On FMCG sector slowdown: Mr. Sanjiv Mehta, the Chairman and MD of Hindustan Unilever, the largest FMCG company by distribution outlets in India said, that the Government is taking necessary steps to revive economic growth. As a company, HUL remains optimistic that H2FY20 will be better.

On Monsoon season thus far: Mr. Mehta mentioned that after a slow start, the monsoon has picked up pace in different parts of the country and there is a rural push that the Government is giving to get rural areas on to the growth path. He was of the view that there is no need to be despondent at this moment.

On the slowdown in soaps category: The slowdown is evident in the soaps category. The Chairman admitted that HUL’s soaps division did deliver a muted performance. This muted performance was due to weakness seen in mass brands. The mass brands are noted to see higher traction in rural areas where there is a slowdown being observed. With regards the premium soap brands and detergents, Mr. Sanjiv Mehta said that the performance was steady and so the issue of contagion spreading does not arise. Regards the other business segments like Foods & Refreshments and Beauty, the divisions have done well as  informed by HULs MD.

On volume growth: Following a slowdown observed in Q4FY19, Q1FY20 also witnessed a slowdown in volumes. At the overall topline level the company reported a growth of 7% with an underlying volume growth of 5% on a YoY basis. Mr. Mehta acknowledged that sequentially volumes and topline growth both have come down from 7% and 9% respectively seen in March quarter. However, he is of the opinion that there is no reason to despair because HUL believes that the market will bounce back in the medium to long term.

On price cuts: Price-led growth in soaps declined by 4% in the Q1 because of the price cuts HUL took during the period. This was linked to the fall in raw material prices and the trend continues in July as well. So, price cuts will continue in soaps. Other segments, however, have seen an average price hike of 2-3% in Q1 and this, too, will continue.

On Channel performance: Modern trade as a channel contributes 15% to the company’s overall sales. But it continues to grow faster than traditional trade. Having said that, a 7% top line growth would not have been possible without the largest channel growing for us. General or Traditional trade has grown, but the rate of growth differs from Modern Trade. Mr. Mehta pointed that CSD, on the other hand, has become erratic in terms of its performance. Some quarters it is good and some quarters it is moderate. CSD growth rate was better in Q1FY20 as highlighted by himts.