Harish Manwani, chairman HUL, said, "Consumer spends in the country have gone up by nearly 15 per cent in urban areas and by 12 per cent in rural India (AC Nielsen). These high spends have led to our growth. We have witnessed down-trading in some categories but we have a large portfolio of brands that will take care of that too. For instance, just as our premium detergent brand Surf Excel grew so did lower priced Wheel."
The company increased its advertising and promotion spends by 70 basis points this quarter over the same period last year. Its A&P spends grew by 30.5 per cent making up 10.5 per cent of the total sales. HUL said it has been increasing its A&P spends consistently year-on-year and would maintain the momentum in the coming quarters.
In this quarter, the company had taken an average price increase of 10 per cent and launched new variants for Lux, Ponds, Axe and Wheel. In spite of high ad spends and cost pressures, its PBIT (profit before interest and tax) margins remained constant at about 14.2 per cent. The company's home and personal care business (HPC), which contributes 50 per cent to the company's revenues, grew by 20 per cent and food business by 14 per cent.
When asked about how the company expects the next few quarters to pan out in terms of cost pressures, chief financial officer D Sundaram said, "We will have to wait and watch. Our decisions will be based on how the crude oil prices change. We may or may not take price increases, we work with several levers, which lever to pull would depend upon how various factors will play out."