Fmcg

Fast Moving Consumer Goods (FMCG) FMCG are products that have a quick shelf turnover, at relatively low cost and don't require a lot of thought, time and financial investment to purchase. The margin of profit on every individual FMCG product is less. However the huge number of goods sold is what makes the difference. Hence profit in FMCG goods always translates to number of goods sold. Fast Moving Consumer Goods is a classification that refers to a wide range of frequently purchased consumer products including: toiletries, soaps, cosmetics, teeth cleaning products, shaving products, detergents, 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 food products and drinks, although these are often categorized separately. The term Consumer Packaged Goods (CPG) is used interchangeably with Fast Moving Consumer Goods (FMCG). Three of the largest and best known examples of Fast Moving Consumer Goods companies are Nestlé, Unilever and Procter & Gamble. Examples of FMCGs are soft drinks, tissue paper, and chocolate bars. Examples of FMCG brands are Coca-Cola, Kleenex, Pepsi and Believe. The FMCG sector represents consumer goods required for daily or frequent use. The main segments of this sector are personal care (oral care, hair care, soaps, cosmetics, toiletries), household care (fabric wash and household cleaners), branded and packaged food, beverages (health beverages, soft 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 fourth largest sector in the economy and is responsible for 5% of the total factory employment in India. The industry also creates employment for 3 m people in downstream activities, much of 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 lifestyle. Furthermore, the boom has also been fuelled by the reduction in excise duties, de-reservation from the small-scale sector and the concerted efforts of personal care companies to attract the burgeoning affluent segment in the middle-class through product and packaging innovations. Unlike the perception that the FMCG sector is a producer of luxury items targeted at the elite, in reality, the sector meets the every day needs of the masses. The lower-middle income group accounts for over 60% of the sector's sales. Rural markets account for 56% of the total domestic FMCG demand. Many of the global FMCG majors have been present in the country for many decades. But in the last ten years, many of 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 in India In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have been a dominant force in the FMCG sector well supported by relatively less competition and high entry barriers (import duty was high). These companies were, therefore, able to charge a premium for their products. In this context, the margins were also on the higher side. With the gradual opening up of the economy over the last decade, FMCG companies have been forced to fight for a market share. In the process, margins have been compromised, more so in the last six years (FMCG sector witnessed decline in demand).

Current Scenario The growth potential for FMCG companies looks promising over the longterm horizon, as the per-capita consumption of almost all products in the country is amongst the lowest in the world. As per the Consumer Survey by KSATechnopak, of 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 for the sector. Around 45% of the population in India is below 20 years of age and the proportion of the young population is expected to increase in the next five years. Aspiration levels in this age group have been fuelled 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 for the FMCG sector are over and driving rural penetration will be the key going forward. Due to infrastructure constraints (this influences the cost-effectiveness of the supply chain), companies were unable to grow faster. Although companies like HLL and ITC have dedicated initiatives targeted at the rural market, these are still at a relatively nascent stage. The bottlenecks of the conventional distribution system are likely to be removed once organized retailing gains in scale. Currently, organized retailing accounts for just 3% of total retail sales and is likely to touch 10% over the next 3-5 years. In our view, organized retailing results in discounted prices, forced-buying by offering many choices and also opens up new avenues for growth for the FMCG sector. Given the aggressive expansion plans of players like Pantaloon, Trent, Shopper’s Stop and Shoprite, we are confident that the FMCG sector has a bright future. Budget Measures to Promote FMCG Sector 2% education cess corporation tax, excise duties and custom duties

Concessional rate of 5% custom duty on tea and coffee plantation machinery

Budget Impact The education cess will add marginally to the tax burden of all FMCG companies The dividend distribution tax on debt funds is likely to adversely effect the other income components of companies like Britannia, Nestle and HLL The measure to abolish excise duty on dairy machinery is a positive for companies like Nestle Concessional rate for tea and coffee plantation machinery is a positive for Tata Tea, HLL, Tata Coffee and other such companies Duty reduction in food grade hexane will have a marginally positive impact on companies like Marico and HLL Area specific excise exemptions for North East, J&K, Himachal Pradesh will continue to encourage FMCG companies to relocate to these areas. Budget over the years Budget 2001-02 • • •

• •

•

From 35-55% to 75% for crude edible oil From 45-65% to 85% for refined edible oil From 35% to 70% for copra, coconut, tea and coffee From 25% to 55% for crude palm oil Development allowance of tea industry raised to 40% from 20% All food preparations based on fruits

Budget 2002-03 •

•

•

•

Increased focus on agricultural reforms with an aim to integrate the countrywide food market Deregulation of the milk processing capacity Excise duty structure largely untouched. Only for tea, the duty was reduced from Rs 2 per Kg to Re 1 Customs duty on tea and coffee

Budget 2003-04 •

•

•

Excise on biscuits reduced to 8% from 16%. Excise on soft drinks and sugar boiled confectionery also reduced All states to switch to VAT in FY04 (deadline now has been extended till end FY05) Loans to agriculture and to small-scale sector will now be available at maximu 2%

and vegetables (pickles, sauces, ketchup, juices, jams etc.) made completely exempt from excise duty •

•

•

doubled to 100% Duty on imported pulses upped to 80%

•

Import duty on wine and liquor slashed from 210% to 180%

above prime lending rate (PLR) Development plans for roads, ports, railways and airports

