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HLL: Cost-cutting exercise to continue

Our Bureau

Mumbai , Feb. 14

HINDUSTAN Lever Ltd (HLL), which reported double-digit topline growth after several quarters, said it would drive the cost reduction initiative further in a market that is competitive.

The FMCG major does not rule out margin pressure but said that its efforts at cost reduction would be a constant endeavour. Mr Harish Manwani, Chairman, HLL, said that people who improve sales and reduce costs would be main contributors to the company's growth.

Margins have been under pressure especially for soaps and detergents. This is reflected in the segment profits where soaps and detergents have shown a dip in profits both in the quarter as well as the full year.

For personal care products, A&P (advertising and promotion) spend has impacted margins. But the skin portfolio did well especially in the December quarter negating some of the A&P costs.

But the overall margin pressure has been negated by higher volume sales, Mr D. Sundaram, Director - Finance, said. Volume growth has been 7 per cent.

Additionally, the company has been working at neutralising the hostile cost environment by way of business restructuring, improving product mix, streamlining distribution and logistics and global buying.

During 2005, HLL did witness significant growth in the rural marketing, which contributed 35 per cent to its turnover. Market recovery and benefits of strong distribution helped HLL, Mr Arun Adhikari, Managing Director - Home and Personal Care Division, said.

"Our strategy would be consistent. We will remain competitive. Our focus is not just growth but to gain market share too," Mr Manwani said.

More Stories on : Outlook | Hindustan Lever Ltd | Personal Products

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