Beruflich Dokumente
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Index
I. II. Executive Summary Market Overview
Industry Overview Evolution of the Indian FMCG Sector Porters Five Forces Model S
WOT Analysis Key Challenges Trends in the Industry Growth Drivers Government Pol
icies Major Segments
III.
Industry Analysis
IV. Investments in the Sector
Recent M&A Deals Recent Private Equity Deals
V.
Major Players
Major Players Common Stock Comparison
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Index
VI. Profiles of the Major Players
ITC HUL Nestle Dabur Godrej Consumer Colgate-Palmolive Marico GSK Consumer
nnia
VII. Corporate Profile (Dinodia Capital Advisors)
2
Market Overview
MARKET OVERVIEW
Industry Overview Evolution of Indian FMCG Sector Porters Five Forces Model SWOT
Analysis
5
Industry Overview
Fast Moving Consumer Goods (FMCG) goods, popularly named as consumer packaged go
ods, play a vital role as a necessity and as an inelastic product
The Indian FMCG sector is the fourth largest sector the economy with a total mar
ket size of Rs. 167,100crs1
The market is estimated to grow to US$ 100 billion by 2025, according to market
research firm Nielsen In the last decade the FMCG sector has grown at an average
of 11% a year; in the last five years, annual growth accelerated to 17% The FMC
G Industry is characterized by a well established distribution network, low pene
tration levels, low operating cost, lower per capita consumption and intense com
petition between the organized and unorganized segments FMCGs are slowly and gra
dually positioning and deeply penetrating in the fast growing rural market. The
Rural mindset is open to consumption of newer, more contemporary food categories
and as a result, drive consistent growth
6
Source: 1 Dabur Corporate Presentation March12
Industry Overview
Urban Vs. Rural
FMCG Industry Size (in Rs bn) 1,671
FMCG Industry Urban (in Rs bn)
1,111 960
1,451
CY 10
CY 11
CY 10
CY 11
FMCG Industry Rural (in Rs bn)
559 491
The FMCG sector in India continues on a strong growth path with both Urban and R
ural India contributing to its growth. Rural India contributes one third of FMCG
sales in India
CY 10
CY 11
Growth driven by increasing consumption led by rise in incomes, changing lifesty
les and favorable demographics
Source: 1 Dabur Corporate Presentation March12
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Industry Overview
Rural India accounts for more than 700 Million consumers or 70% of the Indian po
pulation and accounts for 40% of the total FMCG market The Rural market is a lar
ge market space with very low organized player penetration. Across the globe, th
e Indian rural market is probably the single largest unit of opportunity
Also with changing lifestyle and increasing consumer demand, the Indian FMCG mar
ket is expected to cross $80 billion by 2026 in towns with population of up to 1
0 lakh
The sector has a tremendous opportunity for growth in India, with the growing po
pulation, the rising incomes, education and urbanization, the advent of modern r
etail, and a consumption-driven society
# According to Nielsen, FMCG growth was 10.7% in the rural market and 10.8% in t
he urban market during the quarter ended December 2011; for the quarter ended Ma
rch 2012, while growth in the urban market improved to 16.5%, it rose even highe
r, to 17.2%, in the rural market*
Source: *Business Standard May12
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Industry Overview
The following matrix shows the room for growth in various categories of the FMCG
products:
There is ample room for growth in various categories of FMCG products
100% 90% 80% 70%
Rural penetration (%)
Edible oil Washing pow eders Hair oil T oilet soap Detergent bar Tea