Excise on • Customs duty on cosmetics and alcoholic toiletries halved to beverages 16% reduced India offers a large and growing market of 1 billion people of which 300 million are middle class consumers. India offers a vibrant market of youth and vigor with 54% of population below the age of 25 years. These young people work harder, earn more, spend more and demand more from the market, making India a dynamic and aspirational society. Domestic demand is expected to double over the ten-year period from 1998 to 2007. The number of households with "high income" is expected to increase by 60% in the next four years to 44 million households. India is rated as the fifth most attractive emerging retail market. It has been ranked second in a Global Retail Development Index of 30 developing countries drawn up by A T Kearney. A.T. Kearney has estimated India's total retail market at $202.6 billion, is expected to grow at a compounded 30 per cent over the next five years. The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next decade, analysts feel. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the

rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. India is one of the world’s largest producers for a number of FMCG products but its FMCG exports are languishing at around Rs 1,000 crore only. There is significant potential for increasing exports but there are certain factors inhibiting this. Small-scale sector reservations limit ability to invest in technology and quality up gradation to achieve economies of scale. Moreover, lower volume of higher value added products reduce scope for export to developing countries. The FMCG sector has traditionally grown at a very fast rate and has generally out performed the rest of the industry. Over the last one year, however the rate of growth has slowed down and the sector has recorded sales growth of just five per cent in the last four quarters. The outlook in the short term does not appear to be very positive for the sector. Rural demand is on the decline and the Centre for Monitoring Indian Economy (CMIE) has already downscaled its projection for agriculture growth in the current fiscal. Poor monsoon in some states, too, is unlikely to help matters. Moreover, the general slowdown in the economy is also likely to have an adverse impact on disposable income and purchasing power as a whole. The growth of imports constitutes another problem area and while so far imports in this sector have been confined to the premium segment, FMCG companies estimate they have already cornered a four to six per cent market share. The high burden of local taxes is another reason attributed for the slowdown in the industry At the same time, the long term outlook for revenue growth is positive. Give the large market and the requirement for continuous repurchase of these products, FMCG companies should continue to do well in the long run. Moreover, most of the companies are concentrating on cost reduction and supply chain management. This should yield positive results for them. The profile of major leading FMCG Market Players is as follows:

1.

NESTLE INDIA

Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. With six factories and a large number of co-packers, Nestlé India is a vibrant Company that provides consumers in India with products of global standards and is committed to longterm sustainable growth and shareholder satisfaction. The Company insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationships. This has earned it the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'. Nestlé’s relationship with India dates back to 1912, when it began trading as The Nestlé Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. Brief History After India’s independence in 1947, the economic policies of the Indian Government emphazised the need for local production. Nestlé responded to India’s aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestlé to develop the milk economy. Progress in Moga required the introduction of Nestlé’s Agricultural Services to educate, advise and help the farmer in a variety of aspects. From increasing the milk yield of their cows through improved dairy farming methods, to irrigation, scientific crop management practices and helping with the procurement of bank loans. Nestlé set up milk collection centres that would not only ensure prompt collection and pay fair prices, but also instil amongst the community, a confidence in the dairy business. Progress involved the creation of prosperity on an on-going and sustainable basis that has resulted in not just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving hub of industrial activity, as well. For more on Nestlé Agricultural Services, Nestlé has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods. The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings. The culture of innovation and renovation within the Company and access to the Nestlé Group's

proprietary technology/Brands expertise and the extensive centralized Research and Development facilities gives it a distinct advantage in these efforts. It helps the Company to create value that can be sustained over the long term by offering consumers a wide variety of high quality, safe food products at affordable prices. Nestlé India is a responsible organization and facilitates initiatives that help to improve the quality of life in the communities where it operates. Beginning with its first investment in Moga in 1961, Nestlé’s regular and substantial investments established that it was here to stay. In 1967, Nestlé set up its next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea. The Nanjangud factory (Karnataka), became operational in 1989, the Samalkha factory (Haryana), in 1993 and in 1995 and 1997, Nestlé commissioned two factories in Goa at Ponda and Bicholim respectively. Nestlé India is now putting up the 7th factory at Pant Nagar in Uttaranchal Products Product Category

Brands NESTLÉ EVERYDAY Dairy Whitener NESTLÉ EVERYDAY Ghee NESTLÉ Curds NESTLÉ CEREMEAL

Milk Products

NESTLÉ Jeera Raita NESTLÉ Fresh 'n' Natural Dahi NESTLÉ Fruit 'N Dahi NESTLÉ Milk NESTLÉ Slim Milk NESCAFÉ CLASSIC NESCAFÉ SUNRISE

Beverages

NESTLÉ MILO NESCAFÉ 3 in 1 NESCAFÉ Koolerz

Prepared Dishes

MAGGI 2-MINUTE Noodles

MAGGI Healthy Soups MAGGI Dal Atta Noodles Chocolates & Confectionaries

MAGGI MAGIC Cubes NESTLÉ Milk Chocolate NESTLÉ KIT KAT NESTLÉ MUNCH NESTLÉ MILKYBAR NESTLÉ MILKYBAR CHOO NESTLÉ BAR-ONE POLO NESTLÉ Eclairs NESTLÉ ACTI-V POLO Powermint

Financial Trends Rupees in Millions 2001

2002

2003

2004

2005

Gross Sales

19,210.0 20,472.0 22,798.3 23,728.2 26,438.9

Domestic Sales #

16,110.9 18,109.8 20,226.9 21,292.8 23,847.1

Export Sales

3,099.1 2,362.2 2,571.4 2,435.4 2,591.8

EBITDA *

3,143.6 3,985.3 4,446.8 4,509.9 5,220.5

Other Income

162.3

284.0

278.3

144.5

237.4

Impairment loss on fixed assets

13.9

212.5

22.2

23.3

26.4

Provision for contingencies

180.9

313.6

229.6

266.9

223.2

Profit before taxation and exceptional item

2,577.7 3,188.4 3,991.5 3,864.9 4,690.6

Net Profit before exceptional 1,731.5 2,069.1 2,630.8 2,519.2 3,095.7 item Exceptional item - net of tax

-

53.9

-

-

-

Net Profit after exceptional item

1,731.5 2,015.2 2,630.8 2,519.2 3,095.7

Earnings per Share (Rs.)

