Mumbai, June 24: Hindustan Lever chairman KB Dadiseth reiterated on Tuesday that the company was likely to evaluate the benefits of a possible merger with sister concern Pond's India.

Addressing shareholders at the company's 64th annual general meeting (AGM), his first AGM since he became chairman in August 1996, Dadiseth said that the businesses of both the companies overlap in terms of exports and personal products. This is further leveraged by the arrangement of a common selling and distribution system, he said.

On the recent excise levied on the maximum retail price, Dadiseth assured shareholders that the company had already initiated measures to minimise the impact. The impact would be felt shortly, he added.

The chairman said that HLL has earmarked a capital expenditure in the range of Rs 150-170 crore per annum over the next three years. This will generate financial returns of 52 per cent, he said.

He said the company would bring out new product categories in foods, ice-cream and culinary which require great deal of innovation.

A delay in the dispatch of dividend warrants is likely because of new directives issued by the Reserve Bank of India (RBI) that the `at par' facility in relation to payment of dividend cannot be extended at all branches of any bank.

Dadiseth said that even as the company made a representation for a special permission to Punjab National Bank, the bank has conveyed to the company that it has to comply with the new directives of RBI.

He said that in the above circumstances, HLL was left with no option but to reprint the dividend warrant stationery with the endorsement "payable at par at select branches" and process dividend payment again. The board has thus resolved to change the date of payment of dividend from June 25 to July 10.

On the pricing relating to the preferential allotment of shares to Unilever, Dadiseth said that the income derived through investment of share premium suspense account will be shared pro-rata between HLL and Unilever Plc in the ratio of 252:343. HLL's share of income from escrow account upto May 31, 1996 works out to Rs 26 crore (pre-tax). Dadiseth said that consent terms arrived at are fair and equitable bearing in mind the totality of the circumstances.

On the dereservation of the icecream sector, the chairman said that if an opportunity arises to purchase an icecream facility, the company will examine it.

Regarding its share in the soaps and detergents market, he said that HLL accounts for one-third of the total market where volumes are 3.5 million tonnes.

On exports, Dadiseth said that the business has been restructured by closing down a few units like acquaculture which were not profitable. Exports would continue to grow in consonance of the fact that they would be profitable to the company. Total exports of HLL stand at Rs 682 crore.

On shareholders' demand for a bonus issue, Dadiseth said that such market sensitive information could not be disclosed. On economic liberation after liberalisation, Dadiseth asserted that India can aspire for and attain the target of eight per cent economic growth annually.

He said that the breakthrough from liberalisation to liberation concerns HLL whose future is closely linked to that of India. According to him, the requirement is that of an integrated food supply chain to make agriculture a growth driver.

Answering a shareholder's query on the key areas which worry the chairman, Dadiseth said it was the emerging competition post-liberalisation and the difficulty in establishing brands which require a high degree of innovation.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.