Biscuits 60% 50% Shampoo 40% Toothpow der Talcum Pow der 20% 10% Coffee Skin cre
am Soft drinks Utensil clearners Insencticides Vanaspati Balms Toothpaste
Milk pow der Health Ice Cream Mints Chocolates Baby oil T oilet cleaners Noodles
Floor cleaners 0% Ketchup Deodorants
Urban penetration (%)
Source: HSBC Global Research December 2011
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SWOT Analysis
Moderate operating costs Presence of established distribution networks in both u
rban and rural areas Presence of well-known brands in FMCG sector Favorable gove
rnment policies
Strengths
Weaknesses
Lower scope of investing in technology and achieving economies of scale, especia
lly in small sectors Low exports levels Counterfeit Products
Untapped rural market Rising income levels, i.e. increase in purchasing power of
consumers Large domestic market- a population of over one billion Export potent
ial High consumer goods spending
Opportunities
Threats
Removal of import restrictions resulting in replacement of domestic brands Slowd
own in rural demand Tax and regulatory structure
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Industry Analysis
INDUSTRY ANALYSIS
Key Challenges Trends in the Industry Growth Drivers Opportunities in the Sector
Government Policies Segment Overview
13
Key Challenges
Commodity prices fluctuate, which make it difficult to finalize raw material pri
ces, affecting the final price of the product
Price of inputs
Indian consumers are very price-sensitive and value conscious, making it difficu
lt for FMCG firms to pass on the increased costs
Private labels serve to lower the consumers price points, particularly at the mas
s level Conflicts of interest when a retail chain has its own label whose packag
ing looks like category leaders and stocks brands of other manufacturers, (in ter
ms of display space, promotions etc) These products narrow the scope of FMCG pro
ducts in rural and semi-urban market The spurious pass off products affect large
, high quality brands which have actually invested money in research and develop
ment to create their products and build brand equity
Emergence of Private Labels
Counterfeit and Pass-offs
Infrastructural Bottlenecks
Power Costs Transportation Infrastructure Agricultural Infrastructure
14
Industry Trends
Consolidation Indian FMCG companies are consolidating their existing business po
rtfolios Several companies have started innovating by launching or customizing t
heir existing product portfolios for new consumer segments Lifestyle and premium
range products are the current hot target product segments among Indian FMCG pl
ayers
Product innovation
Lifestyle products
Expanding horizons
A number of companies are exploring the business potential of overseas markets a
nd several regional markets
Backward integration
Backward integration is becoming the preferred strategy for increasing profit ma
rgins
Expanding distribution networks
Companies are now focused on improving their distribution networks to expand the
ir reach in rural India
15
Industry Trends
Third-party manufacturing FMCG players often outsource manufacturing or processi
ng of a certain range of products to small vendors. This approach has helped com
panies focus on front-end marketing Companies are increasingly introducing small
er stock keeping units at reduced prices. This helps them sustain margins, maint
ain volumes from price-conscious customers and expand their consumer base Small
towns are emerging as significant hiring zones. FMCG companies are hiring field
staff from areas such as Kalpa (Himachal Pradesh), Mangaliya (Madhya Pradesh), K
ota (Rajasthan), and Shirdi (Maharashtra) to sell diverse products FMCG companie
s entering Africa as it helps to be close to consumption markets within Africa.
