Profit before tax was up by 62.63 per cent while PAT rose 72.38 per cent to Rs 412.70 crore.
These figures, however, are not comparable with last years which includes the impact of the amalgamation of Brooke Bond Lipton India with the company from January 1, 1996.
Apart from this, from January 1996, HLLs bulk chemicals and fertilisers businesses had also been transferred to Hind Lever Chemicals (HLCL), and in turn, the detergent business of HLCL was transferred to HLL. Hindustan Levers fertiliser division contributed around Rs 282 crore to sales in 1995.
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For HLCL, synthetic detergent sales contributed around Rs 324 crore during 1995. Thus, the net impact of the transfer more or less nullified each other.
If one were to add the sales of both these companies in the previous year (Rs 5,540 crore), the jump over 1995 sales works out to 19.13 per cent. Considering the size, this growth is certainly impressive.
In fact, the growth has been much higher than the previous years 9.07 per cent on the combined sales Rs 5,079 crore (as on December 1994).
A major reason for the growth in sales was the detergent business, which grew by more than twice the industry rate in 1996, besides gaining market share in all categories. Other businesses like beverages, personal products, tea, ice-cream and frozen desserts and culinary products also achieved higher growth rates than the respective industry averages.
With the launch of Kissan Annapurna edible salt and wheat flour, the company entered the popular foods market during the year. Penetration into this market may prove profitable for HLL in the near future.
Coming back to the profitability figures, taking the combined figures in 1995, profit before tax jumped by 15.23 per cent in 1996. Similarly, net profit was up by 12.87 per cent.
The growth on these front has been lower, if one takes the previous growth rate of the Hindustan Lever alone. But shareholders need not complain. For them, on the combined equity, the company has shown an improved earnings per share of Rs 20.72, up 26 per cent.
The dividend pay-out is 60.14 per cent of the PAT, marginally higher than previous years figure of 59 per cent. In 1996, the final dividend was Rs 12.50 per share.
With an increased focus on rural markets, HLL is poised to consolidate its gains. Increased sourcing of porducts by Unilever should also help the company add to its bottomline. For the next three years, the company expects to maintain growth rate at 20 per cent.
Even if this does not materialise, due to its prime position in the market, margins of HLL may not be affected.
This could be the reason why the stock gets a huge discounting of 48.