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MUMBAI, April 16

FMCG major Hindustan Lever Ltd (HLL) has reported an 8.22 per cent rise in its profit after tax for the first quarter ended March 31, 2003, to Rs 382.92 crore as against Rs 353.82 crore in the previous corresponding period.

Including exceptional items net profit for the period slipped, there having been Rs 74.72 crore worth of exceptional items in the company's 2002 first quarter and none this time around.

On the other hand, net sales increased by 1.24 per cent to Rs 2,367.50 crore (Rs 2,338.46 crore), a point noted by HLL's top brass.

The company's home and personal care (HPC) sales grew by 5.6 per cent while that of its continuing businesses grew by 2.9 per cent.

"It is encouraging to see overall volumes up by 11 per cent led by a 41 per cent growth in hair care, 27 per cent in skin care, 16 per cent in oral care and 5 per cent in laundry products. This took overall sales growth in power brands to eight per cent, making it the fourth consecutive quarter of growth,'' Mr M.S. Banga, Chairman, HLL, said in a statement.

On business ahead, HLL officials cite the forecast of a good monsoon but caution of prevalent confusion over VAT. "There is reason to believe markets have not shown significant signs of improvement. The FMCG sector was also impacted by uncertainty surrounding VAT towards end-March,'' Mr D. Sundaram, Director (Finance), HLL, said.

Though its brands, `Taaza' and `Three Roses' returned double digit growth, HLL's beverages business continues to be hit by poor commodity prices and competition from loose tea.

Asked if solutions found for similar problems in HPC could be used in the tea segment, Mr Sundaram said: "In packet tea, you compete with the commodity, while in HPC you don't. HPC value addition is a different profile altogether. When the commodity cycle gets better, low cost operators will find it difficult and perhaps move on to something else.''

In processed foods, Annapurna grew by 26 per cent leading to an 18 per cent growth in HLL's popular foods category. "We will continue to do innovative products,'' he said.

HLL's ice-cream foray had focussed on six major cities, onward distribution to mini-metros vested with wholesalers.

The year-on-year loss therein was halved in the first quarter and the company says it will offer products for a wider spectrum of households.

On the larger picture behind HLL's ice-cream strategy, Mr Sundaram said its strength in all businesses remained the offering of value propositions across categories but it had learnt to shy off the simply generic.

"Our products today are not replicable,'' he said.

Helped by the day's monsoon forecast, its scrip gained by 4.42 per cent to close at Rs 147.75 on the BSE.

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