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    HomeBusinessSoaring prices of home care products hurt household budgets

    Soaring prices of home care products hurt household budgets

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    Hindustan Unilever (HUL) raised the price of Pears by 9% in April over February. ITC hiked the price of Fiama Di Wills by about 11% during the same period, while Godrej Consumer Products (GCPL) increased those of Cinthol and Godrej No1 soaps by about 5-24%. Patanjali soaps, too, became costlier by 22%.

    Spiralling prices of home and personal care products like soaps, detergents, toothpastes and shampoos, owing to soaring palm oil and crude derivative rates, are taking a heavy toll on household budgets.

    The hike in soap prices has been the most across categories, ranging from 25% to even 50% compared to last year.

    Hindustan Unilever (HUL) raised the price of Pears by 9% in April over February. ITC hiked the price of Fiama Di Wills by about 11% during the same period, while Godrej Consumer Products (GCPL) increased those of Cinthol and Godrej No1 soaps by about 5-24%. Patanjali soaps, too, became costlier by 22%.

    Among other products, HUL raised prices of face washes by 3-4% in April, while Colgate raised prices of its Palmolive bodywash by 15%.

    Detergents have seen a sharp increase in prices, with soda ash prices rising 20% on a month-on-month basis. HUL raised prices of Surf Excel and Rin detergent bars 5-13% and detergent powders 2-8%. Similarly, Procter&Gamble (P&G) has hiked Ariel detergent powder prices 4-13%. Dishwash bar prices have also increased, with HUL and Jyothy Labs introducing hikes of 4% and 18%, respectively, according to analysts at Kotak Institutional Equities.

    In its earnings conference last month, the HUL management said consumers should expect more price hikes on the back of the 10% increase during the March quarter, as it combats inflation in prices of key inputs.

    Sanjiv Mehta, CEO and managing director, HUL, said, prices of commodities are expected to go up further in the quarters to come. “We will have to take some price increases. An immediate price increase is our last resort and a large part of it we have been managing by reducing the grammage,” he said.

    GCPL also said there will be incremental price increases in the company’s personal wash portfolio. Sudhir Sitapati, managing director and CEO, GCPL, said in an analysts call, “Like all companies frankly, we have to take judicious price increases.”

    Marico was able to inch up its gross margins sequentially for the quarter ended March, the third quarter in a row with calibrated price hikes, cost rationalisation and a deflationary trend in copra prices. However, Saugata Gupta, MD and CEO, Marico, cautioned that if crude continues to grow at these levels, there will be a price increase in the value-added hair oil category. “The company has taken a price hike of 5-6% in this segment in March,” he said. In April, too, Marico increased prices of select categories of Parachute coconut oils by 10%, while amla hair oils prises rose 3-7%.

    The management at Dabur told analysts after the earnings announcement that inflation was around 9% in the quarter ended March, and there is no sign of abatement.

    Mohit Malhotra, CEO, Dabur India, said, “It will be in the range of around 7% to 8% again, on top of 6% to 7% inflation of last year. There could be a price increase that we will have to take to avoid gross margin shrinkage. At least for two quarters, we will have to watch very cautiously, and see if we can take any price increases or cut back on the costs, because inflationary environment is just going on as we speak. However, we expect inflation to kind of abate a bit in the second half of the year.” Dabur’s gross margins suffered a decline of 130 basis points in the March quarter.

    Tea prices are expected to remain range-bound as they have come off significantly from their peak. Analysts at Motilal Oswal expect tea prices to remain range-bound for Tata Consumer Products, with a good monsoon forecast resulting in a better harvest season. However, the company’s India food business comprising salt and Sampann brands is expected to witness cost pressures in the short term.

    ITC, however, is bucking the trend among FMCG players as its FMCG profitability surprised positively in the January-March quarter, with Ebitda margin up 75 basis points y-o-y to 9%, despite inflationary headwinds. “Apart from pricing actions and cost controls, favourable business mix also helped. FMCG Ebitda grew 22% y-o-y, sharply above estimates. While FMCG peers combat growth slowdown and raw material pressures, ITC is seeing a recovery in earnings, with good momentum across verticals and high margin visibility,” said analysts at Jefferies.

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