Such foreign investments are encouraged by local governments, as they offer ince
ntives to enter the markets
Rising importance of smaller-sized packs
Increased hiring from tier II/III cities
Focus on enhancing presence in Africa Reducing carbon footprint
FMCG players in India are focusing on reducing their carbon footprint. They gene
rate the required energy from renewable sources and earn CER credits for the sam
e
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Growth Drivers
Large Market
Spending Pattern
FDI Support
Growth Drivers
Rise of rural consumers
Increasing per capita income of urban population
Growing popularity of organized retail
Changing Profile and Mind Set of Consumer
17
Segment Overview
Market Segments
The food and beverages segment is the highest contributor to the FMCG sector
The FMCG market has three major segments
20
Segment Overview
Household Care
The detergents segment dominates the household care segment and has been growing
at an annual growth rate of 10-11% in the past five years Local and unorganized
players account for a major share of the total volume of the detergent market T
he Household care segment is plagued by intense competition and high level of pe
netration. With rapid urbanization, emergence of small pack sizes and sachets is
picking up
In the washing powder segment, HUL is the leader and other major players like Ni
rma, Henkel and Proctor & Gamble continue to provide stiff competition/innovatio
n
21
Segment Overview
Personal Care
The Personal care segment includes personal washing products, hair care products
, oral care products, cosmetics, skin care etc
The hair care market can be segmented into hair oils, shampoos, hair colorants &
conditioners, and hair gels. The coconut oil market accounts for 72% share in t
he hair oil market
The skin care market is at a primary stage in India. With the change in life sty
les, increase in disposable incomes, greater product choice and availability, pe
ople are becoming more alert about personal grooming The oral care market can be
segmented into toothpaste 60%; toothpowder 23%; toothbrushes 17%
The Indian personal care segment is set to change significantly in the coming ye
ars as consumption habits, fuelled by rising disposable income and changing life
styles, align themselves with global trends. E.g. bath soaps are likely to be re
placed by shower gel or liquid soap variants and there will be growing use of ha
ir conditioners and electronic tooth brushes
22
Segment Overview
Food and Beverages
The Food and Beverages segment comprises of the food processing industry, health
beverage industry, bread and biscuits, chocolates & confectionery, Mineral Wate
r and ice creams The three largest consumed categories of packaged foods are pac
ked tea, biscuits and soft drinks The Indian hot beverage market is dominated by
tea and the major share of the tea market is dominated by unorganized players I
ndia is one of the fastest growing branded restaurants markets in the world, whe
re the organized eating-out market is currently estimated at US$ 2 billion and g
rowing at a CAGR of 25% Sahara India reportedly plans to enter into dairy produc
tion business by opening the world s biggest dairy on April 1, 2013 and could be
a serious threat for Anand based Amul
23
Naturesse Consumer Care Products (NC) and Essence (GCPL) Consumer Care Products
Ltd (EC) International Consumer Products Corporation
February 19, 2011
March 3, 2011
Soft drink and fruit based beverages business along with the brand, Fruitnik f
rom Siva s Soft Drink Pvt Ltd
Amrutanjan With the deal size of US$ Health Care 5.70mn, AHCL diversified its Lt
d (AHCL) business into 2 beverages business
25
With the deal size of US$ 13.04mn, for Marico, the move was in line with its dec
ision to focus on its flagship brand Saffola
Jyothy Laboratories Ltd Jyothy Laboratories increased its stake to 50.97% in Hen
kel India from Henkel AG & Co for US$ 25.80mn
Henkel India
26
May 6, 2011
Investor
Ventureast Life Fund Peepul Capital
% Stake
NA
Investment Value (US$ mn)
5.43
NA
15
January 23, 2012 April 10, 2012 April 25, 2012
Temasek through Baytree Investments GIC and Baring Private Equity Partners India
New Silk Route Partners
4.9%
136.45
5%
100
NA IncuCapital Saif Partners
NA
May 24, 2012 July 13,2012
STEAMMO (F&B Chain)
Blue Star Ltd
NA NA
0.07 8.57
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Major Players
MAJOR PLAYERS
Strong FMCG Brands
31
36
Hindustan Unilever
Company Profile
Company Snapshot
Incorporation Year Industry Group Main Product 1933 Household Care Cosmetics, to
iletries, soaps & detergents Chairman MD & CEO Exec. Director Exec. Director Exe
c. Director Board of Directors Harish Manwani Nitin Paranjpe Sridhar Ramamurthy
Gopal Vittal Pradeep Banerjee
Company Overview HUL, a 51% subsidiary of Unilever Plc, is the largest Indian FM
CG company (excluding cigarettes) based out of Mumbai It has a portfolio of over
50 brands across categories such as soaps, detergents, foods, ice cream and wat
er purifiers The key strengths of the company are an extensive distribution netw
ork (its products are available in over 6mn outlets), powerful brands (most of i
ts brands are market leaders and straddle price segments), strong balance sheet,
and high-quality management
41
Hindustan Unilever
Product Portfolio
Company Snapshot
42
Hindustan Unilever
Financial Performance
Financial Summary
Financial Highlights
(Rs. In Crs.)
