HLL gears up for 4th price hike of the year

Shampoos, soaps and detergents will be dearer

MUMBAI: Anglo-Dutch foods and toiletries major Hindustan Lever Ltd (HLL) is once again poised to increase the prices of its fast moving consumer goods products by 4-10%. This would be the fourth increase by the company this year.

HLL has been increasing prices to overcome the escalating input costs and to grow its margin at a time when consumers have got more money in their pockets. However, the company has adopted a gradual price increase strategy so that the consumers do not feel the pinch.

“In some cases, taking prices up is pretty much on the cards,” chairman Harish Manwani had told Bloomberg in an interview in Beijing on Thursday. “We remain cautious of the fact that there could be more cost inflation,” he said in the interview.

“This time the price increases are happening mainly in shampoos, soaps and detergents and it will be reflecting in the market within 2 weeks time,” said a source close to the development.

The price of Clinic Plus shampoo (400 ml) would increase from the current Rs 99 to Rs 104. Similarly, the price of Sunsilk shampoo (200 ml) would go up from Rs 140 to Rs 154. The price of soaps, especially the Lux brand, has gone up by 5-10%. Besides, the price of the most competitive detergent products will also go up by 4-5%, nearly across the product range.

The company has already improved its operating margin by 66 basis points from 13.68% in September quarter last year to 14.34% in September quarter this year.

“In total FMCG domestic business, we have achieved roughly 14.2% growth in net sales from the same quarter last year. Out of that, 11% has come from volume growth and better product mix. And roughly 3% has come from the price increase,” said D Sundaram, finance director, HLL.

Rising inputs cost have been the biggest worry for the company. Price of palm oil, a key ingredient for making personal wash soaps, has gone up by roughly 21% since the start of the year. However, a fall in crude oil prices has given some relief to the company as it will bring down freight cost and rate of detergent ingredient linear alkyl benezene.