FMCG Sector

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods.
Items in this category include all consumables (other than groceries/pulses) people buy at regular
intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving
products, shoe polish, packaged foodstuff, household accessories and extends to certain electronic
goods. These items are meant for daily of frequent consumption and have a high return.

A major portion of the monthly budget of each household is reserved for FMCG products. The volume
of money circulated in the economy against FMCG products is very high, as the

number of products the consumer use is very high. Competition in the FMCG sector is very high resulting
in high pressure on margins.

FMCG companies maintain intense distribution network. Companies spend a large portion of their
budget on maintaining distribution networks. New entrants who wish to bring their products in the
national level need to invest huge sums of money on promoting brands. Manufacturing can be
outsourced. A recent phenomenon in the sector was entry of multinationals and cheaper imports. Also
the market is more pressurized with presence of local players in rural areas and state brands.

What are FMCGs? WE regularly talk about things like butter, potato chips, toothpastes, razors,
household care products, packaged food and beverages, etc. But do we know under which category
these things come? They are called FMCGs. FMCG is an acronym for Fast Moving Consumer Goods,
which refer to things that we buy from local supermarkets on daily basis, the things that have high
turnover and are relatively cheaper

FMCG Products and Categories

- Personal Care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps);

- Cosmetics and toiletries, deodorants, perfumes, feminine hygiene, paper products;

- Household care fabric wash including laundry soaps and synthetic detergents;
household cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air
fresheners, insecticides and mosquito repellents, metal polish and furniture polish;

The performance of the industry was inconsistent in terms of sales and growth for over 4 years.
The investors in the sector were not gainers at par with other booming sectors. After two years
of sinking performance of FMCG sector, the year 2005 has witnessed the FMCGs demand
growing. Strong growth was seen across various segments in FY06. With the rise in disposable
income and the economy in good health, the urban consumers continued with their shopping
spree.

- Food and health beverages, branded flour, branded sugarcane, bakery products
such as bread, biscuits, etc., milk and dairy products, beverages such as tea, coffee,
juices, bottled water etc, snack food, chocolates, etc.

- Frequently replaced electronic products, such as audio equipments, digital

cameras, Laptops, CTVs; other electronic items such as Refrigerator, washing
machines, etc. coming under the category of White Goods in FMCG;

Sector Outlook
FMCG is the fourth largest sector in the Indian Economy with a total market size of Rs. 60,000
crores. FMCG sector generates 5% of total factory employment in the country and is creating
employment for three million people, especially in small towns and rural India.

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. These products
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
Tax and regulatory structure

Scope Of The Sector

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the economy.
A well-established distribution network, intense competition between the organized and unorganized
segments characterize the sector. FMCG Sector is expected to grow by over 60% by 2010. That will
translate into an annual growth of 10% over a 5-year period. It has been estimated that FMCG sector will
rise from around Rs 56,500 crores in 2005 to Rs 92,100 crores in 2010. Hair care, household care, male
grooming, female hygiene, and the chocolates and confectionery categories are estimated to be the
fastest growing segments, says an HSBC report. Though the sector witnessed a slower growth in 2002-
2004, it has been able to make a fine recovery since then.

For example, Hindustan Levers Limited (HLL) has shown a healthy growth in the last quarter. An
estimated double-digit growth over the next few years shows that the good times are likely to continue.

Growth Prospects
With the presence of 12.2% of the world population in the villages of India, the Indian rural
FMCG market is something no one can overlook. Increased focus on farm sector will boost rural
incomes, hence providing better growth prospects to the FMCG companies. Better
infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from
growing demand in the market. Because of the low per capita consumption for almost all the
products in the country, FMCG companies have immense possibilities for growth. And if the
companies are able to change the mindset of the consumers, i.e. if they are able to take the
consumers to branded products and offer new generation products, they would be able to
generate higher growth in the near future. It is expected that the rural income will rise in 2007,
boosting purchasing power in the countryside. However, the demand in urban areas would be
the key growth driver over the long term. Also, increase in the urban population, along with
increase in income levels and the availability of new categories, would help the urban areas
maintain their position in terms of consumption. At present, urban India accounts for 66% of
total FMCG consumption, with rural India accounting for the remaining 34%. However, rural
India accounts for more than 40% consumption in major FMCG categories such as personal
care, fabric care, and hot beverages. In urban areas, home and personal care category,
including skin care, household care and feminine hygiene, will keep growing at relatively
attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and
dairy are long-term growth categories in both rural and urban areas.

