This document provides an overview of the fast moving consumer goods (FMCG) sector in India. It discusses the history and current state of FMCG companies in India. Specifically, it notes that major global companies like ITC, HLL, Colgate, and Cadbury have long dominated the Indian FMCG sector. However, in recent decades, increased competition from smaller Indian companies and liberalization have led FMCG companies to fight harder for market share and accept lower margins. The future outlook for the FMCG sector in India is positive due to factors like rising incomes, urbanization, and the growing young population. Penetration of organized retail is also expected to boost the sector.
This document provides an overview of the fast moving consumer goods (FMCG) sector in India. It discusses the history and current state of FMCG companies in India. Specifically, it notes that major global companies like ITC, HLL, Colgate, and Cadbury have long dominated the Indian FMCG sector. However, in recent decades, increased competition from smaller Indian companies and liberalization have led FMCG companies to fight harder for market share and accept lower margins. The future outlook for the FMCG sector in India is positive due to factors like rising incomes, urbanization, and the growing young population. Penetration of organized retail is also expected to boost the sector.
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This document provides an overview of the fast moving consumer goods (FMCG) sector in India. It discusses the history and current state of FMCG companies in India. Specifically, it notes that major global companies like ITC, HLL, Colgate, and Cadbury have long dominated the Indian FMCG sector. However, in recent decades, increased competition from smaller Indian companies and liberalization have led FMCG companies to fight harder for market share and accept lower margins. The future outlook for the FMCG sector in India is positive due to factors like rising incomes, urbanization, and the growing young population. Penetration of organized retail is also expected to boost the sector.
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~A STUDY OF CORPORATE SOCIAL RESPONSIBILITY IN INDIAN IT INDUSTRY
WITH REFRENCE TO INFOSYS, HCL AND WIPRO
SUBMITTED BY PANKA1 KUMAR ROLL: 0409008 Date: 30th September 2010 A REPORT ON
~A STUDY OF CORPORATE SOCIAL RESPONSIBILITY IN INDIAN IT INDUSTRY WITH REFRENCE TO INFOSYS, HCL AND WIPRO
PANKA1 KUMAR ROLL NO - 0409008
BATCH XVII, 2009-2011 Report submitted in partial fulfillment for the award of Post Graduate Diploma in Management VIGNANA 1YOTHI INSTITUTE OF MANAGEMENT (APPROVED BY AICTE, MINISTRY OF HRD, GOVT OF INDIA) BACHUPALLY, HYDERABAD ACKNOWLEDGEMENT I hereby convey my deep acknowledgement to all those who made it possible Ior me to complete this project, by extending their support and continuous co-operation. I would like to acknowledge the consistent encouragement extended by Dr. Kamal Ghosh Ray, Director and Dr. Ch. S. Durga Prasad, Dean-Academic Planning oI Vignana Jyothi Institute oI Management. My sincere gratitude to Col (Retd.) Saeed Ahmad, Associate ProIessor whose constant guidance, eIIorts, heartIelt support, suggestions and consideration helped me in the successIul completion oI this project. llnally l would llke Lo Lhank my frlend Mr Shadab AkLhar un[ab College of 1echnlcal LducaLlon Ludhlana Mr Modassahar khan unlverslLy of Madras Chennal Mr Subhash kumar nlLLM School of 8uslness uelhl and my v!lM baLch maLes wlLhouL whom Lhls dlsserLaLlon work would noL have been successfully compleLed
