Hindustan Unilever announced a massive 7% drop in underlying volume growth in the March quarter, compared to 5% growth in the first nine months of the fiscal. Even after factoring in major disruption at the end of March owing to the lockdown, analysts had factored in flat volumes. This was simply based on the assumption that growth had continued at around 5% before the lockdown. As for the analysts suggests that the growth has been stopped even before the lockdown with rural growth slowing down due to liquidity issues with trade distributions.
Point of concern was relating to cut in salary or terminate employees to deal with the loss in revenue. FMCG major HUL CMD Sanjiv Mehta on Thursday said the company has not cut any jobs or salary of employees so far due to the pandemic but cannot say what will happen in future. On hearing this statement, it was confronted that the decisions were dependent on the circumstances of the company after the lockdown.
Hindustan Unilever has already taken various cost-saving measures but steps for the road ahead will depend on how the economy behaves after the country emerges from the health crisis. At this point, they have not done any salary cuts and shed any jobs but it all depends on the situation evolves and how far this road takes them.
Mehta said, “If for instance, the economy bounces back then we are into business but if we get into deep depression then we will evaluate all the steps that we have been taking. We always keep options open because we evaluate everything very closely. We have to evaluate, we have the options that we can exercise in future.”
To mention they have a keen observation of their profit and loss and subject knowledge of matter where they can add value and drive it to the business. Currently, they are focusing on keeping a strong business model and preserving it rather than adding value as it would lead to expenses.
HUL also has to ensure its ecosystem remains strong, he said, “Also you will appreciate that we don’t run the business in isolation. We have distributors, we have scores of suppliers, thousands of distributors and what we have to do is play a part in ensuring that the ecosystem also survives so that the business keeps doing well going forward.”