A project on

Challenges and Problems faced by

FMCG Companies
A DISSERTATION

SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

DEGREE OF
POST GRADUATE DIPLOMA IN MANAGEMENT
IN FINANCE

Submitted by

HARSHIL S SHAH

Roll No. 914

GUIDE

MR. MADHAV ASHAR

MET SCHOOL OF MANAGEMENT(MUMBAI EDUCATON TRUST)

BANDRA
Contents
CERTIFICATE OF ORIGINALITY ................................................................................................................. 4

ACKNOWLEDGEMENT ............................................................................................................................. 5

INTRODUCTION ....................................................................................................................................... 6

CURRENT SITUATION .............................................................................................................................. 8

OVER VIEW OF INDIAN FMCG MARKET .................................................................................................. 9

PROBLEM OF FMCG COMPANIES ......................................................................................................... 11

ANALYSIS OF FMCG SECTOR ................................................................................................................. 15

STRUCTURAL ANALYSIS OF FMCG INDUSTRY ....................................................................................... 16

DESIGN AND MANUFACTURING ........................................................................................................... 17

MARKETING AND DISTRIBUTION .......................................................................................................... 18

FORCOSTING OF FMCG COMPANIES .................................................................................................... 19

TOP 10 FMCG COMPANIES IN INDIA..................................................................................................... 21

MARICO INDUSTRIES Ltd. and SEGMENT REVENUES ........................................................................... 22

DABUR INDIA Ltd................................................................................................................................... 27

GODREJ CONSUMER ............................................................................................................................. 37

EMAMI LTD. .......................................................................................................................................... 40

NIRMA Ltd. ............................................................................................................................................ 42

SALES TURNOVER .................................................................................................................................. 44

COMPARITIVE BALANCE SHEET............................................................................................................. 45

What should FMCG companies do now? .............................................................................................. 46

Conclusion ............................................................................................................................................. 48

References ............................................................................................... Error! Bookmark not defined.

 CERTIFICATE OF ORIGINALITY

This is to certify that this project ‘CHALLENEGES AND PROBLEMS FACED BY FMCG

COMPANIES’ is the original work of Mr. Harshil Shah and is being submitted in partial

fulfillment of the requirement of PGDM(E BUSINESS) program of MET (MUMBAI EDUCATION

TRUST ) COLLEGE of MANAGEMENT.

No part of this project has been submitted prior to this any college or institution. The

project is based on challenges and problems of FMCG companies and has been compiled at

LATIN MANHARLAL SECURITIES PVT. LTD. Office under the guidance and supervision of the

research guide, Mr. Madhav Ashar.

FOR LATIN MANHARLAL SECURITIES PVT.LTD.

MR.MADHAV ASHAR
ACKNOWLEDGEMENT
Every endeavor in itself is an impression of the efforts of not only those who pursue it but of

those as well who provide guidance and motivation towards its successful completion.

Likewise, this project bears an imprint of all those who helped me at various stages and it

would be unfair on my part not to thank them.

I would like to express my sincere gratitude to Mr. Latin Manharlal for providing me with an

opportunity to undergo training with their esteemed organization.

The successful completion of this project could not have been possible without the co-

operation and encouragement of Mr. Madhav Ashar and the entire research Team who

provided me with their unending support from the very beginning of the project, which

helped in timely completion of the project.

 INTRODUCTION

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, increases 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 middleclass 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 everyday 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.

 CURRENT SITUATION

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.
 OVER VIEW OF INDIAN FMCG MARKET

India offers a large and growing market of 1 billion people of which 300 million are middle

class consumers. India offers a vibrant market of youth and vigor with 54% of population

below the age of 25 years. These young people work harder, earn more, spend more and

demand more from the market, making India a dynamic and inspirational society. Domestic

demand is expected to double over the ten-year period from 1998 to 2007. The number of

households with "high income" is expected to increase by 60% in the next four years to 44

million households. India is rated as the fifth most attractive emerging retail market. It has

Been ranked second in a Global Retail Development Index of 30 developing countries drawn

up by A T Kearney. A.T. Kearney has estimated India's total retail market at $202.6 billion, is

expected to grow at a compounded 30 per cent over the next five years. The share of

modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next

decade, analysts feel. The Indian FMCG sector is the fourth largest sector in the economy

with a total market size in excess of US$ 13.1 billion. The FMCG market is set to treble from

US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita

consumption in most product categories like jams, toothpaste, skin care, hair wash etc in

India is low indicating the untapped market potential. Burgeoning Indian population,

particularly the middle class and the rural segments, presents an opportunity to makers of

branded products to convert consumers to branded products. India is one of the world’s

largest producers for a number of FMCG products but its FMCG exports are languishing at

around Rs 1,000 crore only.

There is significant potential for increasing exports but there are certain factors inhibiting

this. Small-scale sector reservations limit ability to invest in technology and quality up

gradation to achieve economies of scale. Moreover, lower volume of higher value added

products reduce scope for export to developing countries.

The FMCG sector has traditionally grown at a very fast rate and has generally outperformed

the rest of the industry. Over the last one year, however the rate of growth has slowed

down and the sector has recorded sales growth of just five per cent in the last four quarters.

