Support urban poor to boost growth: HUL head

Hindustan Unilever Ltd (HUL) chairman Sanjiv Mehta said the government will have to reach out to the urban poor, especially in the informal sector, to spur growth. Also, the pace of Covid-19 jabs should be nearly doubled as rapid inoculation offers the best return on investment for the government and corporations, he told ET in an interview.The head of India’s biggest consumer goods company said there had been minimal disruption so far due to localised closures during the second wave but a pickup in discretionary categories will point to complete demand recovery. “The government should find ways and means to identify the urban poor and alleviate their suffering just like they have done for the rural poor. Technology, data and use of instruments like Aadhaar could play a very big role in identifying the urban poor, including those employed in the informal sector,” Mehta said. “Unlike the middle class, there is no risk that if you transfer money to the poor, they will save and not spend.” HUL’s performance is considered a proxy for broader consumer sentiment in India. The maker of Rin detergent and Dove soap posted a 12.7% growth in sales with volume expanding 9% for the first quarter ended June. However, the firm said the last two quarters had low base and growth in the September and December quarters will be good indicators of the underlying demand and momentum in the economy.“The first indicator will be how 85% of our portfolio, which consists of health, nutrition, and hygiene products, performs,” Mehta said.‘More Resilience Brought in Supply Chain’“The second will be the performance of relatively discretionary categories which have been impacted adversely by lack of mobility. These two indicators would be good proxies to gauge what is happening to consumption in the country,” he said.More than 400 million Covid-19 vaccine shots have been administered and one-third of the country’s eligible population has received at least one dose. Mehta said there is no investment today, either from the government or from the lens of private enterprise that gives a better return on investment than inoculation.“The vaccination rollout will need to happen with the precision of the work done by the Election Commission — to go booth-wise and vaccinate people, more so in rural areas,” he said.The overall consumer goods market saw demand getting hit in May but recovered sharply in June. However, rural markets have been more resilient, and have started to come back strongly ahead of urban ones. Also, interventions with free supply of food grains, direct transfer of money and the outlay on the rural jobs guarantee programme helped in ensuring demand would be durable. HUL said wholesale mandis were closed and some of its distributors were impacted but the harvest seems to have gone well and the government has even raised minimum support prices.“We have brought in much more resilience in our supply chain. For products, where the demand varies, we have built extra capacity. Also, an important bit is harnessing technology. I think that’s becoming a game changer for HUL,” Mehta said.Inflation pressure has worsened though with palm oil, tea and crude prices at an all-time high and more than twice what they were a year ago. This could shrink margins, analysts said.

from Economic Times https://ift.tt/3kRuRQx