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Fast Moving Consumer Goods (FMCG) Manufacturers in India – “Defensive with Growth” Characterizes India’s Non Discretionary Consumer Stocks (FMCG Companies,Brands,Industry)

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List of Top FMCG Companies in India

India’s GDP unlike that of other emerging developing countries has a bigger consumer percentage than investment.This is because India’s economic growth model has not followed the traditional export growth model of the other countries in Asia like China.This makes India more resilient to external shocks like the Lehman crisis and provides a more domestic orientation to growth.India has one of the fastest growing economics in the world and as the per capita income increase,consumer companies in India are reaping outsized rewards.India has a competitive consumer goods market with a number of domestic and international companies competing in multiple markets and segments.Some of the companies like HLL which is a subsidiary of the global consumer giant Unilever has become an Indian company all but in ownership.Note Fast Moving Consumer Goods (FMCG) companies are different from Consumer Durables companies.FMGC companies are what is known as Consumer Non-Discretionary Group of Companies.These Companies sell products of everyday use and are recession proof in the sense that the products sold by FMCG Manufacturers can’t be ignored even in times of economic recessions.

Note Fast Moving Consumer Goods Companies have been expanding rapidly in the Indian market and and are set to grow to the next level as India’s middle class grows bigger and bigger and the existing middle class becomes richer.India’s Fast Moving Consumer Goods Stocks form a great defensive investment class.They not only have “defensive” characteristics but also growth as well.India’s FMCG sector is expected to grow by more than 100% in the next 5-6 years as more and more consumers move from unorganized part of the industry to the organized industry.Though competition has been fierce in India’s Non Discretionary Consumer Goods Industry with the P&G and Unilever Price War in the Detergent Segment,the Industry has seen its share of winners with Nestle,Colgate being multibaggers in the last 10 years giving huge returns to investors.These stocks trade at high multiples justified with their very high returns,strong brands and low investment requirements.

1) ITC Ltd. – With a market capitalisation of Rs.137,000 crores, ITC is one of India’s foremost private sector companies.  While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery. ITC is one of the country’s biggest foreign exchange earners (US $ 3.2 billion in the last decade). The Company’s ‘e-Choupal’ initiative is enabling Indian agriculture significantly enhance its competitiveness.It earned revenues of Rs.5,000 crores & a net profit margin of 25% in December 2010.

2) Hindustan Unilever Ltd. – HUL is India’s largest Fast Moving Consumer Goods Company with categorised business like soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers. With a market capitalization of  Rs. 61,000 crores, the Company is a part of the everyday life of millions of consumers across India. The company earned revenues of Rs. 5,000 crores with a net profit margin 12%. Its parent company is Unilever, which holds about 52 % of the equity. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit.

3) Nestle Ltd. – Nestle India is a subsidiary of Nestle S.A. of Switzerland. With a market cap of  Rs.35,000 crores  it operates with seven factories and a large number of co-packers.  The main business includes manufacture of Milk products. It specialises in infant food, while the other products in this range are ghee, dahi & dairy whitener. It also has a diversified product chain like prepared dishes & cooking aids – the major one being Maggi, others are sauces, pasta, beverages like coffee & iced and instant tea. Nestle is also known for its chocolate & confectionery range the major brands being Kitkat, polo & bar-one. The sale is not only limited to India but also abroad. The company marked a steady growth in 2010 with Rs. 1,000 crores as revenues & a net profit margin of 15%. It has been acknowledged amongst India’s ‘Most Respected Companies’ and amongst the ‘Top Wealth Creators of India’.

4) United Spirits Ltd. – The company was earlier known as the McDowell & Co. The market cap of the company is Rs 13,000 crores with revenues of Rs.1,000 crores & 6% net profit margin in Dec 2010. United Spirits Limited (USL) is the largest spirits company in India and second largest spirit company in the world. It enjoys a strong 59% market share for its first line brands in India. The company has 20 millionaire brands (selling more than a million cases per annum) with Whyte & Mackay and Bouvet Ladubay being its 100% subsidiaries. The leading brands are Antiquity, Black Dog, Royal Challenge, Signature, Bagpiper, Mc’Dowell’s No.1. The company is known for creating new benchmarks in blends and packaging in the global spirits industry.

