INDUSTRIAL ANALYSIS

ON
“FAST MOVING CONSUMER GOODS
INDUSTRY IN INDIA”

SUBMITTED BY
CH. BALA KOTAIAH
(09KP1E0006)

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY

KAKINADA.

NRI INSTITUTE OF TECHNOLOGY,

VISADALA ROAD, PERECHERLA,
GUNTUR-522009
 Certificate

This is to certify that the

dissertation entitled, is a bonified
record of industrial analysis on
“FMCG INDUSTRY IN INDIA ‘’
carried out by ‘’CH. BALA KOTAIAH”
submitted to the department of MBA,
NRI Institute of technology for the
practical fulfillment in the II semester
of Masters of business Administration.

PROJECT GUIDE
(M.NAGA RAJU)
 DECLARATION

I declare that this dissertation work entitled

“ANALYSIS OF FMCG INDUSTRY IN INDIA” is the original

Work carried out by me under the supervision of

prof.M.NAGARAJU. of NRI INSTITUTE OF TECHNOLOGY,

Perecharla, and that Ihave not Submitted in these results in

any from previously for the award of Any degree.

(BALA KOTAIAH)
 ACKNOWLEDGEMENT

I would like to thank M.NAGA RAJU M.B.A, Ph.D, M.Phill Professor

of M.B.A Department, N.R.I. Institute of Technology for granting me
permission to do this project.

I am thankful to my parents and friends, who helped directly or indirectly

in my phase of the completion of my project work.

I would like to thank all my respondents for their co-operation during the
project work.

CH. BALAKOTAIAH
(LAKSHYA TEAM)
 INDEX

1. INTRODUCTION
2. OBJECTIVES
3. SCOPE
4. METHODOLOGY & LIMITATIONS
5. OVERVIEW OF INDUSTRIAL ANALYSIS
6. CURRENT SENARIO
7. KEY PLAYERS
 Hindustan Unilever Ltd.
 ITC (Indian Tobacco Company)
 Nestlé India
 GCMMF (AMUL)
 Dabur India

8. FUTURE TRENDS
9. SWOT ANALYSIS
10. SUMMARY
11. SUGGESTIONS
12. BIBILOGRAPHY
INTRODUCTION

Fast Moving Consumer Goods (FMCG)

FMCG are products that have a quick shelf turnover, at relatively low cost
and don't require a lot of thought, time and financial investment to purchase.
The margin of profit on every individual FMCG product is less. However the
huge number of goods sold is what makes the difference. Hence profit in
FMCG goods always translates to number of goods sold. Fast Moving
Consumer Goods is a classification that refers to a wide range of frequently
purchased consumer products including: toiletries, soaps, cosmetics, teeth
cleaning products, shaving products, detergents, and other non-durables such
as glassware, bulbs, batteries, paper products and plastic goods, such as
buckets.
’ Fast Moving’ is in opposition to consumer durables such as kitchen
appliances that are generally replaced less than once a year. The category
may include pharmaceuticals, consumer electronics and packaged food
products and drinks, although these are often categorized separately. The
term Consumer Packaged Goods (CPG) is used interchangeably with Fast
Moving Consumer Goods (FMCG).Three of the largest and best known
examples of Fast Moving Consumer Goods companies are NESTLÉ,
UNILEVER AND PROCTER & GAMBLE. Examples of FMCGs are soft
drinks, tissue paper, and chocolate bars. Examples of FMCG brands are
Coca-Cola, Kleenex, Pepsi and Believe. The FMCG sector represents
consumer goods required for daily or frequent use. The main segments of
this sector are personal care (oral care, hair care, soaps, cosmetics, and
toiletries), household care (fabric wash and household cleaners), branded and
packaged food, beverages (health beverages, soft drinks, staples, cereals,
dairy products, chocolates, bakery products) and tobacco.

The Indian FMCG sector is an important contributor to the country's GDP. It

is the fourth largest sector in the economy and is responsible for 5% of the
total factory employment in India. The industry also creates employment for
3 m people in downstream activities, much of which is disbursed in small
towns and rural India. This industry has witnessed strong growth in the past
decade. This has been due to liberalization, urbanization, increase in the
disposable incomes and altered lifestyle. Furthermore, the boom has also
been fuelled by the reduction in excise duties, de-reservation from the small-
scale sector and the concerted efforts of personal care companies to attract
the burgeoning affluent segment in the middle-class through product and
packaging innovations.

