Nitin Paranjpe, chairman of HUL, warns that the economy is in its worst possible state.

  • June 24, 2022, 12:32 p.m.

Hindustan Unilever NSE 1.77 % (HUL NSE 1.77 %) chairman Nitin Paranjpe said India is going through the most difficult economic situation and persistent

NSE : 2.12% inflationary pressures are beginning to weigh on demand. 

This has prompted some buyers of fast-moving consumer goods to temporarily cut back on purchases through a period of price-stickiness, which was described as "rare" by the company. 

"India is going through probably the most difficult economic situation. Inflation is high. "We are probably getting to a situation where we have now seen 14 consecutive months of double-digit wholesale price inflation," Paranjpe told shareholders virtually during his annual address on Thursday. "I don't know when we last saw something like that. FMCG markets, which have generally been strong for a long period of time, have started to see the effects of this."

Test of FMCG Mkt's Resilience
Last month, wholesale prices rose to a record when referenced to the new reporting benchmark, with the gauge climbing to just shy of 16%.


Inflation is testing the resilience of the fast-moving consumer goods (FMCG) market, Paranjpe told delegates at the annual general meeting of the country's biggest consumer company.

"And, more recently, we have seen market rates moderate and volume growth rates have actually become negative in the short term," he said.

Consumer goods volumes fell about 1% during FY22, according to global consumer research firm Kantar Worldpanel (formerly IMRB). HUL's performance is considered a proxy for the broader consumer sentiment in India.

HUL expanded value sales by 11% last fiscal, largely driven by price increases as it tried to offset energy, packaging, and transport costs that rose by about 50% from the past year. In his first AGM as HUL's chairman, Paranjpe added, "The immediate future is challenging, and it will require some astute handling and a balancing act to be able to make sure that growth does not stall and we are able to contain inflation." 

The company said it will try to mitigate some of the impacts of inflation by driving savings instead of passing price increases on to consumers. The company saved nearly 7% of its annual turnover after it cut costs, tightened supply chain operations, tweaked manufacturing lines, and shed its dependence on imported raw materials.

In the medium to longer term, HUL said it remained confident of FMCG demand and its growth rates due to low per capita consumption, a large and young population, a growing middle class, rising affluence and the adoption of technology.

HUL is investing in technology and distribution, resulting in a 15% expansion in reach. About a fifth of the demand served by the company is now captured digitally.

Author : Rajdhani Delhi Representative

Rajdhani delhi representative

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