INTRODUCTION Fast Moving Consumer Goods (FMCG) FMCG are products that have a quick shelI turnover, at relatively low cost and don't require a lot oI thought, time and Iinancial investment to purchase. The margin oI proIit on every individual FMCG product is less. However the huge number oI goods sold is what makes the diIIerence. Hence proIit in FMCG goods always translates to number oI goods sold. Fast Moving Consumer Goods is a classiIication that reIers to a wide range oI Irequently 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 Iood products and drinks, although these are oIten categorized separately. The term Consumer Packaged Goods (CPG) is used interchangeably with Fast Moving Consumer Goods (FMCG).Three oI the largest and best known examples oI Fast Moving Consumer Goods companies are NESTLE, UNILEVER AND PROCTER & GAMBLE. Examples oI FMCGs are soIt drinks, tissue paper, and chocolate bars. Examples oI FMCG brands are Coca-Cola, Kleenex, Pepsi and Believe. The FMCG sector represents consumer goods required Ior daily or Irequent use. The main segments oI this sector are personal care (oral care, hair care, soaps, cosmetics, and toiletries), household care (Iabric wash and household cleaners), branded and packaged Iood, beverages (health beverages, soIt 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 Iourth largest sector in the economy and is responsible Ior 5 oI the total Iactory employment in India. The industry also creates employment Ior 3 m people in downstream activities, much oI 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, increase in the disposable incomes and altered liIestyle. Furthermore, the boom has also been Iuelled by the reduction in excise duties, de-reservation Irom the small-scale sector and the concerted eIIorts oI personal care companies to attract the burgeoning aIIluent segment in the middle-class through product and packaging innovations. Unlike the perception that the FMCG sector is a producer oI luxury items targeted at the elite, in reality, the sector meets the every day needs oI the masses. The lower-middle income group accounts Ior over 60 oI the sector's sales. Rural markets account Ior 56 oI the total domestic FMCG demand. Many oI the global FMCG majors have been present in the country Ior many decades. But in the last ten years, many oI the smaller rung Indian FMCG companies have gained in scale. As a result, the unorganized and regional players have witnessed erosion in market share.
HISTORY OF FMCG COMPANIES IN INDIA In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have been a dominant Iorce in the FMCG sector well supported by relatively less competition and high entry barriers (import duty was high). These companies were, thereIore, able to charge a premium Ior their products. In this context, the margins were also on the higher side. With the gradual opening up oI the economy over the last decade, FMCG companies have been Iorced to Iight Ior a market share. In the process, margins have been compromised, more so in the last six years (FMCG sector witnessed decline in demand).
CURRENT SITUATION The growth potential Ior FMCG companies looks promising over the long-term horizon, as the per-capita consumption oI almost all products in the country is amongst the lowest in the world. As per the Consumer Survey by KSA-Technopak, oI 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 Ior the sector. Around 45 oI the population in India is below 20 years oI age and the proportion oI the young population is expected to increase in the next Iive years. Aspiration levels in this age group have been Iuelled 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 Ior the FMCG sector are over and driving rural penetration will be the key going Iorward. Due to inIrastructure constraints (this inIluences the cost-eIIectiveness oI the supply chain), companies were unable to grow Iaster. Although companies like HLL and ITC have dedicated initiatives targeted at the rural market, these are still at a relatively nascent stage. The bottlenecks oI the conventional distribution system are likely to be removed once organized retailing gains in scale. Currently, organized