A PROJECT R E PO R T O N F M C G

COMPANY

What are Fast Moving Consumer Goods ( F M C G ) ?

Products which have a quick turnover, and relatively low cost are known as Fast Moving
Consumer Goods (FMCG). F M C G products are those that get replaced within a year. Examples
of F M C G generally include a wide range of frequently purchased consumer 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. F M C G m a y also include pharmaceuticals,
consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.

A subset of F M C G s are Fast Moving Consumer Electronics which include innovative electronic
products such as mobile phones, M P 3 players, digital cameras, G P S Systems and Laptops.
These are replaced more frequently than other electronic products.

White goods in F M C G refer to household electronic items such as Refrigerators, T.Vs, Music
Systems, etc.

In 2005, the Rs. 48,000-crore F M C G segment was one of the fast growing industries in India.
According to the A C Nielsen India study, the industry grew 5.3% in value between 2004 and
2005.

Indian F M C G Sector 

The Indian F M C G sector is the fourth largest in the economy and has a market size of US$13.1
billion. Well-established distribution networks, as well as intense competition between the
organised and unorganised segments are the characteristics of this sector. F M C G in India has
a strong and competitive M N C presence across the entire value chain. It has been predicted
that the F M C G market will reach to U S $ 33.4 billion in 2015 from U S $ billion 11.6 in 2003.
The middle class and the rural segments of the Indian population are the most promising market
for F M C G , and give brand makers the opportunity to convert them to branded products. Most
of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per
capita consumption as well as low penetration level, but the
 potential for growth is huge.

The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid
urbanization, increased literacy levels, and rising per capita income.

The big firms are growing bigger and small-time companies are catching up as well. According
to the study conducted by A C Nielsen, 62 of the top 100 brands are owned by M N C s , and the
balance by Indian companies. Fifteen companies o w n these 62 brands, and 27 of these are
owned by Hindustan Lever. Pepsi is at number three followed by Thums Up. Britannia takes the
fifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are figures
the soft drink and cigarette companies have always shied away from revealing. Personal care,
cigarettes, and soft drinks are the three biggest categories in F M C G . Between them, they
account for 35 of the top 100 brands.

T H E T O P 10 C O M P A N I E S IN F M C G S E C T O R  
S. N O. Companies
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco
3. Company) Nestlé India
4. G C M M F (AMUL)
5. Dabur India
6. Asian Paints
7. (India) Cadbury
8. India Britannia
9. Industries
10. Procter & Gamble Hygiene and Health
Care Marico Industries
The companies mentioned in Exhibit I, are the leaders in their respective sectors. The personal
care category has the largest number of brands, i.e., 21, inclusive of Lux, Lifebuoy, Fair and
Lovely, Vicks, and Ponds. There are 11 H L L brands in the 21, aggregating Rs. 3,799 crore or
5 4 % of the personal care category. Cigarettes account for 1 7 % of the top 100 F M C G sales,
and just below the personal care category. ITC alone accounts for 6 0 % volume market share
and 7 0 % by value of all filter cigarettes in India.

The foods category in F M C G is gaining popularity with a swing of launches by HLL, ITC,
Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore. Nestle and
A m u l slug it out in the
 powders segment. The food category has also seen innovations like softies in ice creams,
chapattis by HLL, ready to eat rice by H L L and pizzas by both G C M M F and Godrej Pillsbury.
This category seems to
have faster development than the stagnating personal care category. Amul, India's largest foods
company, has a good presence in the food category with its ice-creams, curd, milk, butter,
cheese, and so on.
Britannia also ranks in the top 100 F M C G brands, dominates the biscuits category and has
launched a
series of products at various prices.

In the household care category (like mosquito repellents), Godrej and Reckitt are two players.
Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's Mortein at Rs 149
crore. In the shampoo category, HLL's Clinic and Sunsilk make it to the top 100, although P&G's
Head and Shoulders and Pantene are also trying hard to be positioned on top. Clinic is nearly
double the size of Sunsilk.