Source: Annual Report * Debt includes Long term and short term borrowings
43
Hindustan Unilever
Financial Performance
Financial Summary
44
Nestle India
Company Profile
Company Snapshot
Incorporation Year Industry Group Main Product 1959 Food & Bevrages Dairy produc
ts Chairman & MD Director Director Board of Directors Antonio Helio Waszyk Shobi
nder Duggal Christian Schmid
Director Director
Pradeep Baijal Rakesh Mohan
Company Overview Nestle, a 62.8% subsidiary of its parent Nestl S.A. of Switzerla
nd, is Indias third largest consumer goods company after HUL and ITC Nestl India m
anufactures products of truly international quality under internationally famous
brand names such as NESCAF, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID an
d NESTEA Nestle enjoys leadership position in its core categories such as baby f
oods, instant noodles, and instant coffee It enjoys a distinct advantage over co
mpetitors in the F&B space on account of its strong focus on developing products
around the nutrition, health, and wellness platform, and a culture of renovatio
n and innovation in its offerings, backed by strong parent support
45
Nestle India
Product Portfolio
Company Snapshot Category Category
46
Nestle India
Financial performance
Financial Summary
Financial Highlights
(Rs. In Crs.)
Nestle India, a subsidiary of Nestle SA, the Swiss major in food and beverages,
plans to invest nearly Rs 5 billion in a Maggie noodles and confectionerymanufac
turing plant in Gujarat
Source: Annual Report * Financial Year Ends in December
47
Nestle India
Financial performance
Financial Summary
48
Dabur
Company Profile
Company Snapshot
Incorporation Year Industry Group Main Product 1975 Personal Care Diversified Ch
airman Vice Chairman Exec. Director Board of Directors Anand Burman (Dr.) Amit B
urman Pradip Burman
Exec. Director Director
P D Narang Mohit Burman
Company Overview Dabur is one of Indias most trusted names and the worlds largest
Ayurvedic and Natural Health Care Company and is the second largest FMCG company
in India, in terms of Product portfolio Dabur has three divisions in India apar
t from its international operations : o First, The Consumer care division (CCD)
offers a wide range of products in hair care, oral care, health supplements, dig
estives and candies, and baby and skin care products, based on ayurveda o Second
, The consumer health division (CHD) includes overthecounter(OTC) products, Asavs,
and branded ethical, and classic products. The CHD division has been merged wit
h CCD to leverage the companies distribution networks o The third, Dabur Foods L
td produces fruit juices, cooking pastes, sauces, and items for institutional fo
od purchases
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Dabur
Product Portfolio
Company Snapshot
50
Dabur
Financial Performance
Financial Summary
Financial Highlights
(Rs. In Crs.)
Source: Annual Report * Debt includes Long term and short term borrowings
51
Dabur
Financial Performance
Financial Summary
52
Colgate-Palmolive
Company Profile
Company Snapshot
Incorporation Year Industry Group Main Product 1937 Household Care Preparations
for oral or dental hygiene Chairman Vice Chairman Deputy Chairman MD Director Bo
ard of Directors D Samuel R A Shah P K Ghosh M V Deoras P E Alton
Company Overview Colgate, 51% owned by Colgate USA, is the largest oral-care com
pany in India. Supported by a wide distribution network, it derives over 96% rev
enue from this category The company s 51% stake is owned by the foreign promoter
s (colgate-palmolive group), around 26% by individuals and around 21% by institu
tional investors. Colgate has also driven inorganic growth through acquisitions,
namely Hindustan CibaGeigy Ltd, CC Health Care Products Pvt Ltd, Professional O
ral Care Products Pvt. Ltd., Advanced Oral Care Products and SS Oral Hygiene Pro
d Colgate Palmolive is a market leader in the toothpaste segment with a market s
hare of ~50% in India, but is seeing increasing competition from domestic player
s
57
Colgate-Palmolive
Product Portfolio
Company Snapshot Product Categories
Oral Care
Toothpastes,
Toothbrushes, Further, it provides various dental care products for
Toothpowder,
Whitening products, gingivitis treatment, sensitivity treatment, t
ooth whitening, Kids products, fluoride therapy, mouth ulcer
And Mouthwashes. tre
atment, and specialty cleaning
Personal care
Body Wash
Liquid Hand Wash
Household Care
Dish washing pastes
58
Skin Care
Colgate-Palmolive
Financial Performance
Financial Summary
Financial Highlights
(Rs. In Crs.)