Unlike the perception that the FMCG sector is a producer of luxury items
targeted at the elite, in reality, the sector meets the every day needs of the
masses. The lower-middle income group accounts for over 60% of the
sector's sales. Rural markets account for 56% of the total domestic FMCG
demand. Many of the global FMCG majors have been present in the country
for many decades. But in the last ten years, many of the smaller rung Indian
FMCG companies have gained in scale. As a result, the unorganized and
regional players have witnessed erosion in market share.
HISTORY OF FMCG IN INDIA
In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have
been a dominant force in the FMCG sector well supported by relatively less
competition and high entry barriers (import duty was high). These
companies were, therefore, able to charge a premium for their products. In
this context, the margins were also on the higher side. With the gradual
opening up of the economy over the last decade, FMCG companies have
been forced to fight for a market share. In the process, margins have been
compromised, more so in the last six years (FMCG sector witnessed decline
in demand).

OBJECTIVES OF FMCG
 Critical operating rules in Indian FMCG sector
 Heavy launch costs on new products on launch advertisements, free
samples and product promotions.
 Majority of the product classes require very low investment in fixed
assets
 Existence of contract manufacturing
 Marketing assumes a significant place in the brand building Process
 Extensive distribution networks and logistics are key to achieving a
high level of penetration in both the urban and rural markets
 Factors like low entry barriers in terms of low capital investment,
fiscal incentives from government and low brand
 Awareness in rural areas have led to the mushrooming of the un
organized sector
 Providing good price points is the key to success.
 SCOPE

The Indian FMCG sector with a market size of US$13.1 billion is the

fourth largest sector in the economy. A well-established distribution

network, intense competition between the organized and unorganized

segments characterize the sector. FMCG Sector is expected to grow by over

60% by 2010. That will translate into an annual growth of 10% over a 5-year

period. It has been estimated that FMCG sector will rise from around Rs

56,500 crores in 2005 to Rs 92,100 crores in 2010. Hair care, household

care, male grooming, female hygiene, and the chocolates and

Confectionery categories are estimated to be the fastest growing segments,

says an HSBC report. Though the sector witnessed a slower growth in 2002-

2004, it has been able to make a fine recovery since then.

For example, Hindustan Levers Limited (HLL) has shown a healthy growth

in the last quarter. An estimated double-digit growth over the next few years

shows that the good times are likely to continue.

METHODOLOGY & LIMITATIONS
 FMCG are products that have a quick shelf turnover, at relatively low

cost and don't require a lot of thought, time and financial investment

to purchase. The margin of profit on every individual FMCG product

is less. However the huge number of goods sold is what makes the

difference. Hence profit in FMCG goods always translates to number

of goods sold.

 Fast Moving Consumer Goods is a classification that refers to a wide

range of frequently purchased consumer products including: toiletries,

soaps, cosmetics, teeth cleaning products, shaving products,

detergents, other non-durables such as glassware, bulbs, batteries,

paper products and plastic goods, such as buckets.

 Fast Moving’ is in opposition to consumer durables such as kitchen

appliances that are generally replaced less than once a year. The

category may include pharmaceuticals, consumer electronics and

packaged food products and drinks, although these are often

categorized separately.
OVERVIEW OF FMCG IN INDIA

 Products which have a quick turnover, and relatively low cost are
known as Fast Moving Consumer Goods (FMCG). FMCG products
are those that get replaced within a year
 Products such as toiletries, soap, cosmetics, tooth cleaning products,
shaving products and detergents, as well as other non-durables such as
glassware, bulbs, batteries, paper products, and plastic goods.
 FMCG may also include pharmaceuticals, consumer electronics,
packaged food products, soft drinks, tissue paper, and chocolate bars.
 White goods in FMCG refer to household electronic items such as
Refrigerators, TVs, Music Systems, etc.
 Fourth Largest sector in the economy with total market size of
$18.1bn and expects to rise to $33.4bn by 2015
 Presence of many MNCs and intense competition between organized
and unorganized segment.
 Low operational cost, availability of Raw materials, cheap labor gives
India a competitive edge.
 Penetration of markets is yet to reach maturity level, as rural markets
are still untapped.
 Growth is likely to come from matured product categories as more
than 200mn people would shift to processed foods by 2010
 Automatic investment approval for FDI upto 100%
 Economy growing by more than 6% which would increase the buying

power of the consumers.

 Recent survey showing 47% of India’s 1+billion people are under age
20, among which 160mn are teenagers which has 14000crs of
discretionary income and their families spend an additional 18500crs
on them every year.

 By 2015 Indians under age 20 are estimated to make up 55% of the

population and would have proportionately higher spending power.