The outlook in the short term does not appear to be very positive for the sector. Rural

demand is on the decline and the Centre for Monitoring Indian Economy (CMIE) has already

downs called its projection for agriculture growth in the current fiscal. Poor monsoon in

some states, too, is unlikely to help matters. Moreover, the general slowdown in the

economy is also likely to have an adverse impact on disposable income and purchasing

power as a whole. The growth of imports constitutes another problem area and while so far

imports in this sector have been confined to the premium segment, FMCG companies

estimate they have already cornered a four to six per cent market share. The high burden of

local taxes is another reason attributed for the slowdown in the industry. At the same time,

the long term outlook for revenue growth is positive. Give the large market and the

requirement for continuous repurchase of these products, FMCG companies should

continue to do well in the long run. Moreover, most of the companies are concentrating on

cost reduction and supply chain management. This should yield positive results for them.
 PROBLEM OF FMCG COMPANIES

The fast-moving consumer goods (FMCG) companies are faced with a peculiar challenge of

maintaining profitable growths in the backdrop of a low inflation rate.As against the high

inflation of the early 90s — the peak growth season for all FMCG companies — the ensuing

period of a lower inflation rate dares companies to now play the volume game. As against a

growth in profitability, which came with price increase in line with the rising inflation, the

FMCG industry will now have to do without this critical factor which has been contributing

to almost half of the industry’s growth. “Volumes will play a critical role now. The number of

units sold will be an important metric, as there is very little avenue to drive price growth,”

said MS Bang, chairman, Hindustan Lever Ltd (HLL), in his keynote address at the 2nd

National FMCG Conclave organized by the Confederation of Indian Industry (CII). Since

volume will be the key determinant of growth, the industry will be forced to push volume

growth. Hence, for those companies which hitherto relied on price increase as an easy way

to enhance profitability, there could be a pressure on margins. To tackle the problem there

needs to be a relentless focus on cost-cutting. “Many companies, which have understood

that volumes will be critical, will benefit,” added Mr. Bang. According to Mahesh Visa,

executive director, the Centre for Monitoring Indian Economy (CMIE), the year holds a lot of

promise, if growth is good and inflation is lower. “Volume growth and no price reduction are

good for FMCG,” said Mr. Visa. He, however, said fresh investments were critical for

sustained growth in the economy.

Another serious challenge which the industry is faced with, said Mr. Bang, is consumer

promotions where freebies are threatening to lead to the commoditization of the industry.

“I believe that the industry must take a serious note of it. It is threatening the very premise

on which the FMCG industry stands today (i.e. branding),” Mr. Banga added. As to how HLL,

which is a leading FMCG company, would boost its volumes and maintain its margins, Mr.

Banga said the only way out was branding. He denied that HLL was cutting down upon its

advertising spends, which he said, was only on a quarter-on-quarter basis. The total

advertising expenditure for HLL declined to Rs 182.74 crore during the third quarter ended

September 30, 2003, from Rs 217.80 crore.

One of the reasons is the fact that the Conditional Cash Transfer scheme (CCT) is gathering

support as a replacement for myriad welfare schemes. Along with the rural employment

guarantee scheme, loan waivers and increase in prices at which agricultural products are

bought, the CCT could solve the FMCG’s problem of unpredictability of agricultural income

and the associated fall in market demand. The mainstay of the rural thrust of FMCG

companies is based on the hope that there are ‘disposable incomes’ lying untapped in the

hinterland: if the rural population spends some of this, it will certainly boost demand in the

current recession. With urban consumption in decline or stagnating because of the

economic slowdown, FMCG companies have been hit hard. The idea is to give a ‘choice’ to

the rural customer to shift to branded products, from traditional, unbranded merchandise

from the nonorganised sector. “The growth is in rural,” says India’s top marketing head,

Rama Bijapurkar.
Rural India constitutes over 60 percent of the country’s total consumer base. It’s estimated

that rural markets hold 55 percent of total LIC policies, 50 percent of the market for

televisions, fans, bicycles and wristwatches — and a massive 70 percent of the market for

toilet soap consumption.

The Rs 65,000 crore debt waivers announced last year helped 3.6 million farmers and made

them eligible to fund the next crop. The Centre continued to provide short-term crop loans

at 7 percent interest up to Rs 3 lakh. An upturn in agriculture was seen in the UPA’s interim

budget of 2009-10, where the annual growth rate of agriculture was posted at 3.7 percent.

Added to this was the election-inspired increase in minimum support prices (MSP) in 2008-

09. Announced in the season ahead of the general election, the MSP for paddy (Rs 550 per

quintal in 2003-04) rose to Rs 900; for wheat, the MSP, which was Rs 630 per quintal, rose

to Rs 1,080. It also led to massive procurement of food grains this year. Factors like this,

according to analysts, have created ‘disposable incomes’ which the rural consumers should

be, ideally, keen on spending on consumer goods. THE ECONOMIC SURVEY 2007-08 says

rural India spends, on average, 55 percent on food and 45 percent on non-food items like

clothing, consumer durables, education and health. And its spend on urban costs of living

such as electricity, commuting, fuel and rent is negligible. That level of spending on regular

consumables is good news for FMCG manufacturers.

Add to that the fact that, unlike their urban counterparts, rural citizens’ incomes are

relatively better preserved from market fluctuations and real estate shocks. For corporate,

the rural hinterland had earlier meant high investment because of poor infrastructure,

absence of storage services no electricity, water or finance facilities. In times of recession,

the problems appear surmountable.

