LAHORE (PPI) - At the meeting of Unilever Pakistan Limited (UPL) held on Monday the Board of Directors approved the un-audited Financial Results of the Company for the quarter ended March 31, 2010. According to the details, despite rampant smuggling of tea which affected the growth and profitability of the Beverages category, healthy volume growth in the rest of the business resulted in aggregate sales increase of 16%. Nearly half the tea consumed in Pakistan is now smuggled, mainly through misuse of the ATT. The govt is losing nearly Rs 8b in taxes. Unilever, together with the Pakistan Tea Association and Pakistan Business Council is lobbying for removal of incentive to smuggle through tax revenue-neutral adjustment in duties and GST/VAT. Additionally it is seeking limits, based on Afghanistans genuine need, on what can be imported under ATT. In Quarter One, the companys focus remained on enhancing consumer and customer value through superior products and by absorbing rising input costs. Unilever also continued to invest behind brands. Increase in input costs, especially of raw tea resulted in lower gross margin. Efficient working capital management reduced financial charges significantly. Earning per share grew by 4%. In 'Home and Personal Care division, the HPC business strengthened its market position by sharpening consumer focus. Surf continued to consolidate its leadership. Lifebuoy and Sunsilk were the other star performers, achieving double digit growth. The re-launch of Sunsilk with the Co-creations campaign was well received by consumers. The 'Beverages segment continues to suffer from rampant smuggling through the Afghan Transit Trade. Increase in Kenyan tea prices combined with the devaluation of the Rupee negatively impacted the gross margin. Despite these factors, the category managed to deliver volume and sales growth on the back of strong brand equity through sharply differentiated portfolio. The 'Ice Cream segment delivered impressive volume led sales growth. Focus on innovations, including Cornetto Double Chocolate and Zapper continued to delight consumers. Portfolio rationalisation and re-deployment of freezer cabinets resulted in higher throughput and improvement in profitability. The Spreads business achieved double digit growth through penetration into new towns. Effective placement of visi-coolers at retail outlets resulted in improved visibility. The launch of the Healthy Lunch Box Challenge campaign has been well received by consumers. For the companys future outlook, the growing inflationary pressure from rising commodity costs; smuggling of tea; volatility in raw tea cost; power short-fall; and the security environment pose challenges. Diversified portfolio of strong brands, continued focus on consumer value and deep reach will help overcome these.