 The FMCG sector in India is expected to grow at a compounded

annual growth rate (CAGR) of 9%
CURRENT SCENARIO
The growth potential for FMCG companies looks promising over the
long-term horizon, as the per-capita consumption of almost all products in
the country is amongst the lowest in the world. As per the Consumer Survey
by KSA-Technopak, of the total consumption expenditure, almost 40% and
8% was accounted by groceries and personal care products respectively.
Rapid urbanization, increased literacy and rising per capita income are the
key growth drivers for the sector. Around 45% of the population in India is
below 20 years of age and the proportion of the young population is
expected to increase in the next five years. Aspiration levels in this age
group have been fuelled by greater media exposure, unleashing a latent
demand with more money and a new mindset. In this backdrop, industry
estimates suggest that the industry could triple in value by 2015 (by some
estimates, the industry could double in size by 2010).
In our view, testing times for the FMCG sector are over and driving rural
penetration will be the key going forward. Due to infrastructure constraints
(this influences the cost-effectiveness of the supply chain), companies were
unable to grow faster. Although companies like HLL and ITC have
dedicated initiatives targeted at the rural market, these are still at a relatively
nascent stage.
The bottlenecks of the conventional distribution system are likely to be
removed once organized retailing gains in scale. Currently, organized
retailing accounts for just 3% of total retail sales and is likely to touch 10%
over the next 3-5 years. In our view, organized retailing results in discounted
prices, forced-buying by offering many choices and also opens up new
avenues for growth for the FMCG sector.

FORECAST 2010

 Rural and semi-urban

 128 million population thrice the urban

 Market size growth from 48k to 100k Crores (Growth of 50% at

10%CAGR)

 Increase penetration from the current less than 1%

 Problems in the rural sector

 Low per capita disposable incomes

 Large number of daily wage earners

 Acute dependence on vagaries of monsoon

 Seasonal consumption

 Poor infrastructure – roads and power supply

 Urban

 Market 16.5k to 35k Crores (Growth of 100% at 20%CAGR)

  Intense competition – severe pressure on margins – Focus on

newer products, such as fruit juices

TOP 10 FMCG COMPANIES IN INDIA

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble Hygiene and Health Care

10. Marico Industries

11.Colgate-Palmolive (India)ltd

12.Gillette India ltd.

13.Godfrey Phillips

14.Henkel spic
15.Johnson & Johnson

Hindustan Unilever Limited

Hindustan Unilever Limited also called Hindustan Lever Limited (HLL) was
established in 1933 as Lever Brothers India Limited. Hindustan Lever
Limited (HLL) is India's largest Fast Moving Consumer Goods Company,
with a customer base of 2 out of every 3 Indian in the category of Home &
Personal Care Products and Foods & Beverages. The company has combined
volumes of about 4 million tonnes and sales of Rs.10, 000 crores. HLL is
also one of the country's largest exporters; the Government of India has
recognized HLL as a Golden Super Star Trading House.

Type Public
Headquarters Mumbai , India
Mr.Harish Manwani ,
Key people
Chairman Douglas Baillie, CEO
Industry FMCG
Products Tea, soap, detergents
Employees 41,000
Parent Unilever
Website www.hll.com
Some of HLL brands are:

• Kwality Walls Ice Cream

• Hamam
• Lifebuoy
• Rexona
• Lux
• Liril
• Moti Soaps
 • Breeze
• Lipton Tea
• Brooke Bond Tea
• Bru Coffee
• Pepsodent

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Sales 7120,06 8342,75 10215,24 10917,69 11392,14 11781,30 10951,61 11096,02 10888,38 11975,53
Profit
After 412,70 580,25 580,25 1069,94 1310,09 1540,95 1731,32 1804,34 1199,28 1354,51
Taxation
New Ventures
 Hindustan Lever Network
 Ayush Ayurvedic Products & Services
 Sangam
 Pureit Water Purifiers

Exports
 HPC
 Beverages
 Marine Products
 Rice
 Castor

Corporate Communications Department

Hindustan Lever Limited
Hindustan Lever House
165/166, Backbay Reclamation
Mumbai - 400020
Maharashtra
India.
Tel: +91-22-39830000
Fax: +91-22-22871970
ITC LIMITED
ITC was set up in 1910 by the name of 'Imperial Tobacco Company of India
Limited'. The company is now known as Indian Tobacco Company Ltd.

ITC has its presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information
Technology, Branded Apparel, Greeting Cards, Safety Matches and other
FMCG products. ITC is a market leader in the businesses of Cigarettes, Hotels,
Paperboards, Packaging and Agri-Exports. It is gaining its market share very
rapidly in the businesses of Packaged Foods & Confectionery, Branded
Apparel and Greeting Cards & Stationery.

-Turnover ¬¬- US$ 3.5 Billion

-Employee Base - Over 20,000 people
-Shareholders - 4,58,000
Hierarchy
There are three levels of leadership at ITC. The Board of Directors at the apex, as
trustee of shareholders, holds the responsibility for strategic supervision of the
Company. The strategic management of the Company is with the Corporate
Management Committee comprising the whole time Directors and members drawn
from senior management.
Recruitment
Entry-level recruitment
ITC visits premier Engineering and Management campuses every year to recruit
talented people.
. Manufacturing . Marketing and Human Resources . Trading, Sourcing and
Logistics . Finance
Manufacturing:
ITC Visits 5 IITs (Chennai, Delhi, Kanpur, Kharagpur, Bombay) and some of the
NITs for its technical functions from various disciplines such as Mechanical,
Electrical and Electronics, Production Engineering, Chemical and Civil.
Marketing and Human Resources
ITC recruits talent from the premier Management Institutes of the country for
Marketing and HR functions. These campuses include the IIMs, ISB, XLRI, FMS,
IIFT, TISS, JBIMS and Symbiosis.

