HLL slipped 2.78% to Rs 150.60 shortly after it became ex-dividend on the bourses.

Over 142,000 Hindustan Lever shares were traded on BSE by 11:20 IST. The scrip had , in fact, risen from its 52-week low of Rs 145.10 (on 1 April 2003) by 6.75% to Rs 154.90 on 3 April 2003. As per market talk, DSP Merrill Lynch Broking was pursuing the stock over the last couple of sessions.

In contrast, between 24 February and 1 April 2003, the scrip had lost 16.75% to Rs 145.10 from Rs 174.30.

Friday's fall in HLL is purely due to the fact that the stock has become ex-dividend. The company had earlier declared a 300% (Rs 3 per share) dividend for the year ended 31 December 2002. The company has fixed 8 April to 23 April as book closure tenure for allotting dividend to shareholders.

The scrip's fall worked towards depressing the BSE Sensex too, which stood at 3,146.81, down 4.35 points at 11:20 IST. HLL has around 13-14% weightage on the BSE Sensex.

Meanwhile, concerns are high over the company's current performance. There is also wide anxiety that domestic sales of FMCG and pharmaceutical companies may be adversely affected due to the introduction of the uniform Value Added Tax at the rate of 12.5% from 1 April 2003, replacing the sales tax levied by various state governments. Due to this, many dealers have cut down their existing inventories and are postponing fresh intake till the time there is more clarity on VAT.

The current rate of sales tax is around 7 to 8% on an average, across the country. However, the uniform VAT is fixed at 12.5%. In addition, considering trade discounts and commissions, the effective rate could likely be around 15.5%. Further, the industry is also worried about the treatment of stock-in-trade of goods at the wholesaler and retailer end. As a result, some wholesalers and retailers have requested companies to take back stocks as of 31 March 2003, while a few others have substantially reduced their purchases.

HLL continues to pass through a turbulent period, with a substantial slowdown in its domestic business in the past 8-12 quarters. An adverse monsoon in 2002 also further distanced any recovery in demand for the company's products. Analysts say demand is likely to remain subdued, with growth expected to remain flat for the next two quarters. Although the management is aggressively restructuring its business, the macro environment remains challenging.

For the full year ended 31 December 2002, HLL recorded a 7% growth in bottom line to Rs 1,755.68 crore (Rs 17.55 billion), but a 7% drop in top line to Rs 9,954.85 crore (Rs 99.54 billion). For the fourth quarter ended 31 December 2002, HLL registered a 7% growth in bottom line to Rs 466.51 crore (Rs 46.6 billion) on a 2% decline in top line to Rs 2634.5 crore. At the profit after tax but before EO level, the company registered a 9% growth in net profit to Rs 542.84 crore (Rs 5.42 billion).

As on 31 December 2002, the promoters' holding in HLL was 51.6%, while the public, domestic institutions and FIIs held 21.4%, 13.4% and 12.83%, respectively.

BSE code: 500696