Hindustan Unilever Ltd (HUL), the consumer goods giant, plans to triple its distribution reach in India in two years, Harish Manwani, chairman said on Tuesday, in an all-out bid to generate sales volumes.
“The kind of reach we are looking to achieve will be equal to what we did in the last 25 years,” Manwani said after the announcement of the company’s results.
HUL’s net profit rose 47.1% in the January-March quarter to Rs 581 crore, beating street estimates of about Rs 471 crore, due to one-off gains. Sales rose 8.5% to Rs 4,380.2 crore.
The one-off gains include Rs 91 crore from sale of long-term investments, Rs 5.47 crore from sale of property and Rs 53.36 crore from reduction in provision for retirement benefits.
Adjusting for this, and a one-off restructuring expense of Rs 6.53 crore, net profit actually fell by 2.35% to Rs 385.7 crore. Ebidta or operating profit, or the money that a company makes through its core business, fell 1.8% to Rs 545.2 crore.
The company has also drawn up a specific gameplan to deepen penetration in the rural markets. HUL plans to add 500,000 outlets in villages, a scale up of 8% from the current 6.3 million that it has.
Of these, about 150,000 will in entirely new markets and about 100,000 in villages where HUL is already present.
Another 250,000 will be reached through its rural project called Shakti.
An HUL spokesperson said market share in modern-trade - or goods sold through retail chains and supermarkets - has risen over the last 10 quarters.
Recently, HUL also embarked on a project to increase product visibility through an initiative called ‘Bushfire’, where 4,000 staffers fanned out to identify mom-n-pop stores that could be converted into what it calls ‘Perfect Stores’.
The stragegy was to enhance visibility across product categories.
Between January and February, HUL piloted the Perfect Stores concept in 5 cities, where it noticed a 30% jump in sales.
In May, the company identified 20, 000 stores across the country and transformed about 16,000 of them into Perfect Stores.
This concept will be rolled out to 1 lakh mom-n-pop stores by the end of 2010.
Meantime, the company said FMCG sales rose to Rs 4,000 crore from Rs 3,700 crores year on year as all products, except soaps and detergent, did well.
“The domestic consumer and FMCG business grew 8% driven by strong 11% volume growth,” the company said.
The soaps and detergent business, which accounts for 45% of total revenues, fell 1.9% to Rs 1,980 crore.