in the personal wash category even as the skin care category grew with BB and CC creams doing well in the premium range.
The company also completed its acquisition of Indulekha – including the trademarks Indulekha and Vayodha – from Mosons group on 7 April 2016. The acquisition is costing HUL Rs 330 crore plus a deferred consideration of 10 per cent of domestic sales from the brands, payable annually, over five years.
HUL also said that it is going ahead with its intention to divest from any business which is not part of its core activities. This means it is offloading its 50 per cent equity stake in its 21 year old joint venture in Kimberly-Clarke Lever Private Ltd (KCCL) to its joint venture partner Kimberly-Clarke. The company produces and markets baby & child care and feminine care products under the brand Huggies and Kotex.
Manwani, in the Q1-2017 investor report, expressed concern on recent volume trends, saying that market growth is likely to continue to remain muted but he was optimistic about the medium term impact of the monsoon and seventh commission payout. “Even though input costs could rise, the company will continue to focus on volume driven growth with an improvement in margins,” he said.
Observers, however, opine that HUL, along with other FMCG MNCs, is under attack from a host of new home grown nimbler and hungry-for-growth competitors such as Patanjali Ayurveda. How it tackles their onslaught in the coming year will impact its performance.
MAM
Sukhpal Singh Ahluwalia deepens philanthropic push in India ahead of retirement
Entrepreneur backs gurdwara project and education for slum children as he expands charitable footprint in the country
LONDON: Sukhpal Singh Ahluwalia is ramping up his philanthropic footprint in India. On a recent visit to the country, the UK-based entrepreneur stepped up support for religious and educational causes, signalling a deeper long-term commitment as he prepares to spend more time in India ahead of retirement.
Ahluwalia reaffirmed support for key social initiatives, including a donation to Sri Guru Singh Sabha Gurdwara Kalgidhar Sahib in Gurugram and continued backing for a school in Faridabad for which he had earlier purchased the land.
The donation will fund the construction of the gurdwara, expected to be completed by mid-2028. Run largely by volunteers, the site will serve as a community hub and continue the Sikh tradition of langar — a community kitchen that provides free meals to all, regardless of faith.
Parallelly, the Faridabad school continues to deliver free, multi-year education to children living in extreme poverty in surrounding slums. The institution is part of the 12 educational facilities run by the Jagriti Sewa Trust, where Ahluwalia serves as chairman. The trust provides underprivileged students with free education as well as skill-development opportunities.
The latest support adds to Ahluwalia’s long record of charitable giving in India. In recent years, it included a £100,000 donation to the Kailash Satyarthi Children’s Foundation’s Justice for Every Child campaign, which provides legal and psychological support to vulnerable children and their families.
Through the Ahluwalia Foundation, the businessman regularly backs charities and non-profits in both India and the United Kingdom. The foundation focuses on projects linked to education, migration and the rights of children and women.
Ahluwalia’s philanthropic drive is rooted in personal history. Having fled to the UK as a refugee at the age of 13, he has long supported migrant-focused organisations, including the London-based Migration Museum, while also funding educational initiatives in India such as free schooling programmes in Hyderabad.
Now, as he gradually shifts more of his time to India, Ahluwalia’s charitable ambitions are expanding. Future plans include launching a classic car rally across the country to raise funds for causes he supports.
“Education and faith are very close to my heart,” Ahluwalia said. “For so many Indians, whether they live in India or abroad, a gurdwara or any place of worship is more than somewhere to practise faith. They are places of community and identity.”
Reflecting on the Faridabad visit, Ahluwalia added: “It was very special seeing the work of the Jagriti Sewa Trust firsthand. Knowing that disadvantaged children are receiving a free education — and that I had a small part to play in that — is deeply meaningful. Social status and economic background should not determine a person’s chances of success.”