Source: Annual Report * Debt includes Long term and short term borrowings
59
Colgate-Palmolive
Financial Performance
Financial Summary
60
Marico
Company Profile
Company Snapshot
Incorporation Year Industry Group Main Product 1988 Household Care Oils Chairman
& MD Director Director Board of Directors Harsh Charandas Mariwala Rajeev Baksh
i Atul Champaklal Choksey
Director Director
Nikhil Khatau Anand Kripalu
Company Overview Marico has evolved into one of the leading Indian FMCG companie
s from a coconut oil manufacturer over the past few years It has positioned itse
lf on the beauty and wellness platform and caters to the hair care, health care,
and skin care segments The company operates in India, the Middle East, SAARC co
untries, Egypt, Malaysia, South Africa, Singapore, and Vietnam and is headquarte
red in Mumbai, India Its manufacturing facilities are located at Goa, Kanjikode
(Kerala), Jalgaon (Maharashtra),Saswad(Maharashtra), Pondicherry, Dehradun (UP)
and Daman Marico is present in more than 25 countries across Asia and the Africa
n continent
61
Marico
Product Portfolio
Company Snapshot Category Range
62
Marico
Financial Performance
Financial Summary
Financial Highlights
(Rs. In Crs.)
Source: Annual Report * Debt includes Long term and short term borrowings
63
Marico
Financial Performance
Financial Summary
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Britannia
Company Profile
Company Snapshot
Incorporation Year Industry Group Main Product 1918 Household Care Bisciuts Chai
rman MD Director Board of Directors Nusli N Wadia Vinita Bali (Ms.) K K Dadiseth
Company Overview
Director Director
Avijit Deb Anil K Hirjee
Britannia Industries Limited is based in Kolkata and is famous for its Britannia
and Tiger brands of biscuits, which are popular throughout the country With an
estimated market share of ~38%, the company s principal activity is to manufactu
re and sell biscuits, bread, rusk, cakes and dairy products The Britannia brand
is the trust of almost one-third of India s one billion population CRISIL has as
signed a credit rating to Britannia Industries as AAA rating
The biscuit industry is the largest processed foods segment in India with size e
xceeding Rs.11,500crs, growing at 13-14% CAGR
Britannia has enhanced its premium cream portfolio with a launch of several diff
erentiated products including Bourbon Cappuccino, Pure Magic Praline and a new r
ange of creamy flavours for Treat
69
Britannia
Product Portfolio
Britannia Category Range
70
Britannia
Financial Performance
Britannia
Financial Highlights
(Rs. In Crs.)
Source: Annual Report * Debt includes Long term and short term borrowings
71
Britannia
Financial Performance
Britannia
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Dinodia
Service
Dinodia
Mergers
We help
e buyer
Capital Advisors
Offerings
Capital Advisors Advice Clients on :
and Acquisitions
in conducting a robust scan of the market and selecting the most suitabl
or seller
Capital Raising
We advice clients on their capital needs and find them the right partner who bri
ngs more than just capital
Restructuring
We advise on business restructurings to help achieve financial, strategic and op
erational efficiency
India Entry Strategy
We help set up and incubate businesses in India, acting as a trusted advisors to
facilitate the India entry strategy
Organizational Transformation
We work with companies to put systems, processes and people in place to help tak
e advantage of both organic and inorganic synergies
Turnarounds
We work closely with companies to help devise and implement a turnaround strateg
y by plugging the deficiencies of management, technology, capital or partnership
s
75