17.96

20.90

27.29

26.13

32.11

Dividends per Share (Rs.)

14.00

18.00

20.00

24.50

25.00

# Domestic Sales include excise duty also * EBITDA - Earnings before Interest, Tax, Depreciation and Amortization.

1.

Hindustan Lever Limited (HLL)

The Global arm of Hindustan Levers Limited is Unilever's and its mission is to add Vitality to life. Their products meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. HLL has deep roots in local cultures and markets around the world which gives them a strong relationship with their consumers, which are the foundation for their future growth. They benefit from there wealth of knowledge and international expertise to the service the local consumers - a truly multi-local multinational. Brief History In the summer of 1888, visitors to the Kolkata harbour noticed crates full of Sunlight soap bars, embossed with the words "Made in England by Lever Brothers". With it, began an era of marketing branded Fast Moving Consumer Goods (FMCG). In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HLL in November 1956; HLL offered 10% of its equity to the Indian public, being the first among the foreign subsidiaries to do so. Unilever now holds 51.55% equity in the company. The rest of the shareholding is distributed among about 380,000 individual shareholders and financial institutions. Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold through an international acquisition of Chesebrough Pond's USA in 1986. The liberalization of the Indian economy, started in 1991, clearly marked an inflexion in HLL's and the Group's growth curve. Removal of the regulatory framework allowed the company to explore every single product and opportunity segment, without any constraints on production capacity. Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the most visible and talked about events of India's corporate history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HLL, effective from April 1, 1993. In 1995, HLL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Lever Limited, to market Lakme's market-leading cosmetics and other appropriate products of both the companies. Subsequently in 1998, Lakme Limited sold its brands to HLL and divested its 50% stake in the joint venture to the company. HLL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994, which markets Huggies Diapers and Kotex Sanitary Pads. HLL has also

set up a subsidiary in Nepal, Nepal Lever Limited (NLL), and its factory represents the largest manufacturing investment in the Himalayan kingdom. The NLL factory manufactures HLL's products like Soaps, Detergents and Personal Products both for the domestic market and exports to India. The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the UB Group and the Dollops Icecream business from Cadbury India. As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companies of Unilever, were merged with Brooke Bond. Then in July 1993, Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL launching the Wall's range of Frozen Desserts. By the end of the year, the company entered into a strategic alliance with the Kwality Icecream Group families and in 1995 the Milkfood 100% Icecream marketing and distribution rights too were acquired. In January 2000, in a historic step, the government decided to award 74 per cent equity in Modern Foods to HLL, thereby beginning the divestment of government equity in public sector undertakings (PSU) to private sector partners. HLL's entry into Bread is a strategic extension of the company's wheat business. In 2002, HLL acquired the government's remaining stake in Modern Foods. In 2003, HLL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports. Present Stature Hindustan Lever Limited (HLL) is India's largest Fast Moving Consumer Goods company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs.10,000 crores. HLL is also one of the country's largest exporters; it has been recognised as a Golden Super Star Trading House by the Government of India. HLL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, KnorrAnnapurna, Kwality Wall's – are household names across the country and span many categories - soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products. They are manufactured in close to 80 factories. The operations involve over 2,000 suppliers and associates. HLL's distribution network, comprising about 7,000 redistribution stockists, directly

covers the entire urban population, and about 250 million rural consumers. HLL believes that an organization’s worth is also in the service it renders to the community. HLL is focusing on health & hygiene education, women empowerment, and water management. It is also involved in education and rehabilitation of special or underprivileged children, care for the destitute and HIV-positive, and rural development. HLL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the village built by HLL in earthquake affected Gujarat, and relief & rehabilitation after the Tsunami caused devastation in South India.

Products Product Category

Product Name

Brands Lux

Soap

Personal Care

Skin Care Hair Care: Oral Care Deodorant Color Cosmetics Ayurvedic Healthcare

Fabric Care

Beverages

Laundry

Tea Coffee

Pears Lifebuoy Liril Hamam Breeze Dove Rexona Pond’s Fair & Lovely Sunsilk Naturals Clinic Pepsodent CloseUp Axe Rexona Lakme Aysh Surf Excel Rin Wheel Brooke Bond Lipton Bru

Foods

3.

Salt Sauces Ice Creams

Knnor Annapurna Kissan Kwality Walls

GLAXO SMITHKLINE

GlaxoSmithKline is a leader in the worldwide consumer healthcare market. With nearly $5 billion in sales, over ten $100 million brands and present in 130 markets, the consumer healthcare business brings an added dynamic dimension to GSK.

Operating in the fiercely competitive environment of retail and consumer marketing GlaxoSmithKline Consumer Healthcare brings oral healthcare, over-the-counter medicines and nutritional healthcare products to millions of people. Brand names such as Panadol the analgesic, Aquafresh toothpaste, Lucozade the nutritional and Nicorette/ Niquitin smoking cessation products are household names around the world. In one year GSK Consumer Healthcare produces - among many others - nine billion tablets to relieve stomach upsets, six billion tablets for pain relief tablets and 600 million tubes of toothpaste. But the driving force behind GlaxoSmithKline's consumer healthcare business is science. With four dedicated consumer healthcare R&D centres and consumer healthcare regulatory affairs, the business takes scientific innovation as seriously as marketing excellence and offers leading-edge capability in both.

