HUL says GST reforms reduce rates to 5 pc for 40 pc of company's portfolio, projects near-flat Q2 growth

Hindustan Unilever on Friday said that the Goods and Services Tax (GST) reforms, which came into effect from September 22, will result in near flat to single-digit growth for the quarter ending September 30, adding that this is a one-off, transitory impact and that the company's growth will recover from November as prices stabilise.

The company said that about 40% of the company's portfolio, including Toilet Soap, Toothpaste, Shampoo, Hair Oil, Talcum Powder, Lifestyle Nutrition and other Foods will now see reduced GST rate of 5% from the previous rates of either 12% or 18%.

"HUL remains committed to supporting the Government’s efforts by ensuring that the GST benefits are being passed on to consumers through competitive pricing and enhanced value across a wide range of products from 22nd September onwards.," the company said in an exchange filing.


HUL further said that the tax cuts are expected to increase disposable income, increasing demand across categories in the long-term, adding that transitory impact is being seen in form of disruption at distributors and retailers across channels to clear existing inventories with old prices.

This, the company said, has led to postponement of ordering in anticipation of receiving new stocks with updated prices and lower orders across the overall portfolio as consumers delayed their buying, impacting sales in September. The company added that lower sales are expected to be seen in October, leading to the slow projected growth rate.

In Q1, HUL reported a consolidated Underlying Sales Growth of 5% and an Underlying Volume Growth of 4%. On a standalone basis, HUL reported an Underlying Sales Growth of 4%, and Underlying Volume Growth of 3%.