Finance

ITC recruits entry-level talent from qualified Chartered Accountants and MBAs
(Finance) for the Finance function.
Trading, Sourcing and Logistics

ITC visits premier institutes such as IIMA, IIFT, IRMA and MANAGE to induct
talent for its Agri Business Division.

Hospitality

ITC inducts Management Trainees every year from Hotel Management Institutes,
who are then trained at the Welcome group management Institute in Gurgaon. ITC
visits selected campuses for the purpose of inducting entry-level talent for its
Hotels.

Research & Development

ITC inducts R&D professionals for its Group R&D Center located in Bangalore as
well as for its Agricultural Research Centers at Rajahmundry and Sarapaka. ITC
recruits MScs/B.Techs/M.Techs and PhDs in this area as Research Associates and
Scientists. Individuals could be either fresh graduates or have relevant work
experience in other organizations.

Secretarial

ITC's Secretarial function offers careers to people who are qualified Company
Secretaries. These professionals are members of the Institute of Company
Secretaries of India. Additional qualifications could be in Chartered Accountancy
or Law.

Summer Internships

ITC offers summer internships to students from the IITs and premier Management
Institutes every year.
Registered Office

Virginia house
37 J.L..Nehru Road, Kolkata 700 071
EPABX no.: 91-(0) 33 22889371
Corporate Affairs Office
Thapar House,
2nd Floor, 124 Janpath,
New Delhi 110001
Tel
41502301, 41502302, 41502163
Fax
23368750/23745931
Nestlé India Ltd
Nestlé's relationship with India started in 1912. It started its trading with
India as The Nestlé Anglo-Swiss Condensed Milk Company (Export)
Limited, importing and selling finished products in the Indian market. Nestlé
India is amongst India's 'Most Respected Companies' and amongst the 'Top
Wealth Creators of India'.

Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. Nestlé India is a

company that provides Indian Consumers products with global standards and
is committed to constant growth and shareholder satisfaction. Nestlé India
has also provided opportunities of growth and employment to about 1
million people including farmers, suppliers of packaging materials, services
and other goods.
Nestlé made its first investment in Moga in 1961. In 1967 Nestlé established
its next factory at Choladi (Tamil Nadu). At present, it has a number of
factories in different parts of India such as:
1. Punjab
2. Uttaranchal
3. Delhi
4. Gurgaon
5. Kolkata
6. Mumbai
7. Goa
8. Karnataka
9. Chennai
10. Tamil Nadu
Financial Figures for Year-2006 (Quarter 3) In millions of CHF (Swiss
Franks)

Results 2006 2005

EBIT (Earnings before Interest, Taxes, 13 302 11 876
Restructuring and Impairments)
As % of sales 13.5% 13.0%
Net Profit 9 197 8 081
Market Capitalization, end December 166 152 152 576
Total earnings per share 23.9 20.78
Sales 98 458 91 115
Careers with Nestlé Nestlé
has an employee base of around 250,000. Nestlé also offers an opportunity
of working overseas. It provides career in various fields such as Marketing,
Administration, Finance or Molecular Biology.
Every year, Nestlé recruits a large number of graduates with strong academic
qualifications, essential language skills and relevant internships or
professional experience.
Nestlé India Ltd.
Nestlé House, Jacaranda Marg
M Block, DLF City Phase II
Gurgaon 122 002 - Haryana
India
+91 124 238 93 00
+91 124 238 94 11
 GCMMF (AMUL)
Amul was formed in 1946 by an apex co-operative organization, Gujarat
Cooperative Milk Marketing Federation. AMUL means "priceless" in
Sanskrit. Amul products are used by millions of people. Amul Butter, Amul
Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates,
Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk, and Amulya has
made Amul one of the leading food brands in India. Amul products are sold
at reasonable prices. Amul has a turnover of Rs. 37.74 billion

in 2005-06.