The Company The company has a challenging and inspiring mission: to improve the quality of human life by enabling people to do more, feel better and live longer. This mission gives them the purpose to develop innovative medicines and products that help millions of people around the world. In fact, they are the only pharmaceutical company to tackle the World Health Organization’s three ‘priority’ diseases – HIV/AIDS, tuberculosis and malaria. Headquartered in the UK and with operations based in the US, it is one of the industry leaders, with an estimated 7% of the world's pharmaceutical market. As a company has a emphasized more on research & development, estimated every hour they spend more than £300,000 (US$562,000) to find new medicines. The medicines produced are mainly in six major disease areas – asthma, virus control, infections, mental health, diabetes and digestive conditions. In addition, it is a leader in the important area of vaccines and are developing new treatments for cancer.

GSK at a glance • • • • • •

Mission is to improve the quality of human life by enabling people to do more, feel better and live longer Research-based pharmaceutical company It is the only pharmaceutical company to tackle the three "priority" diseases identified by the World Health Organization: HIV/AIDS, tuberculosis and malaria Its business employs over 100,000 people in 116 countries They make approximately four billion packs of medicines and healthcare products every year Over 15,000 people work in the research teams to discover new medicines

• • • • •

We supply one quarter of the world's vaccines and by the end of 2005 we had 25 vaccines in clinical development In 2005 we donated 136 million albendazole tablets to help elimitate lymphatic filariasis (elephantiasis) In 2005 we shipped 126 million tablets of preferentially-priced Combivir and Epivir (our HIV treatments) to developing countries Almost 100 countries benefitted from our humanitarian product donations in 2005 We sold 23 million bottle of Lucozade Sport Hydro Active in 2005

History 1976  The H2 blocker Tagamet (cimetidine) is introduced in the UK by the SmithKline Corporation, and in the US in the following year.  The treatment will revolutionise peptic ulcer therapy. 1978  Through the acquisition of Meyer Laboratories Inc, Glaxo’s business in the US is started, to become Glaxo Inc from 1980.  The broad-spectrum injectable antibiotic Zinacef (cefuroxime) is introduced by Glaxo. 1981  The anti-ulcer treatment Zantac (ranitidine) is launched by Glaxo and is to become the world’s top-selling medicine by 1986. Augmentin (amoxicillin / clavulanate potassium), to combat a wide range of bacterial infections in children and adults, is launched by Beecham.  The antiviral Zovirax (aciclovir) is launched by Wellcome for herpes infections 1982  SmithKline acquires Allergan, an eye and skincare business, and merges with Beckman Instruments Inc, a company specialising in diagnostics and measurement instruments and supplies.  The company is renamed SmithKline Beckman. John Vane of the Wellcome Research Laboratories is awarded the Nobel Prize, with two other scientists, "for their discoveries concerning prostaglandins and related biologically active substances." 1983  Glaxo Inc moves to new facilities in Research Triangle Park and Zebulon, North Carolina. The broad-spectrum injectable antibiotic Fortum (ceftazidime) is launched.

 Wellcome launches Flolan (epoprostenol) for use in renal dialysis. 1986  Beecham acquires the US firm Norcliff Thayer, adding Tums antacid tablets and Oxy skin care to its portfolio. 1987  The AIDS treatment Retrovir (zidovudine) is launched by Wellcome. Glaxo introduces the oral antibiotic Zinnat (cefuroxime axetil). 1988  SmithKline BioScience Laboratories acquires one of its largest competitors, International Clinical Laboratories, Inc, increasing the company's size by half and establishing SmithKline BioScience Laboratories as the industry leader.  The Nobel Prize for medicine is awarded to George Hitchings and Gertrude Elion, of Burroughs Wellcome Inc, and to Sir James Black, who had worked at the Wellcome Foundation and Smith Kline and French Laboratories, "for their discoveries of important principles for drug treatment." 1989  SmithKline Beckman and The Beecham Group plc merge to form SmithKline Beecham plc. Engerix-B hepatitis B vaccine (recombinant), a genetically engineered hepatitis B vaccine, is launched in the US and France. 1990  The synthetic lung surfactant Exosurf and the anti-epileptic drug Lamictal (lamotrigine) are launched by Wellcome.  Glaxo introduces long-acting Serevent (salmeterol) for asthma, the inhaled corticosteroid Flixotide (fluticasone propionate) and Zofran (ondansetron) antiemetic for cancer patients. 1991  Glaxo launches its novel treatment for migraine, Imigran (sumatriptan), Lacipil (lacidipine) for high blood pressure, and Cutivate (fluticasone propionate) in the US for skin diseases.  SmithKline Beecham moves its global headquarters to New Horizons Court at Brentford, England. SmithKline Beecham’s Seroxat/Paxil (paroxetine hydrochloride) is launched in the UK, its first market. 1992  Mepron (atovaquone) for AIDS-related pneumonia is introduced by Burroughs Wellcome in the US.  SmithKline Beecham’s Havrix hepatitis A vaccine, inactivated, the world’s first hepatitis A vaccine, is launched in six European markets.

