Mumbai: Hindustan Lever Ltd (HLL) chairman V S Banga is a happy man today. When he took over as the chairman of the largest FMCG company in India at the beginning of the current year, there was slowdown all around, and HLL itself was not doing too well.

One of his first acts was to select 30 products and terming them as power brands. A year later, these power brands helped accelerate the companys growth. HLLs topline growth in the third quarter this year is the fastest since the first quarter of the calendar year 2000.

Surpassing market expectations, HLL posted a 7-per cent topline growth and a 14-per cent bottomline growth for the quarter ended 30 September 2001. The companys net profit has grown by 14 per cent. While sales moved up from Rs 2,461.90 crore to Rs 2,635.22 crore, profits after tax increased from Rs 331.16 crore to Rs 399.16 crore.

On an equity capital of Rs 220.12 crore, the earning per share stands at Rs 7.25 compared to the Rs 6.02 in the nine-month period ended 30 September 2001. Sales at Rs 8,208.98 crore are up 3.18 per cent in comparison to Rs 7,955.69 crore in the corresponding period of the previous year.

The net profit after tax (including exceptional items) at Rs 1,204.93 crore is higher by 36.84 per cent in comparison to Rs 880.51 crore in the corresponding period of the previous year. In the 12-month-period ended 31 December 2000, HLL had posted sales of Rs 10,603.79 crore and a net profit of Rs 1,310.09 crore.

Announcing the results Banga said: The market condition continued to be very challenging and sluggish. Intense competition, coupled with the slowdown, resulted in decline in several categories. Banga said the slowdown was particularly severe in laundry, tea and personal wash categories.

Sales and marketing strategy

Why power brands? Because, says Banga, power brands, comprising 30 specific products and brands, contribute about 80 per cent to the total revenues of the company. It made sense for us to concentrate on these products and extract more out of them. The idea is to increase profitability and not merely profits and sales.

Banga said the company synchronised its supply chain mechanism, resulting in cost cutting. HLL also increased expenditure on advertising by 30 per cent in the second quarter to popularise its power brands.

This reflected directly on the sales. Personal products segment grew 12.8 per cent, spearheaded by a 24-per cent rise in the sales of shampoo. Personal products include oral care, haircare and skincare products, colour cosmetics and deodorants. Revenues from this segment aggregated Rs 499.98 crore.

Soaps and detergents category grew 12.80 per cent with a revenue of 1,070.30 crore. Food products grew by 7 per cent. This included oils and fats growing 7 per cent, culinary products at 7 per cent and branded staples at 4 per cent.