retailing accounts Ior just 3 oI total retail sales and is likely to touch 10 over the next 3-5 years. In our view, organized retailing results in discounted prices, Iorced-buying by oIIering many choices and also opens up new avenues Ior growth Ior the FMCG sector. Given the aggressive expansion plans oI players like Pantaloon, Trent, Shopper`s Stop and Shoprite, we are conIident that the FMCG sector has a bright Iuture. CVLk VILW CI INDIAN IMCG MAkkL1 lndla offers a large and growlng markeL of 1 bllllon people of whlch 300 mllllon are mlddle class consumers lndla offers a vlbranL markeL of youLh and vlgor wlLh 34 of populaLlon below Lhe age of 23 years 1hese young people work harder earn more spend more and demand more from Lhe markeL maklng lndla a dynamlc and lnsplraLlonal socleLy uomesLlc demand ls expecLed Lo double over Lhe Lenyear perlod from 1998 Lo 2007 1he number of households wlLh hlgh lncome ls expecLed Lo lncrease by 60 ln Lhe nexL four years Lo 44 mllllon households lndla ls raLed as Lhe flfLh mosL aLLracLlve emerglng reLall markeL lL has been ranked second ln a Clobal 8eLall uevelopmenL lndex of 30 developlng counLrles drawn up by A 1 kearney A1 kearney has esLlmaLed lndlas LoLal reLall markeL aL $2026 bllllon ls expecLed Lo grow aL a compounded 30 per cenL over Lhe nexL flve years 1he share of modern reLall ls llkely Lo grow from lLs currenL 2 per cenL Lo 1320 percenL over Lhe nexL decade analysLs feel 1he lndlan lMCC secLor ls Lhe fourLh largesL secLor ln Lhe economy wlLh a LoLal markeL slze ln excess of uS$ 131 bllllon 1he lMCC markeL ls seL Lo Lreble from uS$ 116 bllllon ln 2003 Lo uS$ 334 bllllon ln 2013 eneLraLlon level as well as per caplLa consumpLlon ln mosL producL caLegorles llke [ams LooLhpasLe skln care halr wash eLc ln lndla ls low lndlcaLlng Lhe unLapped markeL poLenLlal 8urgeonlng lndlan populaLlon parLlcularly Lhe mlddle class and Lhe rural segmenLs presenLs an opporLunlLy Lo makers of branded producLs Lo converL consumers Lo branded producLs lndla ls one of Lhe world's largesL producers for a number of lMCC producLs buL lLs lMCC exporLs are langulshlng aL around 8s 1000 crore only 1here ls slgnlflcanL poLenLlal for lncreaslng exporLs buL Lhere are cerLaln facLors lnhlblLlng Lhls Smallscale secLor reservaLlons llmlL ablllLy Lo lnvesL ln Lechnology and quallLy up gradaLlon Lo achleve economles of scale Moreover lower volume of hlgher value added producLs reduce scope for exporL Lo developlng counLrles 1he lMCC secLor has LradlLlonally grown aL a very fasL raLe and has generally ouL performed Lhe resL of Lhe lndusLry Cver Lhe lasL one year however Lhe raLe of growLh has slowed down and Lhe secLor has recorded sales growLh of [usL flve per cenL ln Lhe lasL four quarLers 1he ouLlook ln Lhe shorL Lerm does noL appear Lo be very poslLlve for Lhe secLor 8ural demand ls on Lhe decllne and Lhe CenLre for MonlLorlng lndlan Lconomy (CMlL) has already downs called lLs pro[ecLlon for agrlculLure growLh ln Lhe currenL flscal oor monsoon ln some sLaLes Loo ls unllkely Lo help maLLers Moreover Lhe general slowdown ln Lhe economy ls also llkely Lo have an adverse lmpacL on dlsposable lncome and purchaslng power as a whole 1he growLh of lmporLs consLlLuLes anoLher problem area and whlle so far lmporLs ln Lhls secLor have been conflned Lo Lhe premlum segmenL lMCC companles esLlmaLe Lhey have already cornered a four Lo slx per cenL markeL share 1he hlgh burden of local Laxes ls anoLher reason aLLrlbuLed for Lhe slowdown ln Lhe lndusLry AL Lhe same Llme Lhe long Lerm ouLlook for revenue growLh ls poslLlve Clve Lhe large markeL and Lhe requlremenL for conLlnuous repurchase of Lhese producLs lMCC companles should conLlnue Lo do well ln Lhe long run Moreover mosL of Lhe companles are concenLraLlng on cosL reducLlon and supply chaln managemenL 1hls should yleld poslLlve resulLs for Lhem 1he proflle of ma[or