It’s expected that catching the villages’ fancy should be far easier than that of the info-

fatigued urban buyer. The rural market already accounts for 50 percent of FMCG products

like pressure cookers, tea, branded salt and tooth powder. Companies expect to increase

market share and to add products to the rural portfolio. According to ASSOCHAM, which

announced early this year that the FMCG sector is pegged to grow at 40 percent in the rural

market, “rising rural incomes, healthy agricultural growth, boost in demand, rising

consumerism and better penetration of FMCG products,’’ are the reasons for this

projection. Agrees Deepak Jolly, a director with Coca-Cola India: “The rural thrust in India

today is huge. In many ways, I would say it is the main driver for the markets.” Among the

few things that the FMCG companies are seeking from this budget is that the taxes and

duties that have been reduced by the government to promote the sector should not be

revoked. If only they could have the same impact on the monsoon: any weakening or failure

there will considerably affect the purchasing power of villagers and volumes of FMCG

products. It’s in this context that the gathering support for the conditional cash transfers

(CCT) scheme should be seen — it proposes that the government deposit an amount in the

account of beneficiaries identified according to poverty criteria. The amount is deposited in

the name of the woman member of the household and accessed only if children go to

school or attend the health centre. Farmers are spending more than ever to cultivate;

villagers are spending more than ever to buy food. The government hopes to bring the

National Food Security Bill that provides monthly 25kg to BPL families at Rs 3 per kg. It

would be interesting to watch if the ‘disposable income’ left after such subsidies will be

used for consumption.

 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

 STRUCTURAL ANALYSIS OF FMCG INDUSTRY

Typically, a consumer buys these goods at least once a month. The sector covers a wide

gamut of products such as detergents, toilet soaps, toothpaste, shampoos, creams,

powders, food products, confectioneries, beverages, and cigarettes. Typical characteristics

of FMCG products are: -

1. The products often cater to 3 very distinct but usually wanted for aspects - necessity,

comfort, luxury. They meet the demands of the entire cross section of population.

Price and income elasticity of demand varies across products and consumers.

2. Individual items are of small value (small SKU's) although all FMCG products put

together account for a significant part of the consumer's budget.

3. The consumer spends little time on the purchase decision. He seldom ever looks at

the technical specifications. Brand loyalties or recommendations of reliable retailer/

dealer drive purchase decisions.

4. Limited inventory of these products (many of which are perishable) are kept by

consumer and prefers to purchase them frequently, as and when required.

5. Brand switching is often induced by heavy advertisement, recommendation of the

retailer or word of mouth.

 DESIGN AND MANUFACTURING

1. Low Capital Intensity - Most product categories in FMCG require relatively minor

investment in plant 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 underperformed.

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.
 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

 MARICO INDUSTRIES Ltd. and SEGMENT REVENUES

The company's performance was in line with expectation of volume led growth. For quarter

ended March 2010, the company on the consolidated basis has registered sales of Rs 602.26

crore, a growth of 6%. This was led by volume growth across categories. Volume growth

during the quarter was higher at 14%. Revenue growth was lower owing to deflation in

some of the key input materials part of which the company chose to pass on to the

consumer in order to expand its consumer franchise During Q4FY10, the refined edible oils

franchise of Saffola grew by about 13%.

During Q4FY10, all Marico's hair oils brands recorded healthy growth and the portfolio as a

whole grew by about 27% over FY09. Marico's hair oils franchise had a volume market share

of 21% during the 12 months ended Feb. 2010.

Marico's International business has been growing steadily and comprises about 23% of the

group's turnover. During Q4FY10 the business grew by about 16% over Q4FY09. The growth

in Indian Rupee terms was partly deflated owing to the appreciation of the Indian Rupee.

Business growth (excluding the currency movement) was higher at 22%.

The Kaya business achieved revenue of Rs 45 core in Q4FY10 OPM of the company

increased by 80 basis points to 14.1% due to fall in raw material cost. The profit before tax

before EO has increased by 17% to Rs 69.49 crore due to improved margin, increased other

income and fall in interest cost.

Net sales of the company on the consolidated basis for the year ended March 2010 grew by

11% to Rs 2660.76 crore. OPM has inclined by 140 basis points to 14.1% due decrease in raw

material cost. The profit before tax before EO has increased by 26% to Rs 307.66 crore due

to improved margin, increased other income and fall in interest cost.

 For the year ended March 2010

Net sale of the company on the consolidated basis for the year ended March 2010 grew by

11% to Rs 2660.76 crore. OPM of the company has inclined by 140 basis points to 14.1% due

decrease in raw material cost by 690 basis points to 39% of adjusted net sales. However,

there was rise registered other expenditure by 160 basis points to 18% and ASP cost by 310

basis points to 13% of adjusted net sales. As a result of rise in margin, the operating profit of

the company inclined by 23% to Rs. 375.14 crore.

Other income of the company has increased by 50% to Rs 18.26 crore. Interest paid by the

company has decreased by 28% to Rs. 25.68 crore. Depreciation and amortization of the

company has increased by 68% to Rs. 60.06 crore which also includes provision for the

impairment of assets of Rs 15.66 crore. The profit before tax before EO has increased by

26% to Rs 307.66 crore.

EO expenses for the year is Rs 9.79 crore consist of Rs 4.05 crore which is a net charge

arousing from divestment of Sundari and Rs 5.74 crore from the closure of Kaya Life

Centres. The company's profit before tax after EO has increased by 30% to Rs 297.87 crore.

Tax outgo has increased by 57% to Rs 64.32 crore. The net profit of the company after

considering minority interest has increased by 23% to Rs 231.67 crore due to improved

margin, increased other income and fall in interest cost.

 Standalone Results

For quarter ended March 2010

For quarter ended March 2010, the company on the standalone basis has registered sales of

Rs 458.40 crore, a growth of 7%. OPM of the company inclined by 290 basis points to 16.3%

due to decrease in raw material cost by 740 basis points to 40% and other expenditure by

40 basis points to 15% of adjusted net sales. However, there was rise in ASP cost by 290

basis points to 11%, packaging cost by 20 basis points to 9%, staff cost by 10 basis points to

5% and purchase of traded goods increased by 220 basis points to 5% of adjusted net sales.