1993  SmithKline Beecham and Human Genome Science negotiate a multi-milliondollar research collaboration agreement for identifying and describing the functions of the genes in the human body.  Glaxo introduces Flixotide (fluticasone propionate) for bronchial conditions. 1994  SmithKline Beecham purchases Diversified Pharmaceutical Services, Inc, a pharmaceutical benefits manager.  Sterling Health also is acquired, making SmithKline Beecham the third-largest over-the-counter medicines company in the world and number one in Europe and the international markets.  With the intention of focusing on human healthcare, SmithKline Beecham sells its animal health business. 1995  Glaxo and Wellcome merge to form Glaxo Wellcome.  Glaxo Wellcome acquires California-based Affymax, a leader in the field of combinatorial chemistry.  Glaxo Wellcome’s Medicines Research Centre opened at Stevenage in England.  Valtrex (valaciclovir) is launched by Glaxo Wellcome as an anti-herpes successor to Zovirax (acyclovir).  SmithKline Beecham acquires Sterling Winthrop's site in Upper Providence, Pennsylvania, to fulfil US R&D expansion needs. 1996  Community Partnership is established by SmithKline Beecham to focus philanthropy on community-based healthcare.  SmithKline Beecham Healthcare Services is formed by combining the clinical laboratories, disease management and Diversified Pharmaceutical Services businesses. 1997  SmithKline Beecham’s research centre, New Frontiers Science Park, opens at Harlow in England.  SmithKline Beecham and Incyte Pharmaceuticals create a joint venture diaDexus - to discover and market novel molecular diagnostics based on the use of genomics. 1998  SmithKline Beecham and the World Health Organization announce a collaboration to eliminate lymphatic filariasis (elephantiasis) by the year 2020.  The largest pharmaceutical company in Poland is created with the acquisition of Polfa Poznan by Glaxo Wellcome.

1999  The 30th anniversary of the launch of Ventolin (albuterol) is marked as respiratory becomes Glaxo Wellcome’s largest therapeutic area.  Sharpening its focus on pharmaceuticals and consumer healthcare, SmithKline Beecham divests SmithKline Beecham Clinical Laboratories and Diversified Pharmaceutical Services. GSK Products Product name:

Aquafresh

Major Markets • • • • • •

North and South America Europe East and South Africa Middle East Asia Australia and New Zealand

Aquafresh is one of the world's largest and fastest growing toothpaste and toothbrush brands. The unique red, white and blue stripes of the toothpaste make the product not only visually attractive, but also underline the triple benefits of strong teeth, healthy gums and fresh breath – whole mouth protection. The Aquafresh range of manual and electric toothbrushes not only clean teeth effectively, they are also gentle on gums because of their flexible necks. Their flexible heads and brush tips have been designed for cleaning even the hardestto-reach parts of the mouth. The Aquafresh range also includes whitening, sensitive, tartar control and children's toothpaste, children's toothbrushes, dental lozenges and dental gum. Product name:

ENO

Major Markets • • •

India Brazil South Africa and Thailand

ENO is the most global of GSK's gastrointestinal brands with sales of £29 million. The fast-acting effervescent fruit salts, used as an antacid and reliever of bloatedness, was invented in the 1850s by James Crossley ENO

Product name:

Horlicks

Major Markets India and UK Horlicks, 'The Great Family Nourisher,' is a nutritional drink made from wheat, milk and malted barley and is sold in powdered form. The brand is such an enormous success in its key market, India, that alongside the traditional family formula, there is a special formulation for children between one and three years of age and another for breast-feeding mothers. Financial review Operating profit and earnings per share Operating profit of £1,911 million grew by 13%, which was above the turnover growth of 9%, reflecting an improved cost of sales margin and higher other operating income partly offset by increased R&D expenditure. SG&A grew 8%. Excluding costs for legal matters, SG&A grew by 2%, well below turnover growth. In the quarter, gains from asset disposals were £91 million (£10 million in 2005), costs for legal matters were £123 million (£33 million in 2005), the fair value movements on the Quest collar and Theravance options were unfavorable £69 million (£9 million unfavorable in 2005) and net income related to restructuring programmes was £4 million (£24 million charge in 2005). The total operating profit impact of these items was a £97 million charge in 2006, compared with a £56 million charge in 2005, resulting in a 2 percentage point reduction in operating profit growth for the quarter. Profit after taxation grew by 14% which was marginally higher than the growth in operating profit and reflected lower net interest costs, partially offset by a higher expected tax rate for the year.EPS of 23.3 pence increased 15% in CER terms (14% in sterling terms) compared with Q2 2005. The adverse currency impact of 1% on EPS reflected exchange losses on settlement of foreign currency balances in the quarter partly offset by a stronger dollar.

FINANCIAL REVIEW – INCOME STATEMENT Operating profit Q2 2006

Q2

Growth

Turnover Cost of sales Selling, general and administration Research and development Other operating income Operating profit

£m

% of turnover

£m

2005 % of turnove r

–––––– 5,811

–––––– 100.0

–––––– 5,246

(1,209)

(20.8)

(1,883) (853) 45 1,911 ––––––

–––––– 100.0

CER % ––––– – 9

£% –––– – 11

(1,155)

(22.0)

3

5

(32.4) (14.7) 0.8 32.9

(1,681) (702) 3 1,711

(32.0) (13.4) 32.6

8 20

12 22 12

––––––

––––––

––––––

13 ––––– –

4. COLGATE PAMOLIVE INDIA LIMITED From a modest start in 1937, when hand-carts were used to distribute Colgate Dental Cream, Colgate-Palmolive (India) today has one of the widest