leadlng lMCC MarkeL layers ls as follows kC8LLM CI IMCG CCMANILS The Iast-moving consumer goods (FMCG) companies are Iaced with a peculiar challenge oI maintaining proIitable growths in the backdrop oI a low inIlation rate. As against the high inIlation oI the early 90s the peak growth season Ior all FMCG companies the ensuing period oI a lower inIlation rate dares companies to now play the volume game. As against a growth in proIitability, which came with price increase in line with the rising inIlation, the FMCG industry will now have to do without this critical Iactor which has been contributing to almost halI oI the industry`s growth. 'Volumes will play a critical role now. The number oI units sold will be an important metric, as there is very little avenue to drive price growth, said MS Banga, chairman, Hindustan Lever Ltd (HLL), in his keynote address at the 2nd National FMCG Conclave organized by the ConIederation oI Indian Industry (CII). Since volume will be the key determinant oI growth, the industry will be Iorced to push volume growth. Hence, Ior those companies which hitherto relied on price increase as an easy way to enhance proIitability, there could be a pressure on margins. To tackle the problem there needs to be a relentless Iocus on cost-cutting. 'Many companies, which have understood that volumes will be critical, will beneIit, added Mr. Banga. According to Mahesh Vyas, executive director, the Centre Ior Monitoring Indian Economy (CMIE), the year holds a lot oI promise, iI growth is good and inIlation is lower. 'Volume growth and no price reduction is good Ior FMCG, said Mr. Vyas. He, however, said Iresh investments were critical Ior sustained growth in the economy. Another serious challenge which the industry is Iaced with, said Mr. Banga, is consumer promotions where Ireebies are threatening to lead to the commoditization oI the industry. 'I believe that the industry must take a serious note oI 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 Ior HLL declined to Rs 182.74 crore during the third quarter ended September 30, 2003, Irom Rs 217.80 crore. Cne of Lhe reasons ls Lhe facL LhaL Lhe CondlLlonal Cash 1ransfer scheme (CC1) ls gaLherlng supporL as a replacemenL for myrlad welfare schemes Along wlLh Lhe rural employmenL guaranLee scheme loan walvers and lncrease ln prlces aL whlch agrlculLural producLs are boughL Lhe CC1 could solve Lhe lMCC's problem of unpredlcLablllLy of agrlculLural lncome and Lhe assoclaLed fall ln markeL demand 1he malnsLay of Lhe rural LhrusL of lMCC companles ls based on Lhe hope LhaL Lhere are 'dlsposable lncomes' lylng unLapped ln Lhe hlnLerland lf Lhe rural populaLlon spends some of Lhls lL wlll cerLalnly boosL demand ln Lhe currenL recesslon WlLh urban consumpLlon ln decllne or sLagnaLlng because of Lhe economlc slowdown lMCC companles have been hlL hard 1he ldea ls Lo glve a 'cholce' Lo Lhe rural cusLomer Lo shlfL Lo branded producLs from LradlLlonal unbranded merchandlse from Lhe nonorganlsed secLor 1he growLh ls ln rural" says lndla's Lop markeLlng head 8ama 8l[apurkar 8ural lndla consLlLuLes over 60 percenL of Lhe counLry's LoLal consumer base lL's esLlmaLed LhaL rural markeLs hold 33 percenL of LoLal LlC pollcles 30 percenL of Lhe markeL for Lelevlslons fans blcycles and wrlsLwaLches and a masslve 70 percenL of Lhe markeL for LolleL soap consumpLlon 1he 8s 63000 crore debL walvers announced lasL year helped 36 mllllon farmers and made Lhem ellglble Lo fund Lhe nexL crop 1he CenLre conLlnued Lo provlde shorLLerm crop loans aL 7 percenL lnLeresL up Lo 8s 3 lakh An upLurn ln agrlculLure was seen ln Lhe uA's lnLerlm budgeL of 200910 where Lhe annual growLh raLe of agrlculLure was posLed aL 37 percenL Added Lo Lhls was Lhe elecLlonlnsplred lncrease ln mlnlmum supporL prlces (MS) ln 200809 Announced ln Lhe season ahead of Lhe general elecLlon Lhe MS for paddy (8s 330 