As a result of rise in margin, the operating profit of the company has increased by 30% to Rs

74.65 crore.

Other income of the company increased by 73% to Rs 7.36 crore. There was fall in interest

outgo by 35% to Rs 3.58 crore. But, depreciation and amortization has inclined by 62% to Rs

7.54 crore which also includes provision for the impairment of assets of Rs 1.09 crore. The

profit before tax has increased by 37% to Rs 70.89 crore.

The tax outgo for the quarter stood at Rs 10.48 crore. The company's net profit has

increased by 816% to Rs 60.41 crore due to absence of EO expenses in the current quarter.
 For year ended March 2010

For the year ended March 2010, the company's net sales on the standalone basis increased

by 6% to Rs 2030.85 crore. OPM has inclined by 250 basis points to 15.8% due to decrease in

raw material cost by 820 basis points to 41% and packaging cost by 50 basis points to 8% of

adjusted net sales. However, there was rise in ASP cost by 220 basis points to 11%, other

expenditure by 160 basis points to 15%, staff cost by 70 basis points to 5% and purchase of

traded goods by 160 basis points to 4% of adjusted net sales.

As a result of rise in margin, the operating profit of the company has increased by 26% to Rs

320.58 crore.

Other income of the company has increased by 53% to Rs 15.50 crore. Interest paid by the

company declined by 37% to Rs 18.30 crore. Depreciation and amortization has increased by

48% to Rs 25.21 crore which also includes provision for the impairment of assets of Rs 4.98

crore. As such, the profit before tax has increased by 34% to Rs 292.57 crore.

The tax outgo for the year has increased by 99% to Rs 57.55 crore. The company's net profit

has increased by 65% to Rs 235.02 crore due to absence of EO expenses

 Consolidated Segment Results

Consumer Products

The consumer products business contributed 92% to the consolidated revenue of the

company for the quarter ended March 2010. Net sales grew by 7% to Rs 556.88 crore. Profit

before interest and tax (PBIT) margins grew by 30 basis points to 14%. PBIT of the company

increased by 9% to Rs 77.84 crore. The segment accounted for 110% of company's total

PBIT.

For the year ended March 2010, consumer products business contributed 93% to the

consolidated revenue of the company. Net sales grew by 11% to Rs 2475.04 crore. PBIT

margin has inclined by 80 basis points to 13.7%. As a result, the PBIT of the company

increased by 18% to Rs 337.91 crore. The segment accounted for 106% of company's total

PBIT.

OUTLOOK

The consumer products business of the company expects to sustain overall volume growth

and to improve value growth. Though there may be some increase in input costs from the

low levels experienced in FY10, the company expects to be able to pass on this on to the

consumer and maintain its unit margin in the same band, given the strength of its brands.
 DABUR INDIA Ltd.

Dabur India has performed in line with the expectation. The net sales for the consolidated

entity grew by 17% to Rs 858.25 crore for Q4 FY10 on back of strong growth across key

categories like hair care, oral care, skin care, health supplements, digestives & foods. The

quarter figures also include numbers from Fem Care Pharma and as such are not

comparable. Volume grew by 16% while there was a price hike of 1%.

The OPM increased by 170 basis points to 20% due to decrease in raw material cost and

other expenditure. The net profit jumped by 30% to Rs 135.28 crore due to rise in top line

and improved margin.

The net sales for FY10 on the consolidated basis grew by 20% to Rs 3389.72 crore. The 20%

growth came on the back of 16.6% volume growth, 2.3% price hike and 0.7% translational

gain. The year figures also include numbers from Fem Care Pharma and as such are not

comparable. The Health Supplements category reported a 20% growth, toothpaste brands

continued their impressive run to end the year with a 19% gain. Shampoo portfolio

increased by an impressive 27%, while the Skin Care portfolio riding on sustained demand

for the Gulabari range of products and the introduction of Uveda ended the year with a 33%

growth. The Fem personal care portfolio registered a robust 29% surge in the 9 months of

the business being part of Dabur India Ltd. The Foods business posted a 20% growth.

International Business continued to surge ahead at a rapid pace with the division recording

an impressive growth of 26%, led by robust performance in GCC, Egypt, Nigeria, Levant and

North African markets. The international business saw 19.8% volume growth, 2.4% price

hike and 4% translational gain.

Expansion into new markets further contributed to this growth, as the company seeded

volumes in several new geographies like Cambodia, Philippines, Belarus, Gambia and Bolivia.

GCC notched up yet another strong performance, growing by 39%, while Dabur Egypt grew

by 34%. This robust performance in the international business, in fact, comes at a time

when the external conditions remained extremely tough with recessionary trends, currency

depreciations, demand contraction and the global meltdown threatening to hurt businesses

OPM increased by 190 basis points to 19.4% due to decrease in raw material cost and other

expenditure. The net profit has increased by 29% to Rs 503.53 crore due to rise in top line

and improved margin.

 Company Performance

Consolidated Results

For quarter ended March 2010

The net sales for the consolidated entity grew by 17% to Rs 858.25 crore for Q4 FY10 on

back of strong growth across key categories like hair care, oral care, skin care, health

supplements, digestives & foods. The quarter figures also include numbers of Fem Care

Pharma and as such are not comparable. Volume grew by 16% while there was a price hike

of 1%.

The OPM increased by 170 basis points to 20% due to decrease in raw material cost by 490

basis points to 38% and other expenditure by 140 basis points to 13% of adjusted net sales.

