Inflation continues to haunt Govt
The pressure is telling on the Government owing to the rising public unrest over the spiraling prices of essential products. As a last ditch attempt to salvage the UPA regime's pro-common man image, Prime Minister Dr. Manmohan Singh on Feb. 22 urged all states to take necessary steps for containing inflation. The Prime Minister advised the State Governments to put in place an appropriate mechanism for regular intensive monitoring of commodity prices in order to take prompt and necessary action to curb price rise. Separately, Finance Minister P. Chidambaram said the rise in the Wholesale Price Inflation (WPI) was temporary and that the rate was likely to fall once a major supply constraint eases with the arrival of the new wheat crop from March. He said the Government had moderated inflation in the past and would take further measures if needed.
"The Government will take all necessary steps to ensure that the poor are not adversely affected by inflation," President APJ Abdul Kalam said in his inaugural address at the budget session of parliament. The President called for more supplies of factory and farm goods to meet demand and curb inflation. The price rise must be contained to reap the benefits of growth, which makes India among the world's two fastest- expanding major economies, Kalam said. Meanwhile, inflation, based on the WPI, declined to 6.63% in the week ended Feb. 10 from 6.73% in the previous week. The WPI was unchanged at 209.2. The Government revised the inflation rate for the week ended Dec. 16 to 5.73% from the preliminary estimate of 5.43%.
The Finance Ministry has taken a slew of measures to lower inflation to less than the government's comfort level of 4%, including cutting import duties on items ranging from cement, metals, chemicals and edible oils to corn. It has also halted the export of wheat until the end of this year. It has also banned the export of milk powder until Sept. 30. On the monetary side, the RBI has raised the repo rate by 150 basis points since October 2004 and the CRR twice since December to drain money from the banking system. Continuing its ongoing campaign against inflation, the Government decided to release 365,000 tons of wheat to states for sale in open markets in February and March to curb prices. The Government may lift the ban of wheat exports as rains improved the prospects for a bigger-than-expected harvest, Agriculture Minister Sharad Pawar told reporters in New Delhi on Feb. 21.
HLL unveils results and a new name
Hindustan Lever Ltd. (HLL) announced its fourth-quarter and full-year results for the period ended December 2006. For Q4 CY06, the company posted a net profit (excluding exceptional items) of Rs4.83bn versus Rs4.39bn in the same quarter last year. Net sales for Q4 CY06 stood at Rs31.56bn compared to Rs29.74bn in the year-ago quarter. Basic and Diluted EPS for the reporting quarter are Rs2.32 versus Rs2.37 in the same quarter of last year. The results for the quarter are not comparable to those of Q4 CY06 due to the merger of Vashisti Detergents Ltd. with the company and the demerger and subsequent disposal of Doom Dooma and TEI plantation divisions.
Exceptional items (net of tax) for the October- December quarter of 2006 comprised: profit arising from disposal of 51% share in a subsidiary (Rs367.4mn); reduction in liability for retirement benefits arising from impact of revised interest rates and lower annuity costs (Rs218.9mn) and restructuring costs in the foods business (Rs308.8mn). Adjusting for the above, PAT is Rs4.82bn ( Rs4.39bn) and net profit is Rs5.1bn (Rs5.21bn). Net sales for Q4 CY06 is Rs31.56bn ( Rs29.74bn) and Profit Before Interest and Tax is Rs5.41bn (Rs4.88bn).
For the year ended December 2006, the company has recorded a net profit of Rs18.55bn as against Rs14.08bn in the year ended December 2005. Net sales for CY06 are Rs124.11bn as against Rs115.66bn in the year ended December 31, 2005. At Rs3.93bn, other income is up from Rs3.13bn in the previous year. Annualised Basic and Diluted EPS for the year stood at Rs8.57 versus Rs6.16 in the year ended December 2005. Adjusting for the exceptional items, PAT is Rs15.37bn (Rs13.61bn) and net profit is Rs18.53bn (Rs14.15bn). Net sales for CY06 is Rs121.03bn (Rs110.42bn) while Profit Before Interest and Tax is Rs17.06bn ( Rs14.8bn).
The Board of Directors has proposed a Final Dividend of Rs3 per share of Re1 each, subject to the approval of shareholders at the AGM. This along with the interim dividend of Rs3 per share amounts to a total dividend of Rs6 per share for 2006. Hindustan Lever Ltd. (HLL) said on Tuesday that its Board of Directors has considered a proposal for the transfer of the marine products business. The Board of Directors of Hindustan Lever Ltd. (HLL) on Tuesday approved the change of the company's name from "Hindustan Lever Ltd" to "Hindustan Unilever Ltd." The proposal for the name change will be taken up at the next Annual General Meeting (AGM) to be held on May 18, for their approval.