per qulnLal ln 200304) rose Lo 8s 900 for wheaL Lhe MS whlch was 8s 630 per qulnLal rose Lo 8s 1080 lL also led Lo masslve procuremenL of food gralns Lhls year lacLors llke Lhls accordlng Lo analysLs have creaLed 'dlsposable lncomes' whlch Lhe rural consumers should be ldeally keen on spendlng on consumer goods 1PL LCCnCMlC Su8vL? 200708 says rural lndla spends on average 33 percenL on food and 43 percenL on nonfood lLems llke cloLhlng consumer durables educaLlon and healLh And lLs spend on urban cosLs of llvlng such as elecLrlclLy commuLlng fuel and renL ls negllglble 1haL level of spendlng on regular consumables ls good news for lMCC manufacLurers Add Lo LhaL Lhe facL LhaL unllke Lhelr urban counLerparLs rural clLlzens' lncomes are relaLlvely beLLer preserved from markeL flucLuaLlons and real esLaLe shocks lor corporaLe Lhe rural hlnLerland had earller meanL hlgh lnvesLmenL because of poor lnfrasLrucLure absence of sLorage servlces no elecLrlclLy waLer or flnance faclllLles ln Llmes of recesslon Lhe problems appear surmounLable lL's expecLed LhaL caLchlng Lhe vlllages' fancy should be far easler Lhan LhaL of Lhe lnfofaLlgued urban buyer 1he rural markeL already accounLs for 30 percenL of lMCC producLs llke pressure cookers Lea branded salL and LooLh powder Companles expecL Lo lncrease markeL share and Lo add producLs Lo Lhe rural porLfollo Accordlng Lo ASSCCPAM whlch announced early Lhls year LhaL Lhe lMCC secLor ls pegged Lo grow aL 40 percenL ln Lhe rural markeL rlslng rural lncomes healLhy agrlculLural growLh boosL ln demand rlslng consumerlsm and beLLer peneLraLlon of lMCC producLs'' are Lhe reasons for Lhls pro[ecLlon Agrees ueepak !olly a dlrecLor wlLh Coca Cola lndla 1he rural LhrusL ln lndla Loday ls huge ln many ways l would say lL ls Lhe maln drlver for Lhe markeLs" Among Lhe few Lhlngs LhaL Lhe lMCC companles are seeklng from Lhls budgeL ls LhaL Lhe Laxes and duLles LhaL have been reduced by Lhe governmenL Lo promoLe Lhe secLor should noL be revoked lf only Lhey could have Lhe same lmpacL on Lhe monsoon any weakenlng or fallure Lhere wlll conslderably affecL Lhe purchaslng power of vlllagers and volumes of lMCC producLs lL's ln Lhls conLexL LhaL Lhe gaLherlng supporL for Lhe condlLlonal cash Lransfers (CC1) scheme should be seen lL proposes LhaL Lhe governmenL deposlL an amounL ln Lhe accounL of beneflclarles ldenLlfled accordlng Lo poverLy crlLerla 1he amounL ls deposlLed ln Lhe name of Lhe woman member of Lhe household and accessed only lf chlldren go Lo school or aLLend Lhe healLh cenLre larmers are spendlng more Lhan ever Lo culLlvaLe vlllagers are spendlng more Lhan ever Lo buy food 1he governmenL hopes Lo brlng Lhe naLlonal lood SecurlLy 8lll LhaL provldes monLhly 23kg Lo 8L famllles aL 8s 3 per kg lL would be lnLeresLlng Lo waLch lf Lhe 'dlsposable lncome' lefL afLer such subsldles wlll be used for consumpLlon
ANALSIS CI IMCG SLC1Ck S1kLNG1nS 1 Low operaLlonal cosLs 2 resence of esLabllshed dlsLrlbuLlon neLworks ln boLh urban and rural areas 3 resence of wellknown brands ln lMCC secLor WLAkNLSSLS 1 Lower scope of lnvesLlng ln Lechnology and achlevlng economles of scale especlally ln small secLors 2 Low exporLs levels 3 MeLoo producLs whlch lllegally mlmlc Lhe labels of Lhe esLabllshed brands narrow Lhe scope of lMCC producLs ln rural and semlurban markeL CCk1UNI1ILS 1 unLapped rural markeL 2 8lslng lncome levels le lncrease ln purchaslng power of consumers 3 Large domesLlc markeL a populaLlon of over one bllllon 4 LxporL poLenLlal 3 Plgh consumer goods spendlng 1nkLA1S 1 8emoval of lmporL resLrlcLlons resulLlng ln replaclng of domesLlc brands 2 Slowdown ln rural demand 3 1ax and regulaLory sLrucLure
S1kUC1UkAL ANALSIS CI IMCG INDUS1k