There was rise in purchase of traded goods by 380 basis points to 5%, staff cost by 70 basis

points to 9% and advertising & publicity (A&P) cost by 20 basis points to 14% of adjusted net

sales.

Due to rise in margin, the operating profit has increased by 28% to Rs 171.42 crore.

Other income inclined by 12% to Rs 4.79 crore. Interest outgo has declined by 70% to Rs

2.47 crore. Provision for depreciation including amortization charges increased by 4% to Rs

14.88 crore. The profit before tax (PBT) of the company has increased by 37% to Rs 158.86

crore.

Total tax outgo increased 145% to Rs 25.81 crore due to rise in tax rate to 16.2%. After

considering provision for taxation, the net profit jumped by 30% to Rs 135.28 crore due to

rise in top line and improved margin.

 For the year ended March 2010

The net sales on the consolidated basis grew by 20% to Rs 3389.72 crore. The 20% growth

came on the back of 16.6% volume growth, 2.3% price hike and 0.7% translational gain. The

year figures also include numbers of Fem Care Pharma and as such are not comparable. The

Health Supplements category reported a 20% growth, toothpaste brands continued their

impressive run to end the year with a 19% gain. Shampoo portfolio increased by an

impressive 27%, while the Skin Care portfolio riding on sustained demand for the Gulabari

range of products and the introduction of Uveda ended the year with a 33% growth. The

Fem personal care portfolio registered a robust 29% surge in the 9 months of the business

being part of Dabur India Ltd. The Foods business posted a 20% growth.

International Business continued to surge ahead at a rapid pace with the division recording

an impressive growth of 26%, led by robust performance in GCC, Egypt, Nigeria, Levant and

North African markets. The international business saw 19.8% volume growth, 2.4% price

hike and 4% translational gain. Expansion into new markets further contributed to this

growth, as the company seeded volumes in several new geographies like Cambodia,

Philippines, Belarus, Gambia and Bolivia. GCC notched up yet another strong performance,

growing by 39%, while Dabur Egypt grew by 34%.

This robust performance in the international business, in fact, comes at a time when the

external conditions remained extremely tough with recessionary trends, currency

depreciations, demand contraction and the global meltdown threatening to hurt businesses

OPM increased by 190 basis points to 19.4% due to decrease in raw material cost by 510

basis points to 39% and other expenditure by 70 basis points to 13% of adjusted net sales.
There was rise in A&P cost by 230 basis points to 14% and purchase of traded goods by 140

basis points to 7% of adjusted net sales. Due to rise in margin, the operating profit has

increased by 32% to Rs 657.05 crore.

Other income decreased by 31% to Rs 14.67 crore. Interest costs decreased by 43% to Rs

13.16 crore while provision for depreciation including amortization charges increased by

13% to Rs 55.73 crore. PBT registered a growth of 36% to Rs 602.83 crore.

Total tax outgo has increased by 86% to Rs 100.45 crore. After considering provision for

taxation and minority interest, the net profit has increased by 29% to Rs 503.53 crore due to

rise in top line and improved margin.

 Standalone Results

For quarter ended March 2010

For Q4 FY10, the net sales grew by 14% to Rs 702.2 crore. Volume grew by 11%. OPM has

increased by 80 basis points to 18.6% due decrease in other expenditure by 150 basis points

to 12%, A&P cost by 100 basis points to 13% and purchased of finished goods by 10 basis

points to 14% of adjusted net sales. There is rise in raw material cost by 90 basis points to

33% and staff cost by 90 basis points to 8% of adjusted net sales. Due to rise in margin, the

operating profit has increased by 18% to Rs 130.46 crore.

Other income has decreased by 9% to Rs 3.91 crore. Interest paid has declined by 59% to Rs

2.14 crore. Provision for depreciation including amortization charges inclined by 13% to Rs

9.67 crore. As a result, the PBT has increased by 21% to Rs 122.56 crore.

Total tax outgo inclined by 129% to Rs 21.34 crore due to rise in tax rate to 17%. As a result,

the net profit has increased by just 10% to Rs 101.27 crore.

For the year ended March 2010

The net sales have increased by 14% to Rs 2758.4 crore. Volume grew by 12%. OPM has

increased by 80 basis points to 19.4% due decrease in raw material cost by 200 basis points

to 35% and purchase of traded goods by 100 basis points to 14% of adjusted net sales. There

was rise in A&P cost by 200 basis points to 13% of adjusted net sales. The operating profit

has increased by 19% to Rs 533.81 crore.

Other income decreased by 47% to Rs 11.38 crore. Interest cost declined by 55% to Rs 6.06

crore while provision for depreciation including amortization charges increased by 13% to Rs

35.58 crore. PBT registered a growth of 18% to Rs 503.55 crore.

Total tax outgo inclined by 73% to Rs 89.08 crore due to rise in tax rate to 12%. As a result,

the net profit has inclined by just 11% to Rs 414.28 crore.

Consolidated segment results

Consumer Care Business

The consumer care business contributed 75% to the consolidated entity's revenues for the

Q4. Gross sales grew by 15% to Rs 639.52 crore. Profits before interest and tax (PBIT) margin

has inclined by 270 basis points to 29.1%. As a result, PBIT increased by 26% to Rs 186.37

crore. The segment accounted for 83% of total PBIT.

For FY10, the consumer care business contributed 77% to the consolidated entity's

revenues. Gross sales grew by 20% to Rs 2602.79 crore. PBIT margin has inclined by 200

basis points to 27.4%. As a result, PBIT has increased by 29% to Rs 713.49 crore. The

segment accounted for 83% of total PBIT.

