Hindustan Lever in major e-commerce foray (Analyst meet)
Hindustan Lever Limited has announced its results for the year ended 31st December 1999. The company has posted a 7% rise in net sales even as profit after tax (before exceptional items) jumped 27.7%. The rise can be attributed to slightly better operating margins, higher other income and a decline in interest costs.
Profit before Tax
Profit after Tax/(Loss)*
Net profit margin (%)
* after exceptional items
Hindustan Lever Limited (HLL) is the largest consumer products company in India. HLL's business portfolio comprises soaps, detergents, personal products, food products and frozen desserts.
Hindustan Lever, among other measures announced a thrust into e-commerce that would see it emerge as the largest of its kind in the country. HLL has however conservatively stated that due to infrastructural bottlenecks the e-commerce foray will take upto 36 months to roll out. It has however mentioned that the project has been alive for over 18 months. The e-commerce foray is expected to involve B2B and B2C transactions.
Regarding the performance of the company's businesses the table below bares it all:
Market share (%)
Oral – toothpastes
Oral – tooth brush
One thing however needs to be mentioned. The company suffered a sharp erosion of 16% in tea sales mainly due to the adverse affects of the imposition of a discriminatory 8% excise duty. The company has stated that since the withdrawal there has been a recovery and volumes actually rose during the second half of the year.
The company has stated that the acquisition of Modern Foods has provided it with a channel for distributing fresh foods. HLL plans to aggressively tap this network to launch its various food products like readymade 'chapatis' (currently being test marketed).
Hindustan Lever has stated that it is targeting to double its turnover and profits every four years. This marks a climb down from the earlier target of doubling the profits every three years and turnover every four.
The stock has been rated as a 'BUY' by analysts because of its high management quality, and strong brands. Moreover, the company's successful marketing thrust into the rural markets, which has given it access to a largely untapped market of approximately 650 mn people, has also lent support to this rating.
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