A PROJECT REPORT ON FMCG COMPANY

What are Fast Moving Consumer Goods (FMCG)?

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. Examples of FMCG 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. FMCG may also include pharmaceuticals, consumer
electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.

A subset of FMCGs are Fast Moving Consumer Electronics which include innovative electronic products
such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops. These are replaced
more frequently than other electronic products.

White goods in FMCG refer to household electronic items such as Refrigerators, T.Vs, Music Systems,
etc.

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

Indian FMCG Sector

The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1 billion.
Well-established distribution networks, as well as intense competition between the organised and
unorganised segments are the characteristics of this sector. FMCG in India has a strong and competitive
MNC presence across the entire value chain. It has been predicted that the FMCG market will reach to
US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. The middle class and the rural segments of the
Indian population are the most promising market for FMCG, 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 AC Nielsen, 62 of the top 100 brands are owned by MNCs, and the balance by Indian
companies. Fifteen companies own 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
FMCG. Between them, they account for 35 of the top 100 brands.

THE TOP 10 COMPANIES IN FMCG SECTOR

S. NO. Companies
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

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 HLL brands in the 21, aggregating Rs. 3,799 crore or 54% of the personal care
category. Cigarettes account for 17% of the top 100 FMCG sales, and just below the personal care
category. ITC alone accounts for 60% volume market share and 70% by value of all filter cigarettes in
India.

The foods category in FMCG 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 Amul 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 HLL and pizzas by both GCMMF 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 FMCG 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 FMCG companies in India and is a herbal specialist. With a turnover of Rs.
19 billion (approx. US$ 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 USD 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 70% 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 (USD 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 FMCG 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 could be
 increased further if these companies can change the consumer's mindset and offer new generation
products. Earlier, Indian consumers were using non-branded apparel, but today, clothes of different
brands are available and the same consumers are willing to pay more for branded quality clothes. It's the
quality, promotion and innovation of products, which can drive many sectors.

Industry Category and Products

Household Care
Personal Wash:-
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. HUL 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.
Detergents:-
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 HUL is the leader with ~38
per cent of mar-ket share. Other major players are Nirma, Henkel and Proctor & Gamble.
Personal Care
Skin 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.
Hair 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.
Shampoos:-
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 HUL 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.

Oral 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
penetration level of toothpowder/toothpaste in urban areas is three times that of rural areas. This
segment is dominated by Colgate-Palmolive with market share of ~49 per cent, while HUL
occupies second position with market share of ~30 per cent. In toothpowders market, Colgate and
Dabur are the major players. The oral care market, es-pecially toothpastes, remains under
penetrated in India with penetration level ~50 per cent.
Food & Beverages
Food Segment :-
The foods category in FMCG is gaining popularity with a swing of launches by HUL, ITC,
Godrej, and others. This category has 18 major brands aggregating Rs. 4,600 Cr. Nestle and Amul
slug it out in the powders segment. The food category has also seen innovations like softies in ice
creams, ready to eat rice by HUL and pizzas by both GCMMF 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 HUL 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, HUL and Tata Tea.
Company Prospects
Hindustan Unilever Limited
• Unilever is lowering its expenditure on packaging across its portfolio
of food brands as part of a wider cost-cutting drive. HUL has pared
down the colour palette used for print-ing across many products. The
system has been used to reduce printed packaging costs for Unileverʹs
products. It is also eco-friendly because it reduces waste in the printing
process. HUL is taking different steps to reduce the cost and increase
the margin.
• Hindustan Unilever’s product - Pureit (a water purifier) has received
the UNESCO 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.
Procter & Gamble Hygiene & Health Care Limited (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.
Godrej Consumer Products Limited (Godrej)
• The Board of Directors of Godrej Consumer Products Limited (GCPL)
has approved the acquisition of 50 per cent stake of its joint venture
partner SCA Hygiene Products’ stake in Godrej SCA Hygiene Limited.
After the transaction, the Joint Venture which owns the ‘Snuggy’ brand
of baby diapers will become a 100 per cent subsidiary of GCPL.
• Godrej Consumer Products Limited has acquired 100 per cent stake in
the Kinky Group Limited, South Africa. Kinky is among one of the

largest brand into hair segment with product portfolio.

Dabur India Limited (Dabur)
• Dabur has entered into the malted food drink market with the launch
of a new health drink “Dabur 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-Palmolive (India) Limited
• 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 Rs 77.70 lakh. Consequently, SS
Oral Hygiene Products has become a wholly owned subsidiary of the
company.
Nestle India Limited
• 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, while total
income for the quarter rose 23.78% to Rs 10,423.40 million, when compared with the prior year
period.

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

Rs. in Crores 754 843 1061 1140 1925

TURNOVER

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

Rs. in Crores 7540 8625 10903 11915 13514

BRANDED SALES

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

Rs. in Crores 1804 2226 3218 3714 3315

GROSS BLOCK

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

Rs. in 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 Traded (Rs. Crs) of Trades (Rs. Crs)
(In Crs) Full Free Float
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
* - Updated at end of day

 
Advances/Decline Intraday Graph of BSEFMCG
  No. of Scrips 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 Traded 0 0.00 0.00

Total 10 0.29 56.77

Prior Period Comparison Market Cap for BSEFMCG

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

Identifying the segments in FMCG

A brief description of the Indian FMCG industry is given in the table below.
Segment Unit Size Key Players Share of
market
leader
(%)
Household care 62
Fabric wash market Mn tonnes 50 HLL, P&G, Nirma, SPIC 38
Laundry soaps/bars US$ mn 1102
Detergent cakes Mn tonnes 15
Washing powder Mn tonnes 26
Dish wash US$ mn 93 HLL 59
Personal care 58
Soap & Toiletries Mn tonnes 60 HLL, Nirma, Godrej
Personal wash market US$ mn 989 HLL, Nirma, 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 Marico, 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 Britannia, 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 Drink 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, Amul
Milk and Dairy products US$ mn 653 Amul, Britannia, Nestle
Chocolates US$ mn 174 Cadbury's, Nestle
Culinary products US$ mn 326 HLL, Nestle 78
Edible oil Mn tonnes 13 Ruchi Soya, Marico, ITC Agrotech 28
Note: *R&G Source: ORG Marg, AC Nielson, FICCI, India Stat
and HLL.
Product wise production (2004)
PAGE

THE TOP 10 COMPANIES IN FMCG SECTOR

S. NO. Companies
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