Indian Competitiveness and Comparison with the World Markets

The following factors make India a competitive player in FMCG sector:

Availability of raw materials

Because of the diverse agro-climatic conditions in India, there is a large raw material base
suitable for food processing industries. India is the largest producer of livestock, milk,
sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and
fruits &vegetables. India also produces caustic soda and soda ash, which are required for the
production of soaps and detergents. The availability of these raw materials gives India the
location advantage.

Labor cost comparison

Low cost labor gives India a competitive advantage. India's labor cost is amongst the lowest in
the world, after China & Indonesia. Low labor costs give the advantage of low cost of
production. Many MNC's have established their plants in India to outsource for domestic and
export markets.

Presence across value chain

Indian companies have their presence across the value chain of FMCG sector, right from the
supply of raw materials to packaged goods in the food-processing sector. This brings India a
more cost competitive advantage. For example, Amul supplies milk as well as dairy products
like cheese, butter, etc.
 Top 10 FMCG Companies

FMCG sector is an ever growing

sector and is currently in a boom
phase. There are many jobs in FMCG
sector at diiferent levels like sales,
supply chain, manager, operations,
purchasing, supervisor,
administration, general management,
S.
product development, HR, Finance
NO. and marketing. FMCG sector is
famous for jobs that are not only well
paying but also gives the best perks
and bonuses. Freshers are looking for
jobs in FMCGsector as these jobs will
give them the best career in the
industry.
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
Procter & Gamble Hygiene and
9.
Health Care
10. Marico Industries

Hindustan Unilever Limited

Hindustan Unilever Limited (HUL), earlier called Hindustan Lever Limited (HLL) was established in 1933
as Lever Brothers India Limited. Hindustan Lever Limited (HLL) is India's largest Fast Moving Consumer
Goods Company, with a customer base of 2 out of every 3 Indian in the category of Home & Personal
Care Products and Foods & Beverages. The company has combined volumes of about 4 million tonnes
and sales of Rs.10, 000 crores. HLL is also one of the country's largest exporters; the Government of
India has recognized HLL as a Golden Super Star Trading House. HUL is a great place to work at. To
explore the various career opportunities at HUL, visit: http://www(dot)hul(dot)co(dot)in/careers-
redesign/

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

Some of HLL brands are:

• Kwality Walls Ice Cream

• Hamam

• Lifebuoy

• Rexona

• Lux

• Liril

• Moti Soaps

• Breeze

• Lipton Tea

• Brooke Bond Tea

• Bru Coffee

• Pepsodent

• Close Up

• Surf

• Rin

• Wheel Laundry Detergent

• Kissan

• Annapurna

• Pond's

• Vaseline

• Fair & Lovely

• Lakmé

• Clinic Plus

• Clinic All Clear

• Sunsilk and Lux Shampoos

• Vim

• Ala Bleach

• Domex

• Pureit Water Purifier

The Hindustan Lever Research Center (HLRC) was established in 1958, and now has facilities in Mumbai
& Bangalore. HLRC has 200 highly qualified scientists and technologists, many of them with post-doctoral
experience. HLL also runs various ambitious programmes like Shakti. Shakti's aim is to create
opportunities for rural women thereby improving their livelihood and standard of living in rural sector.
Shakti also includes health and hygiene education through the Shakti Vani Programme. The programme
covers about 50,000 villages in 12 states. HLL's motive is to take this programme to 100,000 villages
influencing the lives of over a 100 million rural Indians. HLL is also involved in running a rural health
programme - Lifebuoy Swasthya Chetana. The programme aims to inculcate the hygienic practices
among rural Indians to bring down the figure of diarrhea patients. It has already covered 70 million
people in approximately 15000 villages of 8 states.

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

7120,0 8342,7 10215,2 10917,6 11392,1 11781,3 10951,6 11096,0 10888,3

Sales 11975,53
6 5 4 9 4 0 1 2 8
Profit
After
412,70 580,25 580,25 1069,94 1310,09 1540,95 1731,32 1804,34 1199,28 1354,51
Taxatio
n

New Ventures
Hindustan Lever Network
Ayush Ayurvedic Products & Services
Sangam
Pureit
Water
Purifiers

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

Corporate Communications Department

Hindustan Lever Limited

Hindustan Lever House
165/166, Back bay Reclamation
Mumbai - 400020
Maharashtra
India.
Tel: +91-22-39830000
Fax: +91-22-22871970

ITC Limited

ITC was set up in 1910 by the name of 'Imperial Tobacco Company of India Limited'. The company is now
known as Indian Tobacco Company Ltd. ITC provides very good employment and has very good
employees satisfaction policies. The employees are taken very good care of in ITC, and employees work
very happily there. ITC has many different divisions and is not only confined to the tobacco industry,
anymore. The popular hotels of ITC includes Welcome Group- ITC Maurya, ITC Maratha. For the current
openings in ITC , visit the website: http://www(dot)itcportal(dot)com/careers/careers.aspx Currently,
there are good openings in the fields of Corporate Social Developement, Finance, Technical, Purchase
and Legal. ITC is a wonderful place to work at. Go Ahead and try your luck.