1yplcally a consumer buys Lhese goods aL leasL once a monLh 1he secLor covers a wlde gamuL of producLs such as deLergenLs LolleL soaps LooLhpasLe shampoos creams powders food producLs confecLlonerles beverages and clgareLLes 1yplcal characLerlsLlcs of lMCC producLs are 1. The products oIten cater to 3 very distinct but usually wanted Ior aspects - necessity, comIort, luxury. They meet the demands oI the entire cross section oI population. Price and income elasticity oI demand varies across products and consumers. 2. Individual items are oI small value (small SKU's) although all FMCG products put together account Ior a signiIicant part oI the consumer's budget. 3. The consumer spends little time on the purchase decision. He seldom ever looks at the technical speciIications. Brand loyalties or recommendations oI reliable retailer/ dealer drive purchase decisions. 4. Limited inventory oI these products (many oI which are perishable) are kept by consumer and preIers to purchase them Irequently, as and when required. 5. Brand switching is oIten induced by heavy advertisement, recommendation oI the retailer or word oI mouth. DESIGN AND MANUFACTURING 1. Low Capital Intensity - Most product categories in FMCG require relatively minor investment in plan and machinery and other Iixed assets. Also, the business has low working capital intensity as bulk oI sales Irom manuIacturing take place on a cash basis. 2. Technology - Basic technology Ior manuIacturing is easily available. Also, technology Ior most products has been Iairly stable. ModiIications and improvements rarely change the basic process. 3. Third-party Manufacturing - ManuIacturing oI products by third party vendors is quite common. BeneIits associated with third party manuIacturing include (1) Ilexibility in production and inventory planning; (2) Ilexibility in controlling labor costs; and (3) logistics - sometimes it`s essential to get certain products manuIactured near the market. MARKETING AND DISTRIBUTION Marketing Iunction is sacrosanct in case oI FMCG companies. Major Ieatures oI the marketing Iunction include the Iollowing: - 1. High Initial Launch Cost - New products require a large Iront-ended investment in product development, market research, test marketing and launch. Creating awareness and develop Iranchise Ior a new brand requires enormous initial expenditure on launch advertisements, Iree samples and product promotions. Launch costs are as high as 50- 100 oI revenue in the Iirst year. For established brands, advertisement expenditure varies Irom 5 - 12 depending on the categories. 2. Limited Mass Media Options - The challenge associated with the launch and/or brand- building initiatives is that Iew no mass media options. TV reaches 67 oI urban consumers and 35 oI rural consumers. Alternatives like wall paintings, theatres, video vehicles, special packaging and consumer promotions become an expensive but required activity associated with a successIul FMCG. 3. Huge Distribution Network - India is home to six million retail outlets, including 2 million in 5,160 towns and Iour million in 627,000 villages. Super markets virtually do not exist in India. This makes logistics particularly Ior new players extremely diIIicult. 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 outperIormed this benchmark index, there are also sectors that have under perIormed. FMCG registered gains oI 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 oI the population thus leading to more money in the hands oI the consumer. Changes in demographic composition oI 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 oI India's 1 billion people were under the age oI 20, and teenagers among them numbered about 160 million. Together, they wielded INR 14000 Cr worth oI discretionary income, and their Iamilies spent an additional INR 18500 Cr on them every year. By 2015, Indians under 20 are estimated to make up 55 oI the population - and wield proportionately higher spending power. Means, companies that are able to inIluence and excite such consumers would