A Project Report on Fmcg Company

A PROJECT REPORT ON FMCG COMPANY

What are Fast Moving Consumer Consumer Goods (FMCG)? (FMC G)? 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 fr equently 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 bar s. A subset of FMCGs are Fast Moving Consumer Electronics which include innovative electronic products such as mobile phones, MP3 MP 3 players, digital cameras, GPS Systems and Laptops. T hese are replaced more frequently than other electronic products. White goods in FMCG refer to household electronic items such as Refrige R efrigerators, rators, T.Vs, Music Systems, etc. In 2005, the Rs. 48,000-crore FMCG segment was one of the fast growing industries 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$13.1 billion. Well-established distribution distribution networks, as well as intense competition between the organised a nd unorganised segments are the characteristics of this sector. F MCG in India has a strong and competitive MNC presence across the entire value chain. It has been predicted that the FMCG market will reach to US$ 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 p er capita consumption as well as low penetration level, 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 ca pita income. The big firms are ar e 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 a nd 27 of these are owned by b y 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. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Companies Hindustan Unilever Ltd. ITC (Indian Tobacco Company) Nestlé India GCMMF (AMUL) Dabur India Asian Paints (India) Cadbury India Britannia Industries 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 bra nds, 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 ca tegory. 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.  P ersonal 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 ar e becoming aware about personal grooming. The major players in this segment a re 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. T he 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 c ent. F ood & 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 a nd 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 Unilevers  products. It is also eco-friendly because it reduces waste in the printing  process. HUL is taking different steps to r educe 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 a ward 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 µSnuggy¶ 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 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 (FCP L), 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 c ompany 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

Year

2005-06

2006-07

2007-08

2008-09

2009-10

Rs. in Crores

7540

8625

10903

11915

13514

TURNOVER 

BRANDED SALES Year

2005-06

2006-07

2007-08

2008-09

2009-10

Rs. in Crores

1804

2226

3218

3714

3315

Year

2005-06

2006-07

2007-08

2008-09

2009-10

Rs. in Crores

1189

1308

1502

1744

2511

GROSS BLOCK 

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

3,582.91

High

3,611.60

Low

3,546.28

Current/ Close 3,605.10

Shares Traded (In Crs) 0.29

Turnover  (Rs. Crs)

No. of Trades

P/E

P/B

Yield

Market Capitalization (Rs. Crs) Full

56.77

23214

30.02

12.09

1.35

304,542.45

* - Updated at end of day

Advances/Decline No. of Scr ips Shares Traded

(In Crs)  Advances Declines

Intraday Graph of BSEFMCG

Turnover  (Rs. Crs)

7

0.24

50.25

3

0.05

6.52

Free Float 174,719.70

Unchanged Not Traded

Total

0.00

0.00

0.00

0

0.00

0.00

10

0.29

56.77

Prior Period Comparison Week Ago Month Ago 22 Oct 2010 30 Sep 2010

Previous Close 29 Oct 2010 % Value Points 3,605.10

0

0.00

Value

Points

%

3,630.30

-25.20

-0.69

Value

Points

3,719.54 -114.44

High/Low

Value Date

% -3.08

52 Week

High

Low

High

3793.93

705.66

3793.93

04 Oct 2010

24 A pr 2003

04 Oct 2010

Year Ago 30 Oct 2009 % Value Points 2,808.97 796.13

28.34

High/Low

Low 2646.32 26 Feb 2010

Identifying the segments in FMCG  A br ief descr iption of the Ind ian FMCG industry is given in the table below. Segment Unit Size Key Players Share of  market leader  (%) Household 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, Nir ma, Godrej Personal wash market US$ mn 989 HLL, Nir ma, Godrej Oral care US$ mn 537 Col gate Palm olive, HLL 40 Skin care & cos metics US$ m n 274 HLL, Dabur, P&G 58 Hair care US$ mn 831 Mar ico, HLL, Cav inKare, 54 Procter & Gamble, Dabur, Godrej Feminine hygiene US$ mn 44 Procter & Ga mble, Johnson and Johnson Food and Bevera ges 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 B isler i, Parle Agro, Coca Cola, Pepsi

Market Cap for BSEFMCG

 As on 29 Oct 2010

Value

(Rs.

in Crores)

(%)

BSE Mkt. Cap

7,224,907.35

100

Index Full Mkt. Cap

304,542.45

4.22

Cap Adj. Market Cap

174,719.70

--

Soft Dr ink Mn crates 284 Coca Cola, Pe psi Branded atta 000 tonnes 750 P illsbury, HLL, Agro Tech, Nature Fresh, ITC 15 Health beverages 000 tonnes 120 S mithKline Beecham, Cadbury, Nestle, A mul Milk and Dairy products US$ mn 653 Amul, Br itannia, Nestle Chocolates US$ m n 174 Cadbury's, Nestle Culinary products US$ mn 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, Ind ia 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