Consumer Health Business

The consumer health business contributed 9% to the consolidated entity's revenues for Q4.

Gross sales increased by 13% at Rs 76.81 crore. PBIT margin has declined by 630 basis points

to 27.5%. As a result, the PBIT has decreased by 8% to Rs 21.12 crore. The segment

accounted for 9% of total PBIT.

For FY10, the consumer health business contributed 8% to the consolidated entity's

revenues. Gross sales inclined by 14% to Rs 279.55 crore. PBIT margin has declined by 280

basis points to 26.3%. Despite it, PBIT has inclined by 3% to Rs 73.62 crore. The segment

accounted for 9% of total PBIT.

Foods division

For Q4, the division contributed 14% to the consolidated entity's total revenue. Gross sales

grew by 24% to Rs 115.61 crore. PBIT Margin decreased by 120 basis points to 17.4%.

Despite it, PBIT has increased by 16% to Rs 20.14 crore. With this, the segment accounted

for 9% of total PBIT.

For FY10, food division contributed 12% to the consolidated entity's revenues. Gross sales

grew by 24% to Rs 415.8 crore. PBIT margins inclined by 50 basis points to 17.4% leading to

a 28% rise in the profit of the division to Rs 72.52 crore. The segment accounted for 8% of

total PBIT.

Retails

The retails business gross sales for Q4 stood at Rs 2.4 crore, an increase of 37% while the

loss stood at Rs 2.21 crore.

The retails business gross sales for FY10 stood at Rs 9.18 crore while the loss stood at Rs

9.26 crore.
 Standalone segment results

Consumer Care Business

The consumer care business contributed 72% to the standalone entity's revenues for Q4.

Gross sales grew by 10% to Rs 508 crore. PBIT margin has increased by 170 basis points to

29.3%. As a result, PBIT has increased by 17% to Rs 148.77 crore. The segment accounted

for 79% total PBIT.

For FY10, consumer care business contributed 75% to the standalone entity's revenues.

Gross sales grew by 14% to Rs 2068.17 crore. PBIT margin has inclined by 170 basis points to

29.5%. As a result, PBIT has increased by 21% to Rs 610.54 crore. The segment accounted

for 82% total PBIT.

Consumer Health Business

The consumer health business contributed 11% to the standalone entity's revenues for Q4.

Gross sales increased by 13% to Rs 76.8 crore. PBIT margin has declined by 630 basis points

to 27.5%. As such, the PBIT decreased by 8% to Rs 21.12 crore. The segment accounted for

11% of total PBIT.

For FY10, consumer health business contributed 10% to the standalone entity's revenues.

Gross sales increase by 14% to Rs 279.55 crore. PBIT margin has declined by 280 basis points

to 26.3%. Despite it, PBIT has inclined by 3% to Rs 73.62 crore. The segment accounted for

10% of total PBIT.

Foods division

For Q4, the division contributed 14% to the standalone entity's total revenue. Gross sales

increased by 26% to Rs 96.52 crore. Margins of the company declined by 270 basis points to

18.3%. Despite it, there was increase in PBIT by 10% to Rs 17.67 crore. With this, the

segment accounted for 9% of total PBIT.

For FY10, food division contributed 13% to the consolidated entity's revenues. Gross sales

increased by 20% to Rs 352.32 crore. PBIT margin has decreased by 50 basis points to 17.7%.

Despite it, the PBIT has increased by 17% to Rs 62.45 crore. The segment accounted for 8%

of total PBIT.

Other Developments

The company has invested Rs1.50 crore as a long-term investment in wholly owned

subsidiary H & B Stores Limited during the quarter.

 GODREJ CONSUMER

The fast moving consumer goods (FMCG) segment, the fourth largest sector in the Indian

economy, is expected to witness a steady growth of around 15% over the next few years.

The FMCG sector, which was not majorly impacted by slowdown last year, would see

increased demand from urban areas as the economy gains strength.

Rural demand continues to be robust with rising income levels and shift in lifestyles. Godrej

Consumer Products Ltd (GCPL) would benefit from growing consumer demand due to its

differentiated product offerings, conservative pricing strategies and a strong presence in

rural markets.

Business

GCPL, one of the top FMCG players in the country, has a wide presence in the personal and

household care products. Founded in 1897, the Godrej Group has several subsidiaries in

India and internationally.

GCPL manufactures and markets personal care products such as soaps, hair colors, liquid

detergents and other toiletries. It offers household insecticides, sanitary napkins, baby

diapers and hair product accessories.

The company has several manufacturing units in India and has acquired companies

internationally in UK, South Africa and Middle East. These acquisitions have given GCPL

access to strong brands, wider portfolio and markets in Europe, Australia, Canada and

Africa.

GCPL is the second largest player in the toilet-soap category with a market share of around

10%. Its well-known brands include Cinthol, Fair Glow and Godrej No. 1. GCPL is a market

leader in hair color segment with a market share of 35%.

Soaps contributed around 40% to its consolidated Q2 FY10 revenues, hair color 15%,

toiletries around 20% while insecticides and other household products formed 25%.

Investment rationale

GCPL continues to grow at a much healthier pace in both soap and hair color segments than

the overall market growth. Its soaps business witnessed a growth of 28% against the

industry average of 12%, while hair color segment grew at 47.5% as against 19.6% industry

average growth.

GCPL has been focusing on increasing penetration in smaller towns and rural areas. It has

increased its distribution channel significantly by 10-18% over the last two quarters and

plans to expand into newer areas.