––––

distribution networks in India – a logistical marvel that spans around 3.5 million retail outlets across the country, of which the Company services 9.40,000 outlets directly. The Company has grown to a Rs. 9600 million plus with an outstanding record of enhancing value for its strong shareholder base. Colgate's tight focus in Oral Care in India while building its Personal Care business coupled with a simple, but sound worldwide financial strategy, has helped deliver consistent shareholder value. Colgate consistently increases gross margin while at the same time reducing overhead expenses. The increase in gross margin and the reduction in overhead expenses provide the money to invest in advertising to support the launch of new products, while at the same time increasing operating profit. Today, Colgate is a household name in India with one out of two consumers using a modern dentifrice. Consistently superior quality, innovation and value for money products emerging out of advanced technology employed, has enabled Colgate to be voted ‘The Most Trusted Brand’ in India across all brands and categories for the third consecutive year in the Brand Equity AC Nielson ORGMARG 2005 survey. Colgate has been the only brand to be ranked in the top three for all the five surveys and to hold the premier position for three consecutive years. This is a true measure of the trust and confidence that generations of consumers have placed in Colgate for their oral care needs. History 1975 Caprice hair care launches in Mexico. Today, hair care products are sold in over 70 countries, with variants to suit every type of hair need. 1976 Colgate-Palmolive acquires Hill's Pet Nutrition. Today Hill's is the global leader in pet nutrition and veterinary recommendations. 1983 Colgate Plus toothbrush is introduced. Today over 1.6 billion Colgate toothbrushes are sold annually worldwide. If you lined them up end to end, they would circle the globe 16 times. 1985 Protex bar soap is introduced, and today offers all-family antibacterial protection in over 56 countries. Colgate-Palmolive enters into a joint venture with Hong

Kong-based Hawley & Hazel, a leading oral care company, which adds strength in key Asian markets. 1986 The Chairman's You Can Make A Difference Program is launched, recognizing innovation and executional excellence by Colgate people. 1987 Colgate acquires Softsoap liquid soap business from the Minnetonka Corporation. Today, Colgate is the global leader in liquid hand soap. 1989 Annual Company sales surpass the $5 billion mark. 1991 Colgate acquires Murphy Oil Soap, the leading wood cleaner in the U.S. Today, its product portfolio has expanded to include all-purpose cleaners, sprays and wipes. 1992 Colgate acquires the Mennen Company. Today, Mennen products are sold in over 52 countries. 1995 Colgate enters Central Europe and Russia, expanding into fast-growing markets. Colgate acquires Kolynos Oral Care business in Latin America and launches market-leading Sorriso toothpaste. 1996 Bright Smiles, Bright Futures oral health education program expands to reach 50 countries with in-school programs and mobile dental clinics. 1997 Colgate Total toothpaste is introduced and quickly becomes the market leader in the U.S. Only Colgate Total, with its 12-hour protection, fights a complete range of oral health problems. 2004 Colgate acquires the GABA oral care business in Europe, with its strength in the important European pharmacy channel and its ties with the dental community. 2006 Today, with sales surpassing $10 billion, Colgate focuses on four core businesses: Oral Care, Personal Care, Home Care and Pet Nutrition. Colgate now sells its products in 222 countries and territories worldwide.

Products Oral Care: • Colgate – Toothpaste, Tooth Powder, Whitening Products • Pamolive - Shower Gel, Shower Cream, Bar Soap, Liquid Hand Wash, Shave Preps, Skin Care

Household Care: • Axion Surface Clean

5.

BRITANIA

The story of one of India's favorite brands reads almost like a fairy tale. Once upon a time, in 1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now Kolkata) with an initial investment of Rs. 295. The company we all know as Britannia today.

The beginnings might have been humble-the dreams were anything but. By 1910, with the advent of electricity, Britannia mechanized its operations, and in 1921, it became the first company east of the Suez Canal to use imported gas ovens. Britannia's business was flourishing. But, more importantly, Britannia was acquiring a reputation for quality and value. As a result, during the tragic World War II, the Government reposed its trust in Britannia by contracting it to supply large quantities of "service biscuits" to the armed forces. As time moved on, the biscuit market continued to grow and Britannia grew along with it. In 1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry's who till now distributed Britannia biscuits in India. In the subsequent public issue of 1978, Indian shareholding crossed 60%, firmly establishing the Indianness of the firm. The following year, Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four years later in 1983, it crossed the Rs. 100 crores revenue mark. On the operations front, the company was making equally dynamic strides. In 1992, it celebrated its Platinum Jubilee. The Wadia Group acquired a stake in the company and became an equal partner with Groupe Danone in Britannia. The subsequent year saw sales cross landmark 100,000 tones of biscuits or 1 billion packs of 100g. Britannia strode into the 21st Century as one of India's biggest brands and the pre-eminent food brand of the country. It was equally recognized for its innovative approach to products and marketing: the Lagaan Match was voted India's most successful promotional activity of the year 2001 while the delicious Britannia 5050 Maska-Chaska became India's most successful product launch. In 2002, Britannia's New Business Division formed a joint venture with Fonterra, the world's second largest Dairy Company, and Britannia New Zealand Foods Pvt. Ltd. was born. In recognition of its vision and accelerating graph, Forbes Global rated Britannia 'One amongst the Top 200 Small Companies of the World', and The Economic Times pegged Britannia India's 2nd Most Trusted Brand. Today, more than a century after those tentative first steps, Britannia's fairy tale is not only going strong but blazing new standards, and that miniscule initial investment has grown by leaps and bounds to crores of rupees in wealth for Britannia's shareholders. The company's offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust of almost one-third of India's one billion population and a strong management at the helm means Britannia will continue to dream big on its path of innovation and quality. And millions of consumers will savour the results, happily ever after. 1975•