No. of Cooperative Unions 12

No. of Producer Members: 2.5 million

No. of Village Societies: 11,962

Total Milk Handling Capacity: 9.91 million liters per

day

Milk Collection (Total – 2005-06): 2.28 billion liters

Capacity 6,595 thousand liters per

Day

No. of Dairy Plants 19

Sales Turnover
 Sales Turnover Rs (million) US $ (in million)

2001-02 23365 500

2002-03 27457 575

2003-04 28941 616

2004-05 29225 672

2005-06 37736 850

AMUL'S PRODUCTS
Infant Milk Range
Amul Infant Milk Formula 1
Amul Infant Milk Formula 2
Amulspray Infant Milk Food
Milk Powders
Amulya Dairy Whitener
Sagar Skimmed Milk Powder
Sagar Tea and Coffee Whitener
Amul Full Cream Milk Powder
Bread Spreads
Amul Butter
Amul Lite Low Fat Bread Spread
Amul Cooking Butter

EXPORTS
GCMMF is the largest exporter of Dairy Products in India. It has been given
a "Trading House" status. The Government of India has awarded the
APEDA (Agriculture and Processed Food Products Exports Development
Authority) to GCMMF for excellence in Dairy Product Exports for the last 9
years. Amul has entered overseas markets such as Mauritius, UAE, USA,
Bangladesh, Australia, China, Singapore, Hong Kong , Sri Lanka and a few
South African countries.

The major export products are:

Consumer Packs
Amul Pure Ghee
Amul Butter
Amul Shrikhand
Amul Mithaee Gulabjamun
Nutramul Brown Beverage
Amulspray Infant Milk Food
Amul Cheese
Amul Malai Paneer
Amul UHT Milk
Amul Fresh Cream

Bulk Packs
Amul Skimmed Milk Powder
Amul Full Cream Milk Powder

Gujarat Cooperative Milk Marketing Federation Ltd.

Amul Dairy Road
P B No.10, Anand 388 001,
India
Phone: +91-2692-258506, 258507, 258508, 258509
Fax: +91-2692-240208
Email: gcmmf@amul.com
 DABUR INDIA LTD
Dabur India Ltd. is the fourth largest FMCG Company in India. Dabur deals
in Health care and Personal care products. Today, Dabur has a turnover of
Rs.1899.57 crores. The market penetration of Dabur is of about 1.5 million
retail outlets all over India with 47 C& F agents and more than 5000
distributors. Dabur India is divided into 2 major strategic business units:
Consumer Care Division
Consumer Health Division

Dabur has 3 subsidiary group companies:

1. Dabur Foods
2. Dabur Nepal
3. Dabur International- Further divided into Asian Consumer Care in
Bangladesh, African Consumer Care in Nigeria and Dabur Egypt.
Dabur has 13 ultra-modern manufacturing units in:
 Jammu & Kashmir
 Uttar Pradesh
 Himachal Pradesh
 Madhya Pradesh

(Rs. in Cr.)
FINANCIALS
FOR PAST 4 FMCG FMCG FMCG
FMCG Standalone
YEARS (RECAST)* Standalone Standalone
05-06
02-03 03-04 04-05

Profit and Loss Account

Sales 1048.5 1148.0 1268.7 1369.7

Other Income 4.9 11.1 11.5 5.4

Earnings Before
Depreciation,
109.6 136.1 187.9 243.3
Interest & Taxes
(EBDIT)

Profit Before
80.0 113.4 165.0 214.4
Tax

Profit After Tax 72.0 101.2 148.0 189.1

EPS (Rs.) 2.5 3.5 5.2 3.3***

West Bengal
 Silvassa
 Nepal
Dabur's Brands
 Vatika
 Anmol
 Hajmola
 Dabur Amla
 Dabur Chyawanprash
 Dabur Lal Dant Manjan
Exports
 United Kingdom
 Egypt
 Bangladesh
 Dubai
 Nigeria
 Nepal
Dabur has its offices and representatives in America, Europe, and Africa. It
exports Active Pharmaceutical Ingredients to Latin America, Europe, Africa,
and other Asian countries. Dabur also exports herbal products to Middle
East, Far East, and several European countries. Today Dabur is marketing its
products in more than 50 countries.
Corporate Address
Dabur India Ltd.
Kaushambi
Ghaziabad - 201010
Uttar Pradesh, India
Phone:
+91 (0120) 3982000
+91 (0120) 3001000
 ASIAN PAINTS INDIA LTD

Asian Paints was formed in 1942 in India. Asian Paints is dealing in marine
and industrial coatings, automobile OEMs and refinishes, wood finishes,
finish coats and an ancillary product in decorative paints. It manufactures
and markets paints. The plants of the Group are located in:
Maharashtra
Gujarat
Andhra Pradesh
Uttar Pradesh
Tamil Nadu

Asian Paints is the largest paint company in India and the third-largest
company in Asia. It has a turnover of US$ 680 million. The company is
spread across 21 countries and has 29 paint manufacturing facilities

Asian Paints serves through its subsidiaries by the name of:

 Berger International Limited
 Apco Coatings
 SCIB Paints
 Taubmans
Some Facts about Asian Paints:
- Asian Paints was ranked among 200 Best small companies in the world for
2002 and 2003 and was presented as the 'Best under a Billion Award' by
Forbes Global Magazine;
- In Feb 2001, Asian Paints was also awarded as the Ninth Best Player in
India by the leading magazine called India Today;
- Asian Paints was ranked as the Fourth most admired company across
industries in India in a survey conducted by 'Economic Times' in January
2000;
Key Financials
Year end Mar04 Mar03 Mar02 Mar01 Mar00

Net Sales 2108.41 1885.26 1660.50 1524.81 1341.60

Operating Profit 287.85 285.90 237.78 209.59 191.22

Net Profit 147.58 143.37 115.33 106.39 97.34

Equity Cap pd 95.92 64.19 64.19 64.19 40.12

The audited results for the quarter ended at September 30, 2006
-Profit has increased to Rs 775.60 million from Rs 611.70 million for the
corresponding quarter in 2005.
-Total Income has increased to Rs 7949.52 million from Rs 6263.75 million
for the corresponding quarter in 2005.
- Net Profit has increased by 11.8 % to Rs 626.3 million from Rs. 560.3
million for the same quarter in 2005.

Worldwide Presence
Asian Paints India ltd. has its presence in:
 Middle East
 Asia
 Caribbean
 South Pacific
 Africa

Careers with Asian Paints India ltd.

Asian Paints provides consistent support to its employees. Asian Paints

believes in continuous learning.
The Company looks for the following attributes in a jobseeker:
 Interpersonal Effectiveness
 Business Perspective
 Achievement Orientation
 Planning and Analysis
 Customer Service Orientation
 Teamwork

The Qualifications and Attributes required in a candidate for various fields

are:

1. Commercial Professionals
 Candidate must be an MBA -Finance or CA-first attempt only
 Must be an Indian citizen or hold relevant residence status

2. Human Resource Professionals

 Candidate must be an MBA-HR
 Must be an Indian citizen or hold relevant residence status

3. Sales And Marketing

 Candidate must be an MBA-Marketing
 Must be an Indian citizen or hold relevant residence status

4. Territory Sales In charge

 Candidate must be below 26 years of age
 Any graduate (full-time course) with minimum 50% aggregate
 Must have good numerical and communication skills
 Must be computer literate
 Must be flexible about job location

5. IT Professionals
 Candidate must be an MBA-Systems or MCA

6. Supply Chain Professionals

 Candidate must be MBS-Operations or Engineer (Chemical/Mechanical)
 Must be an Indian citizen or hold relevant residence status

REGISTERED OFFICE:
Asian Paints India Ltd.
6/A Shantinagar
Santacruz (East)
Mumbai-400055
Maharashtra
India
Phone: 91-022-56958000
Fax: 91-022-56958888
Website: http://www.asianpaints.com

FUTURE TRENDS:
 Future Challenges for FMCG Manufacturers
  The Grocery Retail Industry is fiercely competitive, highly
innovative and has huge influence over its suppliers. The
challenge for manufacturers is to keep up.

 In Europe an FMCG manufacturer’s primary customer base

is the European Grocery Retail industry – which is by no
means static itself.
 By carefully analyzing trends in the Retail Industry – and
matching its Network Strategy to the evolving future
requirements of the Retailers – you can position yourself for
a sustained competitive edge.

A far from exhaustive list of potentially significant trends

would include:
 Factory Gate Pricing
 Trends towards convenience formats
 Automated composite Retail DC’s
 Electronic Product Coding (and ASN’s)

ANALYSIS OF FMCG SECTOR

STRENGTHS:
1. Low operational costs
2. Presence of established distribution networks in both urban and rural
areas
3. Presence of well-known brands in FMCG sector
WEAKNESSES:
1. Lower scope of investing in technology and achieving economies of
scale, especially in small sectors
2. Low exports levels
3. "Me-too" products, which illegally mimic the labels of the established
brands, narrow the scope of FMCG products in rural and semi-urban market.
OPPORTUNITIES:
1. Untapped rural market
2. Rising income levels i.e. increase in purchasing power of consumers
3. Large domestic market - a population of over one billion
4. Export potential 5. High consumer goods spending
THREATS:
1. Removal of import restrictions resulting in replacing of domestic brands
2. Slowdown in rural demand.
3. Tax and regulatory structure

DESIGN AND MANUFACTURING

 1. Low Capital Intensity - Most product categories in FMCG require
relatively minor investment in plan and machinery and other fixed
assets. Also, the business has low working capital intensity as bulk of
sales from manufacturing take place on a cash basis.

2. Technology - Basic technology for manufacturing is easily available.

Also, technology for most products has been fairly stable.
Modifications and improvements rarely change the basic process.

3. Third-party Manufacturing - Manufacturing of products by third

party vendors is quite common. Benefits associated with third party
manufacturing include

(1) flexibility in production and inventory planning;

(2) flexibility in controlling labor costs; and

(3) logistics - sometimes it’s essential to get certain products

manufactured near the market.