be those that win in the market place. The Indian FMCG market has been divided Ior a long time between the organized sector and the unorganized sector. While the latter has been crowded by a large number oI local players, competing on margins, the Iormer has varied between a two-player-scenario to a multi-player one. unllke Lhe uS markeL for fasL movlng consumer goods (lMCC) whlch ls domlnaLed by a handful of global players lndlas 8s460 bllllon lMCC markeL remalns hlghly fragmenLed wlLh roughly half Lhe markeL golng Lo unbranded unpackaged home made producLs 1hls presenLs a Lremendous opporLunlLy for makers of branded producLs who can converL consumers Lo branded producLs Powever successfully launchlng and growlng markeL share around a branded producL ln lndla presenLs Lremendous challenges 1ake dlsLrlbuLlon as an example lndla ls home Lo slx mllllon reLall ouLleLs and super markeLs vlrLually do noL exlsL 1hls makes loglsLlcs parLlcularly for new players exLremely dlfflculL CLher challenges of slmllar magnlLude exlsL across Lhe lMCC supply chaln 1he facL ls LhaL lMCC ls a sLrucLurally unaLLracLlve lndusLry ln whlch Lo parLlclpaLe Lven so Lhe opporLunlLy keeps lMCC makers Lrylng S1kA1LG CI IMCG CCMANILS CCML1I1IVL S1kA1LGILS ICLLCWLD 8 IMCG CCMANILS IN INDIA CompeLlLlve SLraLegy conslsLs of move of companles ln order Lo aLLracL cusLomers WlLh sLand compeLlLlve pressures and sLrengLhen an organlzaLlon's markeL poslLlon 1he maln ob[ecLlve of CompeLlLlve SLraLegy ls Lo generaLe a compeLlLlve advanLage lncrease Lhe loyalLy of cusLomers and Lo beaL compeLlLors I|ve ma|n compet|t|ve strateg|es are O Overall low cost leadership strategy O Best cost provider`s strategy O Broad diIIerentiation strategy O Focused low cost strategy O Focused diIIerentiation strategy Pere compeLlLlve sLraLegy varles from secLor Lo secLor and company Lo company 1hus lL ls noL easy Lo predlcL a slngle or Lo flnd a slngle sLraLegy for Lhe whole secLor When we come on Lo lMCC SecLor maln sLraLegles lay behlnd markeL sLraLegles cosL and quallLy sLraLegles Pere ln Lhls reporL you are golng Lo geL lnformaLlon abouL such Lype of sLraLegles of lMCC glanLs
kLLA1LD 1C 1WC CCMANILS nUL I1C nUL (n|ndustan Un||ever Ltd) 1hls Company ls earller known as PlndusLan Lever LLd 1hls ls lndla's largesL lMCC secLor company wlLh all Lype of household producLs avallable wlLh lL lL has Pome ersonal Care producLs and also food and WaLer urlfler avallable wlLh lL Accordlng Lo 8rand LqulLy PuL has largesL no of brands ln mosL LrusLed brands llsL 16 of PuL's brands feaLured ln ACnlelson 8rand LqulLy llsL of 100 mosL LrusLed brands ln 2008 ln an annual survey lor Lhe enLlre year endlng March 2009 neL Lurnover of company ls 8s 20'23933 Crore whlch ls 4799 hlgher Lhan 31sL uecember 2007's 8s 1367343 Crore drlven malnly by dom esLlc lMCC's wlLh neL proflL sLood aL 8s 2'49643 Crore roducts of nUL are Annapurna Ayush Axe 8reeze 8ru 8rooke bond Cllnlc uove lalr Lovely Pamam Llrll Lux ears onds epsodenL urelL 8exona 8ln SunllghL Surfexcel vasellne Wheel
I1C L|m|ted This Company was earlier known as Imperial Tobacco Company oI India Ltd. It is Currently headed by Yogesh Chander Deveshwar. Company mainly operates in the industry like Tobacco, Foods, Hotels, Stationary and Greeting Cards with the major products constitutes Cigarettes, packed Ioods, hotels, and apparels. For the entire year ending Mar-2009 the turnover oI company is at Rs. 15388 Crore which is 10.3 higher than previous year`s Rs. 13947.53 Crore, driven mainly by robust 20 growth in non cigarette FMCG business with net proIit stood at Rs. 3324 Crore. VI SI CN MI SSI CN