Britannia Biscuit Company takes over biscuit distribution from Parry's

1979

Re-christened Britannia Industries Ltd. (BIL) Sales cross Rs.100 crore

1983 1989• 1992• 1993•

The Executive Office relocated to Bangalore BIL celebrates its Platinum Jubilee Wadia Group acquires stake in ABIL, UK and becomes an equal partner with Groupe Danone in BIL

•

1997•

Re-birth - new corporate identity 'Eat Healthy, Think Better' leads to new mission: 'Make every third Indian a Britannia consumer'

• 1999•

BIL enters the dairy products market "Britannia Khao World Cup Jao" - a major success! Profit up by 37% Forbes Global Ranking - Britannia among Top 300 small companies BIL ranked one of India's biggest brands No.1 food brand of the country Britannia Lagaan Match: India's most successful promotional activity of the year

2000• 2001• • •

• 2002• • • • •

2003• •

2004• • • 2005• •

Maska Chaska: India's most successful FMCG launch BIL launches joint venture with Fonterra, the world's second largest dairy company Britannia New Zealand Foods Pvt. Ltd. is born Rated as 'One amongst the Top 200 Small Companies of the World' by Forbes Global Economic Times ranks BIL India's 2nd Most Trusted Brand Pure Magic -Winner of the Worldstar, Asiastar and Indiastar award for packaging 'Treat Duet'- most successful launch of the year Britannia Khao World Cup Jao rocks the consumer lives yet again Britannia accorded the status of being a 'Superbrand' Volumes cross 3,00,000 tons of biscuits Good Day adds a new variant - Choconut - in its range Re-birth of Tiger - 'Swasth Khao, Tiger Ban Jao' becomes the popular chant! Britannia launched 'Greetings' range of premium assorted gift packs

•

The new plant in Uttaranchal, commissioned ahead of schedule.

•

The launch of yet another exciting snacking option - Britannia 50-50 Pepper Chakkar

PRODUCTS •

• •

• • • • • • •

•

Britannia Treat proffers a wide variety of flavours, such as the classic favourites Bourbon & Elaichi, the Fruit Flavoured Creams such as Orange, Pineapple, Mango, and Strawberry, the Jam Filled Centres under the Jim Jam range, and the Duet Range Tiger, launched in 1997, became the largest brand in Britannia's portfolio in the very first year of its launch and continues to be so till today. Tiger has grown from strength to strength and the re-invigoration. Britannia Good Day was launched in 1986 in two delectable avatars Good Day Cashew and Butter. Over the years, new variants were introduced - Good Day Pista Badam in 1989, Good Day Chocochips in 2000 and Good Day Choconut in 2004. Britannia 50-50 is the leader in its category with more than one-third of market share. The versatile and youthful brand constantly aims to provide a novel and exciting taste experience to the consumer. Britannia's oldest brand enjoys a heritage that spans the last 50 years and going strong., Britannia Marie Gold has maintained its stronghold. It is the #1 brand in its category by a long shot In 1996, Milk Bikis launched a variant called Milk Cream. These round biscuits come with smiley faces and are full of milk cream that makes them very popular with children. To offer something to consumers who cherish healthy living, Britannia introduced Nutri-Choice biscuits. In 1998, Nutri-Choice Thin Arrowroot was morphed from Jacob's Thin Arrowroot (a popular brand in East India). Before Timepass, Britannia's offering in the salted cracker category was Snax. Launched in 1999, Snax was promoted as a tastier base for toppings through edgy advertising. Little Hearts was launched in 1993 and targeted the growing youth segment. A completely unique product, it was the first time biscuits were retailed in pouch packs like potato wafers. Britannia Nice Time was the pioneer of sugar sprinkled biscuits in India. This unique product managed to create such a strong consumer pull that soon there was a rush of pretender products in the market, clearly indicative of the success of the concept. Till 1958, there were no breads in the organised sector and bread consumption was a habit typified by the British. Then, a mechanised bread unit was set up in Delhi with the name "Delbis" which produced sliced

bread and packed it under the Britannia name. Thus, Britannia was not only the pioneer, but also inculcated in the people of Delhi the habit of eating white sliced bread. The Mumbai unit came up in 1963, and there again Britannia was the first branded bread in the city. Financial Performance Annual Report 2004-2005 TEN YEAR FINANCIAL STATISTICS: 1996-2005 Year ended 31st March Assets employed Fixed assets less depreciation & amortisation Investments Net current assets Miscellaneous Expenditure

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

714 853 1277 1353 1306 1588 1632 1481 1283 1277 871 731 912 1293 1470 2156 3104 2969 2913 3300 68 78 7 18 65 257 592 747 43 (423) 122 163 217 260 463 342 1653 1662 2196 2664 2963 4164 5545 5457 4702 4496

Financed by Equity shares Reserves & Surplus Loan funds

186 186 186 186 279 279 269 259 251 239 741 838 1026 1308 1586 2123 3430 3653 4059 4196 726 638 984 1170 1098 1762 1846 1545 392 61 1653 1662 2196 2664 2963 4164 5545 5457 4702 4496

Profits and appropriations Sales 6024 7523 847810301 116981332514510134911470516154 Profit before 324 368 542 735 962 1211 1463 1690 2187 2610 Depreciation,Amortisation and 54 73 118 159 172 189 240 261 224 190 tax 270 295 424 576 790 1022 1223 1429 1963 2420 Depreciation and Amortisation 19 117 1368 44 (119) (217) Profit before tax and 270 295 424 576 771 1139 2591 1473 1844 2203 Exceptional items 110 116 135 180 261 434 559 482 656 715 Exceptional Items 160 179 289 396 510 705 2032 991 1188 1488 Profit before tax* 74 74 93 102 125 153 201 251 272 334 Taxation 7 9 11 14 16 32 35 47 Profit after tax 47 14 18 Dividends 86 98 187 283 371 489 1564 692 910 1117 Tax on dividend

Debenture Redemption Reserve Retained earnings

6.