GCPL’s increased rural thrust along with rising income levels in rural areas and shift in

lifestyles there would benefit GCPL. Though poor monsoon may be a dampener in the short

term, GCPL would not see significant drop in volumes due to its “value for money” pricing.

GCPL has been focusing on cost efficiency and productivity across the manufacturing

processes in order to contain its expenses. It is covered for raw material price increase for 2-

3 months and has pricing advantage to pass on slight price hike to consumers.

The company has made several changes in its product composition and has come out with

innovative products at different price points, which would ensure interest among the

consumers. GCPL’s international business grew by 22% in Q2 FY10. GCPL is aggressively

looking at acquisitions to expand its footprint globally as well as to widen its product

portfolio. GCPL may be looking at businesses in Asia, Latin America and Africa to reduce its

exposure to domestic market alone.

GCPL has a strong balance sheet with sufficient cash and a comfortable debt/equity ratio.

Its management had recently passed resolution to raise around Rs 3,000 crore for

acquisitions.

Concerns

There is stiff competition in the FMCG space on account of low entry barriers of technology

and capital requirements.

The presence of several multinationals as well as regional players in the FMCG space may

lead to a price war thereby impacting the revenue share and profits.

Rise in costs of raw materials like palm oil may hurt profits in coming months. Rising food

inflation would mean less spending on non-food items and consumers shifting their buying

pattern or brands, thereby affecting revenues.

Valuations

GCPL’s revenues in the coming years would be driven by increasing thrust on rural areas,

enhanced product portfolio and likely acquisitions in emerging markets going forward.

GCPL’s revenues are expected to grow at compound annual growth rate of 27% over FY09-

FY11E and net profit at CAGR of 42% over the same period. At current market price of Rs

263.90, GCPL trades at a P/E of 22.61x & 19.31x of its FY10E & FY11E earnings, respectively.

Considering the company’s inorganic growth plans, its strong rural focus, leadership position

in its key products and strong fundamentals, GCPL can be looked at current levels from a

medium- to long-term perspective.

 EMAMI LTD.

Emami Ltd. (EL) is the flagship company of the Kolkata based Emami Group, which is

engaged in the business of manufacturing personal care and health care products for over 3

decades and has diversified in the field of real estate, paper, biofuel, cement etc. Some of

the major brands of the company are Boroplus Antiseptic Cream, Boroplus Prickly Heat

Powder, Fair and Handsome Fairness Cream for men, Navratna Oil, Himani Fast Relief,

Mentho Plus balm, Sona Chandi Chyawanprash and Amritprash, amongst others.

Investment Rationale

Presence in niche segments

Emami is an FMCG company that offers products based on ayurvedic concept. The company

operates in segments where there is minimum competition, hence ensuring a larger share

of the market. The company only focuses on products offering high margins, thus

maintaining superior profitability.

Strong brands registering better than industry growth rates

Emami has brands like Boroplus Antiseptic Cream and Navratna Oil which are undisputed

market leaders in their respective categories.

Other brands like Fair & handsome Fairness Cream, Sona Chandi Chawanprash, Himani Fast

Relief, MentholPlus Balms etc. are growing at better than the industry rate .
International presence

Emami has an international presence that includes 60 countries in the GCC, CIS and SAARC

regions. The company’s exports grew by 60% in 2008-09, contributing 13.6% to the topline.

This contribution is expected to grow in future.

Extensive distribution network

EL has an extensive distribution network of more than 2700 distributors, 1200 sub

distributors, 60 super stockists and 4,00,000 direct outlets, covering every nook & corner of

the country. Emami has tied up with ITC Ltd. to distribute products through the echoupal

outlets, thus ensuring greater rural reach. The company also implemented project

“Navodaya”, in consultation with E&Y, to tap the target customers in shopping malls and

lifestyle outlets.
 NIRMA Ltd.

Soap and detergent maker Nirma Ltd’s March quarter results reflect collateral damage from

the tussle between two consumer multinationals, Hindustan Unilever Ltd (HUL) and Procter

and Gamble Home Products Ltd (P&G).

In the March quarter, Nirma’s sales of soaps and wetting agents fell by around 11% to Rs650

crore and were down by around 1% for the full year. P&G’s decision to grow share in the

mass detergents market has sparked off a fierce battle. Though Nirma has diversified its

product range to include premium products, the mass market is still an important segment

for the company.

Competition has risen in the soap market. HUL has relaunched its entire soap portfolio and

lowered prices of some brands. Both multinationals have stepped up advertising.

Nirma’s other expenditure, excluding power and fuel, has risen by 14% during fiscal 2010,

though they remained flat in the March quarter.

Despite lower sales in the March quarter, Nirma’s total material costs fell by 9%. The firm

makes some of its key intermediates required for its soaps and detergents business. After

active consumption, the surplus is sold in the market. Soda ash and linear alkyl benzene are

two such products that contributed around one-fifth of sales in fiscal 2009.

Nirma’s diversification into the pharmaceuticals sector made profits in the March quarter.

On revenue of Rs64 crore, it earned a segment profit of Rs9.5 crore, compared with a loss of

Rs25 crore a year ago and a similar loss in the December quarter.

The company had also acquired a soda-ash business in the US, which could have balanced

slower growth in the domestic market. But its sales declined by 2% during the year to

Rs1,509 crore. Global soda ash companies have been suffering from excess supply, which

put pressure on product prices during 2010.

The firm’s cash flows during the year were sound, which it used to lower debt by 20%. Its

debt-to-equity ratio fell to 0.5 in fiscal 2010, from 0.7 in the previous year.