Innovating Enjoyment With 1hat Extra Flavour. Enduring value. Enhancing appeal. Enriching liIe. By adding that extra Ilavour. We are constantly innovating to oIIer products & services, which are distinctive, diIIerentiating and not the ordinary. O To sustain global leadership in the Chewing Tobacco Business. O To become a household name Ior quality products in Foods & Beverages. To set new benchmarks in the sectors we operate. THE ITC PROFILE TC is one of ndia's foremost private sector companies with a marketCapitalisation of nearly US$ 15 billion and a turnover of over US $ 4.75 billion. Rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine,among ndia's Most Respected Companies by BusinessWorld and among ndia's Most Valuable Companies by Business Today, TC ranks third in pre-tax profit among ndia's private sector corporations. TC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, nformation Technology, Branded Apparel, Greeting Cards, Safety Matches and other FMCG products. While TC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging andAgri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards. As one of ndia's most valuable and respected corporations, TC is widely perceived to bededicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". n his own words: "TC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. TCpractises this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part
TC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in ndia. TC's Agri-Business is one of ndia's largest exporters of agricultural products. TC is one of the country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The Company's 'e-Choupal' initiative is enabling ndian agriculture significantly enhance its competitiveness by empowering ndian farmers through the power of the nternet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for TC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach.
TC's wholly owned nformation Technology subsidiary, TC nfotech ndia Limited, is aggressively pursuing emerging opportunities in providing end-to-end T solutions, including e-enabled services and business process outsourcing.
TC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. TC was the first company in ndia to voluntarily seek a corporate governance rating. TC employs over 21,000 people at more than 60 locations across ndia. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 4,88,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the nation and for the shareholder.
ANALYSIS OF BOTH COMPANIES PuL l1C are ma[or companles ln lMCC markeL ln lndla When we compare boLh companles on Lhe basls of Lhelr sLraLegles le Lhelr compeLlLlve sLraLegles ln Lhe presenL markeL When we look aL Lhe presenL segmenL breakup for boLh of Lhe companles Lhen we came Lo know LhaL Lhelr dlfferenL producLs vary Loo much ln Lhe markeL nUL I1C PlndusLan unllever (PuL) ls Lhe largesL pure play lMCC company ln Lhe counLry and has one of Lhe wldesL porLfollos of producLs sold vla a sLrong dlsLrlbuLlon channel lL owns and markeLs some of Lhe mosL popular brands ln Lhe counLry across varlous caLegorles lncludlng soaps deLergenLs shampoos Lea and face creams l1C ls noL a pureplay lMCC company slnce clgareLLes ls lLs prlmary buslness lL ls dlverslfylng lnLo nonLobacco lMCC segmenLs llke foods personal care paper producLs hoLels and agrlbuslness Lo reduce lLs exposure Lo clgareLLes erformance erformance AfLer sLagnaLlng beLween 1999 and '04 Lhe company ls back on Lhe growLh Lrack ln Lhe pasL Lhree years Llll 2008 PuL's neL sales have wlLnessed a CAC8 of 11 whlle neL proflL has posLed a CAC8 of 17 uesplLe dlverslflcaLlon l1C's rellance on clgareLLes ls sLlll huge 1he Lobacco buslness conLrlbuLes 40 Lo lLs revenues and accounLs for over 80 of lLs proflL 1hls cash generaLlng buslness has enabled lL Lo Lake amblLlous buL expenslve beLs ln new segmenLs and dellver modesL proflL growLh TOP 10 FMCG COMPANIES IN INDIA 1. Hindustan Unilever Ltd. 2. ITC (Indian Tobacco Company) 3. Nestl India 4. GCMMF (AMUL) 5. Dabur India 6. Asian Paints (India) 7. Cadbury India 8. Britannia Industries 9. Procter & Gamble Hygiene and Health Care