New Delhi Hindustan Unilever Ltd Chairman Nitin Paranjpe on Thursday flagged off unprecedented levels of inflation, saying the company would continue with its savings agenda, but a hike in prices would be inevitable.
“These are not easy times. On a macroeconomic level, we are going through perhaps the most difficult economic situation; inflation is high,” Paranjpe said at the company’s 89th Annual General Meeting held virtually on Thursday.
Paranjpe said geopolitical tensions as well as the world emerging from the pandemic have created supply chain disruptions. “Therefore, in India, we are probably reaching a position where we have seen double-digit wholesale price inflation for 14 consecutive months,” he said.
This, he said, has had an impact on the fast growing consumer goods markets. “FMCG markets which have generally been strong for a long time have started seeing its impact. And recently, we have seen that the market growth has been moderate and the volume growth rate has actually turned negative in the short term.” Companies are coping with unusually high commodity inflation in raw materials. High input inflation This prompted companies to take direct price increases in their portfolios as well as cut down on the grammar of the products they sell.
HUL, which sells popular brands like Sunsilk Shampoo and Kisan Sauce, said it would continue to save. Paranjpe, however, did not rule out the hike in prices.
“As a company, we are determined to try and see how we can reduce some of the impact of this on our consumers. And so, our first action in all of this is to make the savings harder; your company is on it. Works great. We continuously improve and increase efficiency. We get about 7% savings every year, and we’ll keep that hard work going.”
He said that materials like palm oil, tech crude, plastics and logistics cost have seen inflation which is more than 50%. The level of inflation is such that despite cost-saving efforts, it is inevitable that the firm will have to keep increasing the prices and hence, they are going up, he said. “When it’s needed, we get it calibrated in as fashion a fashion as possible, in as thoughtful a way as possible. And that’s what we’ll continue to do. Price points are the pack on which we have to be vigilant, and we can use appropriate strategies.” will follow – sometimes reducing the volume of fill levels, sometimes raising prices…” Paranjpe said.
HUL is the country’s top pure-play fast moving consumer goods company with a turnover of 50,336 crore for the year ended 31 March 2022. The company, with its wide reach across 9 million outlets, is a barometer for household consumption of daily commodities.
Paranjpe’s comments come at a time when the fast-growing consumer goods sector is witnessing a sharp decline in volume growth; This, coupled with decadal high inflation, is posing a challenge for both companies and households.