5) Dabur India – Dabur India Limited is the fourth largest FMCG Company in India with Market Capitalisation of Rs.16,000 crores. Dabur operates in key consumer products categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care & Foods. For the past 125 years, the company has been dedicated to providing nature-based solutions for a healthy and holistic lifestyle. They touch the lives of consumers, in all age groups, across all social boundaries. Dabur specialises in Ayurvedic products. Some well known in the category are Chyawanprash, baby medicines – JanamGhutti & gripe water, Hajmola, Glucose-D & Pudinhara. It earned a revenue of Rs.900 crores  & a net profit margin of 14% in Dec’10.

6) Colgate Palmolive (India) Ltd. – With Rs.11,000 crores as the market capitalisation & Rs.500 crores revenues with a net profit margin of 11% in December 2010, Colgate Palmolive Ltd. is a truly global company serving hundreds of millions of consumers worldwide. Started as a small soap & candle company, the company is now 200 years old. Colgate is well known for its Oral care products like toothpastes & toothbrushes. Lately introduced – Colgate sensitive toothpaste takes care of the sensitive teeth. It has also diversified its business into personal care &  home care, professional care – trusted by dentists across the country.

7) Godrej Consumer Products Ltd. –  Rs.350 crores a leader among India’s Fast Moving Consumer Goods (FMCG) companies, with leading Household and Personal Care Products. The major brands are Good knight, Cinthol, Godrej No. 1, Expert, Hit, Jet, Fairglow, Ezee, Protekt and Snuggy are household names across the country. With Rs. 11,000 crores as the market capitalisation, the company is largest marketers of toilet soaps in the country and are also leaders in hair colours and household insecticides. The ‘Good knight’ brand has been placed continues to be the most trusted household care brand in the country in Brand Equity’s Most Trusted Brands Survey 2010.
The company has an emerging presence in markets outside India. With the acquisition of Keyline Brands in the UK, Rapidol and Kinky Group, South Africa and Godrej Global Mideast FZE, Godrej owns international brands and trademarks in Europe, Australia, Canada, Africa and the Middle East.  Godrej has also recently acquired Tura, a leading medicated brand in West Africa, Megasari Group, a leading household care company in Indonesia and Issue Group and Argencos, two leading hair colorant companies in Argentina.

8) TATA Global Beverages Ltd.- With Rs.6,000 crores as its market capitalisation TATA beverages are No.2 in Tea worldwide. It is a part of the Tata Group.  With the inception of TATA tea in 1983, there is no looking back. The company acquired the Tetley group UK in 2000 & in 2010 TATA global beverages corporate announced formation of Pepsi JV. Its famous brands are TATA tea, Tetley, Himalayan water, Good earth.

9) Marico Ltd. –  Marico is a leading Indian Group in Consumer Products & Services in the Global Beauty and Wellness space. Marico’s Products and Services in Hair care, Skin Care and Healthy Foods generated a turnover of about Rs. 26.6 billion during 2009-10.  The company has a market capitalisation of Rs.8,000 crores. Marico markets well-known brands such as Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti, Mediker, Revive, Manjal, Kaya, Aromatic, Fiancee, HairCode, Caivil, Code 10 and Black Chic. Marico’s brands and their extensions occupy leadership positions with significant market shares in most categories- Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment, Premium Refined Edible Oils, niche Fabric Care etc. Marico is also present in the Skin Care Solutions segment through Kaya Skin Clinics in India, Middle East and Bangladesh.

Some other companies are Procter&Gamble, Amul, Brittania, Johnson&Johnson, Henkel, Nirma, Kraft (through Cadbury) etc. A number of them are not listed on the Indian Stock Markets, but like others they have strong brands and a big marketshare in India’s FMCG Market.


Abhishek Shah

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