FMCG large Hindustan Unilever Ltd‘s (HUL) outgoing MD & CEO Sanjiv Mehta mentioned the nation’s largest FMCG firm will be capable of minimize costs of its merchandise solely when there’s a deflation of prices, at a time when shopper items majors have been battling the consequences of excessive commodity prices by rising costs and lowering product bundle measurement.

“The speed of inflation is coming down, however deflation has not began. Solely when deflation begins, an actual value discount will occur…(the chance of that occuring) would depend upon some stimulus. Say, if tomorrow the Russia-Ukraine conflict involves an finish, that might be one set off for commodity costs to fall,” Mehta mentioned in a post-This autumn end result interplay on Thursday.

India’s CPI-based retail inflation cooled to a 16-month low of 5.66 per cent in March 2023. The determine was at 6.95 per cent in March 2022. This was the primary month this 12 months to this point the place India has seen retail inflation falling beneath the 6 per cent set out by the Reserve Financial institution of India (RBI) as its higher tolerance restrict.

The Dove soap-maker famous in its investor presentation that whereas costs of commodities reminiscent of Brent crude, soda ash, caustic soda, and palm oil have dropped year-on-year, they continue to be above long-term averages. The corporate’s gross revenue margin fell from 50% final 12 months to 46% by March 2023, which the corporate attributed to unprecedented inflation.

Referring to oscillating crude costs and the corporate’s flat quantity progress, Mehta pointed to volatility out there forces not absolutely settling down. HUL posted flat quantity progress of 5% year-on-year (Y-O-Y) for the total monetary 12 months of 2022-23 and 4% Y-O-Y for the March quarter.

“We’re very cognisant that we’ve got to keep up the price-value. And if commodity costs go down, we are going to cross the profit to the customers. We’re completely clear we is not going to lose market share,” he mentioned.

He added that the corporate took a disproportionate hit on the margins of merchandise within the low-price classes when commodity costs went up as a result of they didn’t change the value factors. “You may mess around with the grammage solely up to some extent. There we took a success. Because the commodity costs begin reducing down, we are going to after all put extra grammage again. Hopefully, that can even assist us to enhance the margin,” mentioned Mehta, who’s retiring after 10 years on the helm of the FMCG large. He can be succeeded by Rohit Jawa, who has joined the agency as CEO designate and Complete-time Director from April 1, 2023.

For the total monetary 12 months, HUL reported a 16% progress in turnover to Rs 58,154 crore and 13% rise in web revenue to Rs 9,962 crore.