GST rejig hurts HUL’s sales in Sept as orders get pushed, ETCFO
MUMBAI: Hindustan Unilever (HUL) has said that sales have been impacted in Sept as markets prepared for the new GST regime leading to some temporary disruptions in the supply chain. Distributors and retailers postponed placing orders for fresh stock as they awaited new packs with updated prices to hit the markets and instead focused on clearing old stock.
Consumers too delayed pantry buying, leading to “lower orders” across the portfolio. “Given our existing pipeline inventory in the channels, we expect this impact to continue into Oct as well,” HUL said in an exchange filing on Friday.
The company estimates consolidated business growth to be near flat to low single-digit for the Sept quarter. “This is a one-off, transitory impact, and we anticipate recovery starting Nov as prices stabilise, underpinned by rising disposable incomes and our ongoing portfolio transformation actions,” HUL said. The new GST rates came into effect from Sept 22. Some FMCG firms such as Godrej Consumer Products had flagged the possibility of disruption in Sept due to stock adjustments. Even after the revised rates kicked in, several small kirana stores are not passing on GST benefits on old stock given their inability to absorb losses due to the price differential. HUL said that about 40% of its existing product portfolio including shampoo, toothpaste and foods will benefit from reduced GST rate of 5%. “These reforms are expected to increase disposable income and drive long-term demand across key categories,” HUL explained.
