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Hindustan Unilever shuts Assam unit; shares drop

Hindustan Unilever shuts Assam unit; shares drop
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First Published: Tue, Jul 17 2007. 12 20 AM IST
Updated: Tue, Jul 17 2007. 12 20 AM IST
New Delhi: India’s biggest household-products maker, Hindustan Unilever Ltd, shut its personal care products manufacturing factory in Assam because of a dispute with workers.
A “lock-out” at the factory was declared on Sunday after a “series of illegal strikes launched by the workmen during the last six months,” the Mumbai-based company said in an emailed press release.
The factory is located in the town of Doom Dooma, about 500km from Guwahati, the commercial capital of Assam.
The factory accounts for 15% of the company’s total output of personal care products.
Products such as Fair & Lovely skin creams and Pepsodent toothpastes reap about half its pre-tax profit and a quarter of net sales.
“Until and unless this goes on for a few weeks, it should not have much of an impact,” said Anand Shah, an analyst at Angel Broking Ltd, who has a “hold” rating on the stock.
The personal products division “is one of the highest-margin businesses for the company,” Shah added.
Shares of Hindustan Unilever, 51.4% owned by Rotterdam and London-based Unilever, fell Rs4.5, or 2.2% to 198.15 on the Bombay Stock Exchange on Monday.
The shares have declined by 8.5% since the start of the year.
In April 2004, the workers and the management agreed on a settlement, accordingto which the workers were to be paid an additional allowance of Rs200 a month fromApril this year, HindustanUnilever said.
A company audit found there were “various viola-tions of the mutually agreed settlement by the work-men and the union” and it decided not to “release the payment” as it would set a “bad precedent,” Hindustan Unilever said.
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First Published: Tue, Jul 17 2007. 12 20 AM IST