HUL's Nitin Paranjpe Sees Growth Beyond 'Extraordinary Times'
Hindustan Unilever Ltd. sees urban and rural demand driving the company’s growth in the long term even as high inflation and supply-chain disruption has weakened the pace for now.
"These are not easy times but extraordinary times that we are living in," Nitin Paranjpe, chairman at India's largest consumer goods maker, said while addressing shareholders at the 89th annual general meeting on Thursday. It was his first AGM after taking over as the chairman in March.
"Inflation is in excess of 50%, supply chain disruption continues… and therefore market growth rate moderated, and our volume growth turned negative," he said. Notwithstanding the recent slowdown, "we are confident of navigating through these challenges over the medium-to-long term".
To counter the inflationary pressure on margins, Paranjpe said, price hikes are inevitable even as the company will continue to drive its saving agenda.
"In India, we are probably getting to a situation where we have now seen 14 consecutive months of double-digit wholesale price inflation and I don't know when we have last seen something like that," he said. Many people were complimenting India on how we were coming out of the Covid period but it does mean that the immediate feature is challenging, "and it will require some astute handling and a balancing act to be able to make sure that growth does not stall and we are able to contain inflation," he said.
The penetration of fast-moving consumer goods products in urban and rural India provides a significant headroom for growth, he said. "More people entering the middle class, a large working population, increasing nuclear family structures, urbanisation and rapid adoption of technology, all bode well for FMCG growth in the country," he said. "There is also a big opportunity in premiumisation and different sales channel."
He also sees a rural driver for growth. But for that, there was a “need to change” as 60% of the country’s population depends on agriculture and allied sectors, which contribute 19% to the country’s GDP, "We need to aim for 30% of those engaged in agriculture to produce what 60% or more do today.”
"At the same time, we will need to ensure there are enough employment opportunities in other sectors such as manufacturing and services," he said.
The owner of Surf Excel brand remains committed to ‘Less Plastic, Better Plastic, No Plastic’ by targeting to use 15% recycled plastic by 2025. "We are committed to make 100% reusable, recyclable or compostable plastic packaging by 2025," he said.
HUL more than doubled its turnover to cross the Rs 50,000 crore in revenue, tripled Ebitda and quadrupled market capitalisation in the fiscal ended March 2022.