Nirma’s sales will continue to be affected by higher competition. A recent development is

the proposed demerger of a group company’s cement and mining project to Nirma. That will

not only result in equity dilution, but also increase the commodity element in its revenues

and could also put pressure on its funds position. Nirma’s share price has fallen by 9% in a

month, while the FMCG (fast-moving consumer goods) index on the Bombay Stock Exchange

has gained by 3%.

 SALES TURNOVER

Last Price Market Cap. Sales Net Profit Total Assets

(Rs. cr.) Turnover

HUL 263.35 57,465.09 17,725.33 2,202.03 2,483.46

Dabur India 208.05 18,050.12 2,874.60 433.15 877.17

Colgate 841.00 11,437.00 1,770.82 290.22 330.70

Godrej Consumer 344.00 10,601.74 1,267.88 248.12 599.80

Marico 123.65 7,534.49 2,030.85 235.02 676.21

P and G 1,990.00 6,459.69 772.81 178.85 440.02

Emami 788.70 5,966.98 1,006.86 165.40 736.10

Gillette India 1,732.00 5,643.76 661.51 113.13 490.89

Godrej Ind 167.85 5,331.33 880.97 19.33 1,628.10

Jyothy Labs 249.65 1,811.68 579.87 80.05 352.51

This table gives you an overview of the company annual sales turnover in the year09-10 and the

profit and market capitalization and the net profit as well as the total assets of the top FMCG players

in INDIA
 COMPARITIVE BALANCE SHEET

------------------- in Rs. Cr. -------------------

Balance Sheet
Marico HUL Dabur India Colgate Godrej Consumer

Mar '09 Mar '09 Mar '09 Mar '10 Mar '09

Sources Of Funds
Total Share Capital 60.90 217.99 86.51 13.60 25.70
Equity Share Capital 60.90 217.99 86.51 13.60 25.70
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 306.78 1,842.85 651.69 312.51 511.22
Revaluation Reserves 0.00 0.67 0.00 0.00 0.00
Networth 367.68 2,061.51 738.20 326.11 536.92
Secured Loans 107.51 144.65 8.26 0.00 14.89
Unsecured Loans 201.02 277.30 130.72 4.59 48.00
Total Debt 308.53 421.95 138.98 4.59 62.89
Total Liabilities 676.21 2,483.46 877.18 330.70 599.81
Marico HUL Dabur India Colgate Godrej Consumer

Mar '09 Mar '09 Mar '09 Mar '10 Mar '09

Application Of Funds
Gross Block 262.16 2,881.73 518.77 534.52 266.54
Less: Accum. Depreciation 146.25 1,274.95 210.45 287.57 96.75
Net Block 115.91 1,606.78 308.32 246.95 169.79
Capital Work in Progress 45.61 472.07 51.71 6.19 2.50
Investments 112.58 332.62 232.05 21.00 97.89
Inventories 273.69 2,528.86 261.72 110.55 126.67
Sundry Debtors 61.05 536.89 112.36 9.77 9.86
Cash and Bank Balance 13.37 190.59 32.16 347.58 23.67
Total Current Assets 348.11 3,256.34 406.24 467.90 160.20
Loans and Advances 275.80 1,196.95 455.65 140.13 126.14
Fixed Deposits 11.59 1,586.76 111.53 0.00 320.89
Total CA, Loans & Advances 635.50 6,040.05 973.42 608.03 607.23
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 202.52 4,440.08 381.87 426.65 244.67
Provisions 30.87 1,527.98 315.10 124.82 32.94
Total CL & Provisions 233.39 5,968.06 696.97 551.47 277.61
Net Current Assets 402.11 71.99 276.45 56.56 329.62
Miscellaneous Expenses 0.00 0.00 8.64 0.00 0.00
Total Assets 676.21 2,483.46 877.17 330.70 599.80

Contingent Liabilities 26.32 417.26 174.15 62.75 45.42

Book Value (Rs) 6.04 9.45 8.53 23.98 20.90
 What should FMCG companies do now?
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 andColgate-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.

BRAND MANAGERS TO BUSINESS MANAGERS

Tough market situations and a more aware and savvier demanding consumer have

necessitated that yesterday's Brand Managers be transformed into Business Managers who

understand consumers and can innovate and be flexible to move with the consumer. Gone

are the days when brands could be made to gallop with a big budget media plan, a generous

dose of below-the-line and above-the-line activities and constant promotions and schemes

in the market. Consumers who have become demanding yet inscrutable in terms of

attitudes, outlook, moods and behavior have rendered conventional Brand Management

tools obsolete.
 Conclusion
Thus, from the above we can conclude that although the FMCG sector is saturated and

there is cut throat competition from the organized and unorganized sector in this market

the companies in FMCG sector would show a steady growth and would spend more on

Research and Development and would develop innovative products and sustain in the

market.

They are exploring the untapped rural markets of India for their growth opportunities. They

are exploring by various projects like E-choupal etc. From the above project report we can

say that there lies a huge scope for the FMCG companies.
 References
www.moneycontrol.com

www.bseindia.com

http://www.dabur.com/en/investors1/results/quartely/publishedresults30062009.pdf

www.financialexpress.com

http://www.emamiltd.in/ibank/Final%20Finalcial%20report%20june%2009.pdf

http://www.livemint.com/2010/06/01221328/Nirma8217s-consumer-biz-hit.html

http://www.nirma.co.in/pdf/qtr_june.pdf

http://www.nirma.co.in/pdf/qtr_sept_06.pdf

http://www.dnaindia.com/money/comment_godrej-consumer-has-a-rural-edge_1330555

http://www.businessworld.in/bw/2010_02_23_Godrej_Consumer_To_Announce_Buys_By_Early_FY
11.html