Some Facts about ITC

ITC has its presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-
Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Greeting
Cards, Safety Matches and other FMCG products. ITC is a market leader in the businesses of
Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports. It is gaining its market share very
rapidly in the businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting
Cards & Stationery. ITC ranks third in pre-tax profits among India's private sector corporations.
Forbes magazine has ranked ITC among the World's Best Big Companies and Asia's 'Fabulous
50'. Business World has placed it among India's Most Respected Companies. ITC has also been
placed among India's Most Valuable Companies by Business Today magazine

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the
country's biggest foreign exchange earners (US $ 2.4 billion in the last decade).

Financial Results for the quarter ended 31st December 2006

-The Company's pre-tax profit for the quarter ended 31st December 2006 recorded a growth
of 26% over last year and crossed the Rs.1000 crores mark.

-Post-tax profit at Rs. 717.4 crores grew by 23.2% over last year
-Earnings Per Share for the quarter stood at Rs. 1.91.
-ITC's Net Turnover at Rs. 3166 crores account for 52% of the Company's Net Turnover
posted a strong growth of 24%
-Market Capitalization - US$ 16 Billion

-Turnover ¬¬- US$ 3.5 Billion

-Employee Base - Over 20,000 people

-Shareholders - 4,58,000

Hierarchy

There are three levels of leadership at ITC. The Board of Directors at the apex, as trustee of
shareholders, holds the responsibility for strategic supervision of the Company. The strategic
management of the Company is with the Corporate Management Committee comprising the
whole time Directors and members drawn from senior management.

Registered Office
Virginia house
37 J.L..Nehru Road, Kolkata 700 071
EPABX no.: 91-(0) 33 22889371

Corporate Affairs Office

Thapar House,
2nd Floor, 124 Janpath,
New Delhi 110001
Tel
41502301, 41502302, 41502163
Fax
23368750/23745931

Dabur India Ltd

Dabur India Ltd. is the fourth largest FMCG Company in India. Dabur deals in Health care and Personal
care products. Today, Dabur has a turnover of Rs.1899.57 crores. The market penetration of Dabur is of
about 1.5 million retail outlets all over India with 47 C& F agents and more than 5000 distributors. Dabur
India is divided into 2 major strategic business units:

• Consumer Care Division

• Consumer Health Division

Dabur has 3 subsidiary group companies:

1. Dabur Foods
2. Dabur Nepal
3. Dabur International- Further divided into Asian Consumer Care in Bangladesh, African
Consumer Care in Nigeria and Dabur

Dabur has 13 ultra-modern manufacturing units in:

 Jammu & Kashmir  Uttar Pradesh  Himachal Pradesh  Madhya Pradesh  Rajasthan 
Uttaranchal
 West Bengal  Silvassa  Nepal

Dabur's Brands
 Vatika  Anmol  Hajmola  Dabur Amla  Dabur Chyawanprash  Dabur Lal Dant
Manjan

(Rs. in Cr.)

 FINANCIALS FOR PAST 4 YEARS FMCG FMCG FMCG FMCG

(RECAST)* Standalon Standalon Standalone 05-
02-03 e 03-04 e 04-05 06
Profit and Loss Account

Sales 1048.5 1148.0 1268.7 1369.7

Other Income 4.9 11.1 11.5 5.4
Earnings Before Depreciation,
109.6 136.1 187.9 243.3
Interest & Taxes (EBDIT)
Profit Before Tax 80.0 113.4 165.0 214.4
Profit After Tax 72.0 101.2 148.0 189.1
EPS (Rs.) 2.5 3.5 5.2 3.3***
Exports
 United Kingdom  Egypt  Bangladesh  Dubai  Nigeria  Nepal
Dabur has its offices and representatives in America, Europe, and Africa. It exports Active
Pharmaceutical Ingredients to Latin America, Europe, Africa, and other Asian countries. Dabur also
exports herbal products to Middle East, Far East, and several European countries. Today Dabur is
marketing its products in more than 50 countries.
Dabur India Ltd
Kaushambi
Ghaziabad – 201010
Uttar Pradesh, India
+91 (0120) 3982000, +91 (0120) 3001000