MARKETING AND DISTRIBUTION

 Marketing function is sacrosanct in case of FMCG companies. Major
features of the marketing function include the following: -

1. High Initial Launch Cost - New products require a large front-ended

investment in product development, market research, test marketing

and launch. Creating awareness and develop franchise for a new brand
requires enormous initial expenditure on launch advertisements, free
samples and product promotions. Launch costs are as high as 50-
100% of revenue in the first year. For established brands,
advertisement expenditure varies from 5 - 12% depending on the
categories.
2. Limited Mass Media Options - The challenge associated with the

launch and/or brand-building initiatives is that few no mass media

options. TV reaches 67% of urban consumers and 35% of rural
consumers. Alternatives like wall paintings, theatres, video vehicles,
special packaging and consumer promotions become an expensive but
required activity associated with a successful FMCG.
3. Huge Distribution Network - India is home to six million retail

outlets, including 2 million in 5,160 towns and four million in 627,000

villages. Super markets virtually do not exist in India. This makes
logistics particularly for new players extremely difficult.

FORCOSTING OF FMCG COMPANIES

 Markets all over the world have been on a roll in 2003 and the Indian
bourses are no exception having gained almost 60% in 2003. During this
period, while there are sectors that have outperformed this benchmark index,
there are also sectors that have under performed. FMCG registered gains of
just 33% on the BSE FMCG Index last year.

At the macro level, Indian economy is poised to remained buoyant

and grow at more than 7%. The economic growth would impact large
proportions of the population thus leading to more money in the hands of the
consumer. Changes in demographic composition of the population and thus
the market would also continue to impact the FMCG industry.

Recent survey conducted by a leading business weekly, approximately

47 per cent of India's 1 + billion people were under the age of 20, and
teenagers among them numbered about 160 million. Together, they wielded
INR 14000 Cr worth of discretionary income, and their families spent an
additional INR 18500 Cr on them every year. By 2015, Indians under 20 are
estimated to make up 55% of the population - and wield proportionately
higher spending power. Means, companies that are able to influence and
excite such consumers would be those that win in the market place.

The Indian FMCG market has been divided for a long time between
the organized sector and the unorganized sector. While the latter has been
crowded by a large number of local players, competing on margins, the
former has varied between a two-player-scenario to a multi-player one.

Unlike the U.S. market for fast moving consumer goods (FMCG),
which is dominated by a handful of global players, India's Rs.460 billion
FMCG market remains highly fragmented with roughly half the market
going to unbranded, unpackaged home made products.

This presents a tremendous opportunity for makers of branded

products who can convert consumers to branded products. However,
successfully launching and growing market share around a branded product
in India presents tremendous challenges. Take distribution as an example.
India is home to six million retail outlets and super markets virtually do not
exist.

This makes logistics particularly for new players extremely difficult.

Other challenges of similar magnitude exist across the FMCG supply chain.
The fact is that FMCG is a structurally unattractive industry in which to
participate. Even so, the opportunity keeps FMCG makers trying.

STRATEGY OF FMCG COMPANIES

COMPETITIVE STRATEGIES FOLLOWED BY FMCG
COMPANIES IN INDIA

Competitive Strategy consists of move of companies in order to attract

customers. With stand competitive pressures and strengthen an
organization’s market position. The main objective of Competitive Strategy
is to generate a competitive advantage, increase the loyalty of customers and
to beat competitors.

Five main competitive strategies are:

• Overall low cost leadership strategy

• Best cost provider’s strategy
• Broad differentiation strategy
• Focused low cost strategy
• Focused differentiation strategy

Here competitive strategy varies from sector to sector and company to

company. Thus, it is not easy to predict a single or to find a single
strategy for the whole sector. When we come on to FMCG Sector main
strategies lay behind market strategies, cost, and quality strategies. Here
in this report you are going to get information about such type of
strategies of FMCG giants.

POWER BRANDS, THE NEW FMCG MANTRA

Three men, one voice. Indian fast moving consumer goods companies like
HLL, Godrej Consumer Products Limited and Marico Industries are
completely sold on the concept of "power brands".

But in their rush to put their best brands forward, are these big companies in
danger of overlooking the potential offered by some of the also-ran brands?

It's been almost five years since these three FMCG giants opted to manage
their brand portfolios on the basis of the power brand strategy.

