Hindustan Lever Ltd (HLL) has revealed the squeeze on its margins that was expected after the recent price war with Procter and Gamble in its bread-and-butter detergents business.For the quarter ended March 2004, the company has posted a drastic fall in its profit after tax at Rs 303 crore, which is a decline of 21 per cent over last year. Its operating profits have tumbled by 13.7 per cent to Rs 359 crore. Net profit after providing for exceptional items was Rs 295 crore.’ñIts sales, however, went up marginally by three per cent to Rs 2,353.34 crore for the March 2004 quarter. Home & personal care division has seen volume growth of seven per cent, but value growth fell by 3.5 per cent to 1,572.81 crore, due to price cuts. Its gross profit was down from Rs 530 crore recorded in the same period of last fiscal to Rs 399.47 crore.A price war with rival P&G India Ltd forced it to cut prices of its key detergent, Surf, last month. Shortly after, it also cut the price of Clinic Plus shampoo and introduced a promotional offer on Sunsilk shampoo to pre-empt P&G’s move to lower the price of its Pantene shampoo. In the foods division, power brands grew by eight per cent, while the overall foods growth was 1.4 per cent to Rs 409.94 crore.Chairman MS Banga said HLL’s business is now totally focussed and the company will not hesitate to make financial commitments to defend and strengthen their market position. ‘‘The price cutting steps taken by the competition will not go on for ever as this is unviable. We have to see for how long they continue to cut price,’’ said Banga.Director Finance D. Sundaram said the topline growth has been affected in toothpaste and atta, both in volume and value terms. However, vice-chairman, M.K. Sharma added in the processed foods category products like squash, jam, ketchup and soupy snacks will continue to drive growth.
