The note ban decision by the government which led to lower spending by the consumers has badly affected the 3rd quarter sales of HUL (Hindusthan Unilever). When it comes to the domestic consumer business, HUL reported a flat growth of Rs 8,307 crore where the volumes reduced by four percent.
Operation sales were down to Rs 8,127 crore even as net profit grew to Rs 1,308 crore by seven percent. CEO and MD of HUL, Sanjiv Mehta stated in a media conference that the October quarter fared better as compared to the July quarter and the company is expecting the trend to build up till it takes a liquidity crisis hit in November. He also stated that they are expecting to see the pipeline correcting by first quarter of next fiscal.
The liquidity crunch led to lower consumer purchase and reduced trade pipelines. The adverse market conditions impacted performance across different categories. Considering the fact that, skin cleansing which is an integral part of the personal care category of HUL, is firmly established in the rural areas where impact was also felt in wholesale distribution. Sharp rise in product prices led to three percent decline in segmental revenues.
The uncertainty of the situation led HUL to rearrange its supply chain as well as enhance its distribution coverage and double credit to assist its channel partners. HUL also stated that though the conditions were adverse, it sustained its innovation initiatives and brand-building spends.