SUMMARY OF FMCG COMPANIES

They should not only price their products competitively, but also offer their
rural prospects maximum value for money spent. Certainly, reaching out to
3.33 million retail outlets is an uphill task. The only way out for Indian
FMCG players: put in place an aggressive cost structure that would enable
them to offer low-price and value-for-money products. But then, FMCG is a
low-margin business with a high cost of raw materials. Consider the case of
Marico: its material cost works out to a high of 59 per cent on sales. Therein
lays the rural marketing paradox.
However, customer-centric and market-savvy FMCG companies have
always chased prospects when they perceive there is a latent demand. For
instance, Hindustan Lever's Rin, Surf and Lux are available even in India's
most obscure villages. Hindustan Lever had given shape to its rural strategy
a few years ago when it perceived that its urban market was shrinking due to
an industrial slowdown. It’s Operation Bharat that focused on personal care
products made the most out of surging rural incomes. The result was there
for all to see. The company has been able to clock in double-digit profits
every three years and log in double-digit revenues every four years.
Britannia with its Tiger brand of biscuits and Colgate-Palmolive with its
low-priced and conveniently-packaged products designed for the rural
masses have been other pioneers in rural marketing.

DISTRIBUTION
One of the age-old problems that FMCG has been facing not only in India
but globally is that of distribution. Integrating operations with your
distributors and channel partners is a Herculean task. Few ways to reduce
pain involved in this link:

• Reducing supply chain costs by reducing intermediaries -

Organized retail chains have set up systems for inventory management
and quick servicing, thereby offering the opportunity for a
company/supplier to reduce distribution cost by reducing
intermediaries such as wholesalers/distributors and supplying directly
to the warehouse of retail chain.
• Increasing sales by driving channel width - The relative share of
grocers to FMCG sales has dropped from over 50% in the early 90's to
35% in the late 90's. On the other hand the contribution of chemist
outlets and paan outlets has been increasing. This has been a result of
both SKU's (sachets) and hardware (mini dispensers) being
specifically designed to facilitate entry to these outlets and increase
consumer interface.

Major suggestions:
As majority of customers (38 percent) visit the store weekly especially
weekends. So it is suggest to stores give special offers and discounts to
capture more customers and retain loyal customers.
As study refers more customers are looking for the special offers ,so it
suggest stores to more concentrate on the special offers but no compromise
in the quality of food.
It is found that majority of customers are not fully satisfied with the
friendliness of staff. So it is suggest that the stores should conduct soft skill
training and make them give more customer service .Regular monitoring of
the staff behavior towards customers is also suggest here.
Customers are happy with the MENU verities available in the stores .But it
is suggested that add more customized menu and review the menu for every
3 months.
As study shows that customers are not aware of the calorie contents exist in
the food. So it is suggest that stores should display the calorie contents
available in a particular food.
It is suggest the stores to concentrate on the areas of ambience and location
strategy.
Advertising strategy of the stores are not making attention the customers .So
it is suggest the stores to think of the design of different innovative
advertising campaigns.

CONCLUSIONS
 In this report, it can very easily be concluded that HUL,

holds major portion of the FMCG market. It holds major shares in the soap,

detergent, shampoo & cream’s category. HUL’s products are mainly in

demand, because they provide these products in different packs. They

consider the fact that rural consumers do not have that much money to be

spent on these products. So, they prefer buying the small or the medium

packs. However, large or family packs are still been bought by few

consumers, who are from a well – off families.

In the case of TEA, TATA holds a major share. In the case of

COFFEE, NESTLE & NESCAFE holds the major share. Rural consumers

favor TATA because it is an old organization & it has gained a lot of

BRAND EQUITY which finally creates BRAND LOYALTY. In these

products, consumers do get brand loyal, because they do not want to take a

risk with their tastes. So they prefer sticking to one brand. These

organizations supply their products in various packs (small, medium &

large), considering the buying capacity of their consumers.

As in the case of BISCUITS, BRITANNIA holds the major

market share. Rural consumers favor BRITANNIA because it is an old

organization & it has gained a lot of BRAND EQUITY which finally creates

BRAND LOYALTY. In case of BISCUITS, consumers do get brand loyal,

because they do not want to take a risk with their tastes.

In the case of TOOTH PASTES, COLGATE PALMOLIVE

holds a major market share. Consumers are very concerned about their

health, so if any product suits them they prefer sticking to that product.

In the case of HAIR OILS, MERICO holds the major market

share. MERICO is a much known organization & its product PARACHUTE

has reached all the places. So it is a known product, which has created a

good amount of goodwill for the organization.

BIBILOGRAPHY
1. http://www.naukrihub.com/india/fmcg/overview/

2. http://www.naukrihub.com/india/fmcg/

3. http://www.naukrihub.com/india/fmcg/consumer-class/

4. http://www.naukrihub.com/india/fmcg/consumer- class/income/

5. http://www.coolavenues.com/know/mktg/competitive-strategies-2.php

6. http://www.rediff.com/money/2005/nov/15spec.htm

7. www.hll.com

8. www.itc.com

9. www.insightory.com

10.http://www.indianmba.com/Faculty_Column/FC448/fc448.html