Shareholders at Hindustan Unilever grilled the management on its handling of the pandemic
Sanjiv Mehta, Chairman, Hindustan Unilever (HUL)
A decade ago, shareholders of Hindustan Unilever (HUL) were worried about the company getting back on the growth path. Ten years of solid growth later, they are concerned about the sustainability of that growth path.
At a feisty annual general meeting (AGM) that lasted a little over four hours, shareholders posed questions on the competition from homegrown Patanjali, the recent rebranding of Fair & Lovely and the impact of the Covid-19 crisis on the operations of the company. Just like previous years, there were those who praised the management with poetry and singled out individual directors for praise. The environment and HUL’s use of packaging material were also cause for concern, as was their imports from China.
The meeting was presided by chairman Sanjiv Mehta, with directors and the management committee joining via videoconferencing.
HUL’s annual meeting is keenly followed by analysts and shareholders alike, for the granularity provided in the answers; and this year’s didn’t disappoint. Mehta spent significant time explaining to shareholders how Covid-19 had impacted operations. About 75 percent of the company’s portfolio comes under essential items. Soaps, shampoo and detergent saw a quick restart of operations, while the beauty and ice cream categories were adversely impacted. Against an anticipated growth of 3 percent in sales in the quarter-ended March 2020, the company saw a fall of 9 percent.
While Mehta alluded to the fact that the June quarter has been better, he refused to give numbers. “Demand for non-essentials has picked up only in June,” he said, while pointing out that the cost of operations on account of enhanced safety standards has increased. Mehta pointed to what economists term as the ‘lipstick effect’, when people spend money on small indulgences during a downturn that could see demand for non-essentials such as beauty products revive. Expect margins to take a hit in the June quarter.