The Hindu : HLL board approves special dividend

Online edition of India's National Newspaper
Saturday, Jun 14, 2003

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Business

HLL board approves special dividend

By Our Staff Correspondent

MUMBAI JUNE 13. The board of Hindustan Lever has approved the payment of special dividend of Rs. 1.76 per share relating to bonus debenture and recommendation of a final dividend of Rs. 2.65 per share to the shareholders. The total payout for final dividend will remain at Rs. 3 per share, including provision for distribution of tax liability.

Following an amendment to tax laws, including provisions for dividend distribution tax, the board made changes in the scheme for bonus debenture and special dividend, the company informed the Bombay Stock Exchange today.

Accordingly, the board has declared a special dividend Rs. 1.765 per share aggregating Rs. 388.50 crores after accounting for dividend distribution tax of Rs. 219 crores (proposed on special dividend and bonus debenture), it said.

The total outlay on account of special dividend under the scheme approved by the High Court will remain unaltered at Rs. 607.50 crores.

The board also ratified the recommendation of final dividend at Rs. 2.65 per equity share and an amount of Re. 0.34 for payment of the dividend distribution tax liability of 12.81 per cent, thereby retaining the aggregate pay out at Rs. 3 per share as originally recommended by the board on January 29, the company said. This change was made following changes in tax laws made in the Finance Act 2003.

The company sees each of its mega brands achieving a potential scale of Rs. 1,000 crores in the foreseeable future, according to the HLL Chairman, M. S. Banga.

Speaking at the company's annual general meeting here today, Mr. Banga said the company's Power Brands now account for 93 per cent of the company's domestic consumer business and the top five brands together account for sales of over Rs. 3,000 crores.

On the future approach, Mr. Banga said Power Brands have enormous space for growth. This will be achieved by leveraging their scale, redefining categories, liberating brands from their existing category mindset, exciting innovations for differentiated and relevant benefits and leveraging technology for innovation.

Mr. Banga said that leveraging brand scale was crucial. "Brand scale enables us to get a larger share of the consumer's mind as well as the retail shelf. For instance, five of our power brands are among the top ten most heavily advertised brands in India. We derive scale competitive advantage from our combined media spends".

The Chairman said the new opportunities for growth, which arose out of project millennium increased the size of HLL's market opportunity by about 40 per cent. HLL's entry into categories such as confectionery and ayurvedic health care, and initiatives such as the Sangam retailing business and the HLL Network direct to consumer business have all made good progress.

On the foods business, he said, "There is a big opportunity to grow processed foods, which are still a small proportion of the overall largely commoditised foods market. However, developing this market will require relevant and differentiated products that cater to Indian tastes and habits as well as sustained and considerable investment and time for market development".

HLL has been involved in a controversy regarding environmental pollution and health impacts caused by its thermometer factory in Kodaikanal. The unit was closed in March 2001. An NGO, Indian People's Tribunal (IPT) on Environment and Human Rights, brought out the health problems faced by the former workers and the community in Kodaikanal. The IPT had released a report on this issue on the request of Palani Hills Conservation Council, the Greenpeace and some local groups. The IPT had said that there were testimonies of individuals that ten youngsters had died after working at the factory.

HLL in response to this had said that there were no health concerns, no deaths and no damage to the environment. The thermometer business became a part of HLL when it acquired Pond's India. The mercury for the thermometers was imported primarily from the U.S. and the finished thermometers were exported to the U.S. from where it was further exported.

In response to a query regarding this issue at the AGM, Mr. Banga said there was an independent study by the chief surgeon in Tamil Nadu and the report was shared with the Tamil Nadu Pollution Control Board and was also shown to the Greenpeace.

"Any charges or statements about the health of the workers are baseless and unproven. As far as HLL is concerned, we have acted with great responsibility in this issue. Everyone makes mistakes, but we have acted responsibly and shut down the plant. All the glass containing the mercury has been shipped back to the U.S. and been received there".

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