Dabur is among the top five F M C G companies in India and is a herbal specialist. With a
turnover of Rs. 19 billion (approx. U S $ 420 million) in 2005-2006, Dabur has brands like Dabur
Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a formidable
presence in the Indian sub-continent, Southeast Asia, Far East, Middle East, South Pacific,
Caribbean, Africa and Europe. Asian Paints is India's largest paint company, with a turnover of
Rs.22.6 billion (around U S D 513 million).
Forbes Global magazine, USA, ranked Asian Paints among the 200 Best Small Companies in the
World

Cadbury India is the market leader in the chocolate confectionery market with a 7 0 % market
share and is ranked number two in the total food drinks market. Its popular brands include
Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion ( U S D 380 Million)
Marico is a leading Indian group in consumer products and services in the Global Beauty and
Wellness space.

Outlook 

There is a huge growth potential for all the F M C G companies as the per capita consumption of
almost all
 products in the country is amongst the lowest in the world. Again the demand or prospect
 products. Earlier, Indian consumers were using non-branded apparel, but today, clothes of
different
 brands are available and the sa m e consumers are willing to pay more for branded quality
clothes. It's the quality, promotion and innovation of products, which can drive many sectors.

Ind us t ry Category a n d P roduct s

 Household Care
Personal Was h:-
The market size of personal wash is estimated to be around Rs. 8,300 Cr. The personal wash can
be segregated into three segments: Premium, Economy and Popular. The penetration level of
soaps is ~92
 per cent. It is available in 5 million retail stores, out of which, 75 per cent are in the rural
areas. H U L is
the leader with market share of ~53 per cent; Godrej occupies second position with market share
of ~10
 per cent. With increase in disposable incomes, growth in rural demand is expected to increase
because consumers are moving up towards premium products. However, in the recent past there
has
not been much change in the volume of premium soaps in proportion to economy soaps, because
increase in prices has led some consumers to look for cheaper substitutes.
D etergents:-
The size of the detergent market is estimated to be Rs. 12,000 Cr. Household care segment is
characterized by high degree of competition and high level of penetration. With rapid urbanization,
emergence of small pack size and sachets, the demand for the household care products is
flourishing. The demand for detergents has been growing but the regional and small
unorganized players account for a major share of the total volume of the detergent market. In
washing powder H U L is the leader with ~38
 per cent of mar-ket share. Other major players are Nirma, Henkel and Proctor & Gamble.
 P  ersonal Care
S k i n Care:-
The total skin care market is estimated to be around Rs. 3,400 Cr. The skin care market is at a
primary
stage in India. The penetration level of this segment in India is around 20 per cent. With changing
life styles, increase in disposable incomes, greater product choice and availability, people are
becoming aware about personal grooming. The major players in this segment are Hindustan
Unilever with a market share
of ~54 per cent, fol-lowed by CavinKare with a market share of ~12 per cent and Godrej with
a market share of ~3 per cent.
H a i r Care: -
The hair care market in India is estimated at around Rs. 3,800 Cr. The hair care market can
be segmented
into hair oils, shampoos, hair colorants & conditioners, and hair gels. Marico is the leader
in Hair Oil segment with market share of ~ 33 per cent; Dabur occu-pies second position at
~17 per cent.
S hampoos :-
The Indian shampoo market is estimated to be around Rs. 2,700 Cr. It has the penetration
level of only 13
 per cent in India. Sachet makes up to 40 per cent of the total shampoo sale. It has low
penetration level even in metros. Again the market is dominated by H U L with around ~47 per
cent market share; P & G
occupies second position with market share of around ~23 per cent. Antidandruff segment
constitutes around 15 per cent of the total shampoo market. The market is further expected
to increase due to
increased marketing by players and availability of shampoos in affordable sachets.

