HUL plans to invest Rs1,000 cr on new Assam manufacturing unit

FMCG major HUL on Monday said it plans to invest of about Rs 1,000 crore to set up a new facility at Doom Dooma in Assam, while announcing a change in its management committee after the resignation of ED and VP, Sales & Customer Development, Punit Misra. 

The new manufacturing unit will be in the vicinity of the existing factory premises in Doom Dooma. It is expected to be commissioned in early 2017 and will augment the production capacity of personal care products for HUL, the company said in a statement. 

“This investment is subject to receipt of requisite approvals and clearances,” it added. At present, Hindustan Unilever Ltd has a manufacturing facility in Doom Dooma Industrial Estate of Upper Assam set up in 2001 and houses three units that produce personal care products (shampoo, skin creams and toothpaste). 

“With over 15 years of operating experience in the state and considering the support from the state government and the local community, HUL has decided to set up the new manufacturing unit in Assam,” it added. Assam has been looking at attracting investment into the state by offering favourable policies that encourage and incentivise companies to set up manufacturing units.

 It is also intended to encourage suppliers to establish units for packing material supplies, and it is expected that the new unit will lead to the creation of ancillary, logistics and warehousing opportunities within the region, HUL added.

 “Given the attractive outlook that the company sees in personal care, the additional capacity will support the growth ambition and enable the business better serve its consumers,” the statement said. HUL has a wide footprint of manufacturing operations with over 30 factories located across India.

 On the management committee change, HUL said Misra has decided to leave HUL to pursue an external opportunity. Subsequently, Srinandan Sundaram, currently Vice President, Skin Care, will take over from Misra as the Executive Director, Sales & Customer Development, and will join the HUL Management Committee. 

The change will be effective from 1st September, 2016. HUL CEO & Managing Director Sanjiv Mehta said: “Under Srinandan’s leadership, the Hair and Skin Care businesses have seen strong growth fuelled by innovations and brilliant marketing.” Meanwhile, HUL  reported a 9.79 per cent increase in its standalone net profit at Rs 1,173.90 crore for the first quarter ended June, driven by growth across all segments and improvement in margins. 

The company had posted a net profit of Rs 1,069.16 crore in April-June quarter of the previous fiscal. Hindustan Unilever’s net sales were up 3.56 per cent at Rs 7,987.74 crore during the quarter under review as against Rs 7,712.71 crore a year before, the company said in a statement. “Net profit at Rs 1,173.90 crore was up 10 per cent, aided by a one-time writeback of provision for pension benefits arising from plan amendments,” the company said.

Its lower input costs led to 100 bps reduction in cost of goods sold, and brand investments were maintained at competitive levels across segments. “During the quarter, against the backdrop of a challenging environment where market growth further slowed in both volume and value terms, the business continued to track ahead of market with sustained margin improvement,” said HUL in a statement.

“Domestic consumer business growth was at 4 per cent, with 4 per cent underlying volume growth and operating margin expansion by 70 bps. The growth was broad-based across segments.” Expenses in the period went up 2.78 per cent to Rs 6,585.58 crore as against Rs 6,407.39 crore a year ago.