HUL's parent Unilever expects rise in value growth on GST implementation

Unilever said it expects higher value growth after it annualises the implementation of the Indian goods and services tax in the second half of the year and better performance in the country.

"We expect price growth to pick up as commodity inflation increases and as we annualize the implementation of GST in India, which has had an adverse impact at the global Unilever level of around 30 basis points on price," said Graeme Pitkethly, chief financial officer told investors on Thursday after posting underlying sales increase of 1.9 per cent during second quarter.

Unilever said it is witnessing year-on-year improvement in several of the emerging markets most notably India, where consumption continues to pick-up.

India is the second largest market for Unilever after the US, contributing about 10 per cent to total sales. In the quarter ended June, its Indian unit Hindustan Unilever Ltd (HUL) posted 12 per cent volume growth, highest in over five years after the maker of Rin detergent and Lux soap passed on the benefits of the tax change to consumers through price-cuts. Also, net sales are not comparable as turnover in the latest quarter was calculated net of GST: A year ago, it was gross of excise, which in turn was baked into the costs, thus impacting sales in value.

The company, during the latest quarter, saw double-digit volume growth across all three divisions - beauty and personal care , home care and foods and refreshments. However few categories such as oral care remains a concern. "Oral Care is a business which has been challenging for many quarters. We have seen another quarter of growth, but there is more work to be done and we continue to tweak our mixes and the portfolio on this side," HUL CFO Srinivas Phatak told analysts on an investors call on Monday.

Also, HUL that launched Citra, a natural skin care brand from Unilever's portfolio last year said it is relooking at the whole portfolio of Citra as it did not deliver on its action standard.