O ral Care:-
The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per
cent; toothbrushes - 17 per cent. The total toothpaste market is estimated to be around Rs.
3,500 Cr. The
F o o d S e gm en t :-
The foods category in F M C G is gaining popularity with a swing of launches  by H U L , ITC,
Godrej, and others. This category has 18 major brands aggregating Rs. 4,600 Cr. Nestle
and A m u l
slug it out in the powders segment. The food category has also seen innovations like
softies in ice creams, ready to eat rice by H U L and pizzas by both G C M M F and Godrej
Pillsbury.
Tea :-
The major share of tea market is dominated by unorganized players. More than 50 per
cent of the market share is capture by unorganized players. Leading branded tea players
are H U L and Tata Tea.
Coffee :-
The Indian beverage industry faces over supply in segments like coffee and tea.
However, more
than 50 per cent of the market share is in unpacked or loose form. The major
players in this segment are Nestlé, H U L and Tata Tea.
C o m p a n y Prospects
H i n d u s t a n Un i lever L i m i t e d
 Unilever is lowering its expenditure on packaging across its
portfolio of food brands as part of a wider cost-cutting drive.
H U L has pared
down the colour palette used for print-ing across many products.
The system has been used to reduce printed packaging costs for
Unilevers
 products. It is also eco-friendly because it reduces waste in the
printing
 process. H U L is taking different steps to reduce the cost and
increase the margin.
 Hindustan Unilever¶s product - Pureit (a water purifier) has
received
the U N E S C O Water Digest Water Award 2008-2009 in the
category of 
 best domestic non-electric water puri-fier. Pureit received the
award for outstanding contribution in the field of water in
India. The product
is available across 21 Indian states and has reached more than 1
million homes in India giving them access to microbiologically
safe drinking
water. Pureit¶s performance has been tested by leading
international & national medical, scien-tific & public health
institutions and meets the
germ-kill criteria of the Environmental Pro-tection Agency, the
drinking water regulatory agency in the USA.
P roct er & G a m b l e H y g i e n e & H e a l t h C are L i m i t ed (P&G)
 The Company has 21 product categories out of which only 8
product
have presence in India. The company is planning to launch the
rest 13
 product in India. The company expects to see a growth in
other categories.
 The company has an aggressive plan to set up 20 new factories
across the World out of which 19 is expected to come in
emerging markets and most of them would be seen in Brazil,
Russia, India, and China (BRIC) nations.
 Whisper which is one of the company¶s power brands has
recorded 50
 per cent market share in urban India.
G o d re j C on s u m e r P roduct s L i m i t ed (Godrej)
 largest brand into hair segment with product portfolio.
D a b u r India Limited (Dabur)
 Dabur has entered into the malted food drink market with the
launch of a new health drink ³Dabur Chyawan Junior´.
According to the
company, they expect to capture a market share of 10 per
cent of the Rs. 1,900 Crores malted food drink market over
the next two years.
 Dabur has acquired 72.15 per cent of Fem Care Pharma Ltd
(FCPL), a leading player in the women¶s skin care products
market, for Rs 203.7
Crores in an all-cash deal. The Company is expected to create
synergy
 by this deal.
 Dabur got approval from Government of Himachal Pradesh to
set up
another medicine manufacturing unit. The project has an
expected investment of Rs. 130 Crores.
Colgate-Palmol i ve (Ind i a) L i m i t e d
 Colgate Palmolive (India) Ltd, which is currently holding 75 per
cent of the share capital of SS Oral Hygiene Products Private Ltd,
Hyderabad,
has acquired the remaining 25 per cent share capital from the
local shareholders at an aggregate price of R s 77.70 lakh.
Consequently, SS
Oral Hygiene Products has become a wholly owned subsidiary
of the company.
Nestle I n d i a L i m i t e d
 Nestle is planning to invest Rs 6 billion in India in 2009 for
expansion of its business in the country.The company which has
allotted an
investment of Rs 3 billion in the Indian market in 2008, would
be doubling the investment in 2009 as part of its business
strategy. Nestle
International is reinvesting and expanding in India and Nestle
India will have all the financial resources to expand and
grow from the
 parent company.
 Nestle India reported a good increase in its standalone net
profit for the second quarter.During the quarter, the profit of the
company rose 26.54% to Rs 1,210.90 million from Rs 956.90
million in the same
quarter, last year. The company posted earnings of Rs 12.56 a
share during the quarter, registering 26.61% growth over prior
year period.
 Net sales for the quarter rose 23.45% to Rs 10,356.30 million,
NET W
while O RT H
total
income for the quarter rose 23.78% to Rs 10,423.40 million,
when
Y ea r compared with the prior year  2006-07
2005-06 2007-08 2008-09 2009-10
 period.
 Rs. i n Crores 754 843 1061 1140 1925

TURNOVER 

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Rs. i n Crores 7540 8625 10903 11915 13514

BRANDED SALES

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Rs. i n Crores 1804 2226 3218 3714 3315

GROSS BLOCK 

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Rs. i n Crores 1189 1308 1502 1744 2511

Index Reach - BSE FMCG

Scripwise Price Movement Scripwise Weightages

Current Value (BSEFMCG) *As on Friday, October 29, 2010

Last Updated On 10/29/2010 3:59:53 PM

Open High Low Current/ Shares Turnover  No. P/E P/B Yield Market Capitalization
Close (Rs. Crs) of Trades (Rs. Crs)
Traded Full Free Float
(In
Crs)
* - Updated at end of day

3,582.91 3,611.60 3,546.28 3,605.10 0.29 56.77 23214 30.02 12.09 1.35 304,542.45 174,719.70
Advances/Decline Intraday Graph of BSEFMCG
No. of Scri ps Shares Traded Turnover 
(In Crs) (Rs. Crs)
 Advances 7 0.24 50.25
Declines 3 0.05 6.52
 Unchanged 0 0.00 0.00
Not 0 0.00 0.00
Traded

Total 10 0.29 56.77

Prior Period Comparison Market Cap for BSEFMCG

Previous Close Week Ago Month Ago Year Ago
 As on
29 Oct 2010 22 Oct 2010 30 Sep 2010 30 Oct 2009 V alue(Rs.
29 Oct (%)
V alue % V alue Points % V alue Points % V alue Points in Crores)
2010
Points 0.00 3,630.30 -25.20 -0.69 3,719.54 -114.44 -3.08 %
2,808.97 796.13 28.34 BSE Mkt. 7,224,907.35 100
3,605.10 0.00 IndexCa p Mkt.
Full 304,542.45
Ca p
4.22
H igh/ Low 52 Week H i g h / L o w Cap Adj. 174,719.70
Market Cap
--
High Low High Low
3793.93 2646.32
Value 3793.93 705.66
04 Oct 2010 26 Feb 2010
Date 04 O ct 2010 24 Apr
2003

Identifying the segments in FMCG

 A br ief descr iption of the Indian FMCG industry is given in the table
below.
Segment Unit Size Key Players Share of 
market
leader 
(%)
House
hold
care
62
Fabr ic wash market Mn tonnes 50 HLL, P&G, Nir ma, SPIC
38 Laundry soaps/bars US$ mn 1102
Deter gent cakes Mn tonnes 15
Washing powder Mn tonnes 26
Dish wash US$ mn 93 HLL 59
Personal care 58
Soap & Toiletr ies Mn tonnes 60 HLL, Nirm  a, Godrej
Personal wash market US$ mn 989 HLL, Nirm  a,
Godrej Oral care US$ mn 537 Colgate Palmolive, HLL
40
Skin care & cosmetics US$ mn 274 HLL, Dabur, P&G 58
Hair care US$ mn 831 Mar ico, HLL, CavinKare, 54
Procter & Gamble, Dabur, Godrej
Feminine hygiene US$ mn 44 Procter & Gamble, Johnson and Johnson
Food and Beverages
Bakery products Mn tonnes 30 Br itannia, Parle, ITC
Tea 000 tonnes 870 HLL, Tata Tea 31
Coffee 000 tonnes 20 Nestle, HLL, Tata Tea 49*
Mineral water Mn crates 65 Parle Bisleri , Parle
Agro, Coca Cola, Pepsi
Soft Dr ink Mn crates 284 Coca Cola, Pepsi
Branded atta 000 tonnes 750 Pillsbury, HLL, Agro Tech, Nature Fresh, ITC 15
Health beverages 000 tonnes 120 SmithKline Beecham, Cadbury, Nestle, Am ul
Milk and Dairy products US$ m n 653 Amul, Br itannia, Nestle
Chocolates US$ m n 174 Cadbury's, Nestle
Culinary products US$ m n 326 HLL, Nestle 78
Edible oil Mn tonnes 13 Ruchi Soya, Mar ico,
ITC Agrotech 28
Note: *R&G Source: ORG Mar g, AC Nielson, FICCI, India Stat
and HLL.
Product wise production (2004)
PAGE

T H E T O P 10 C O M PA N I E S IN F M C G SECTOR 

S. C om p anie
 N O s
. Hindustan Unilever Ltd.
1. ITC (Indian Tobacco
2. Company) Nestlé India
3. G C M M F (AMUL)
4. Dabur India
5. Asian Paints (India)
6. Cadbury India
7. Britannia
8. Industries
9. Procter & Gamble Hygiene
10. and Health Care
Marico Industries