DABUR INDIA

Dabur India Limited is a leading Indian consumer goods company with interests in health care, Personal care and foods. Over more than 100 years we have been dedicated to providing nature-based solutions for a healthy and holistic lifestyle. Through our comprehensive range of products we touch the lives of all consumers, in all age groups, across all social boundaries. And this legacy has helped us develop a bond of trust with us.

1979

Sahibabad factory / Dabur Research Foundation

1986

Public Limited Company

1992

Joint venture with Agrolimen of Spain

1993

Cancer treatment

1994

Public issues

1995

Joint Ventures

1996

3 separate divisions

1997

Foods Division / Project STARS

1998

Professionals to manage the Company

2000

Turnover of Rs.1,000 crores

2003

Dabur demerges Pharma Business

2005

Dabur aquires Balsara

2006

Dabur announces Bonus after 12 years

2006

Dabur crosses $2 Bin market Cap, adopts US GAAP

Dabur Health Care Product Range Dabur Hajmola Yumstick ChyawanprashHajmola Mast Dabur Masala ChyawanshaktiAnardana Glucose DHajmola Dabur Lal tailHajmola candy Dabur Baby olive Hajmola Candy oilFun2 Dabur Janma Pudin hara Ghunti(Liquid and pearls) Pudin hara G Dabur Hingoli -

Shilajit Gold Nature Care Sat Isabgol Shilajit Ring Ring Itch Care Back-aid Shankha Pushpi Dabur Balm Sarbyna Strong -

Dabur Personal Care Product Range Amla Hair Oil Amla Lite Hair Oil -

- Anmol Silky Black Shampoo - Vatika Henna Conditioning Shampoo

Vatika Hair Oil Anmol Sarson Amla -

- Vatika Anti-Dandruff Shampoo - Anmol Natural Shine Shampoo

Gulabari Vatika Fairness Face Pack -

- Dabur Red Gel - Dabur Red Toothpaste - Babool Toothpaste - Meswakl Toothpaste - Promise Toothpaste - Dabur Lal Dant Manjan - Dabur Binaca Toothbrush

Dabur Foods Product Range Tastes like eating a fruit

100% Natural Fruit Juice

Pure natural Honey

Hommade - a range Lemoneez is a Natural Lemon Capsico - a fiery red-pepper of Juice sauce. culinary ingredients giving you 'The taste of Indian Kitchen'.

FINANCIAL PERFORMANCE (Rs. in Cr.) FMCG (RECAST) * 02-03

FMCG standalon e 03-04

FMCG standalon e 04-05

FMCG standalone 05-06

1048.5

1148.0

1268.7

1369.7

4.9

11.1

11.5

5.4

7.

109.6

136.1

187.9

243.3

80.0

113.4

165.0

214.4

72.0

101.2

148.0

189.1

2.5

3.5

5.2

3.3***

148.9

154.9

191.6

198.8

47.2

171.2

270.9

275.1

112.3

-16.9

-70.2

-22.9

28.6

28.6

28.6

57.3

196.3

240.0

309.5

390.5

222.9

262.1

332.3

415.0

81.7

39.8

48.6

20.6

GODFREY PHILLIPS

Godfrey Phillips is a company driven by passion - the passion to excel, innovate and win, a passion to be the leader, to emerge as the most respected company in the tobacco industry, not just in India but all over the world. Godfrey Phillips is today the second largest player in the Indian cigarette industry with an annual turnover of over US$ 265 million. Incorporated in India in 1936, the Company established its own manufacturing facilities in 1944. Today, the operations span the entire northern and western part of the country, with two manufacturing facilities located in Ghaziabad (near Delhi) and in Andheri (Mumbai), a state of the art R&D centre in Mumbai and a tobacco-

buying unit in Guntur (Andhra Pradesh). Headquartered in Delhi, the Company has its sales offices across the country at Ahmedabad, Mumbai, Delhi, Chandigarh and Hyderabad. The Company today is the proud owner of some of the most popular cigarette brands in the country like Red and White, Four Square, Jaisalmer, Cavanders, Tipper and Prince. Its products are distributed through an extensive India wide network comprising 484 exclusive distributors and over 800,000 retail outlets. Over the years, Godfrey Phillips has emerged as a professionally managed, highly efficient corporate entity. Today, the Company has one of the highest productivity rates of workers in the entire country and an enviable organisational structure. Over the years the Company has also become an active player in overseas markets, with significant export volumes. Godfrey Phillips has two major stakeholders, one of India's leading industrial houses - the K.K. Modi Group and one of the World's largest tobacco companies, Philip Morris. Godfrey Phillips has the strong backing of over 15,000 shareholders in the Country and is today, through the sheer determination & passion of every employee of the organization, growing from strength to strength. From its modest beginning in London way back in 1844, Godfrey Phillips, a major player in the Indian tobacco industry, has come a long way. The history of the Company reflects the strong determination and passion amongst the founders & the employees of the Company to establish itself as a leader of the tobacco industry in the Country. Mr. Godfrey Phillips, founder of Godfrey Phillips & Sons commenced business in the Barbican (London), as a Cigar manufacturer in 1844. From the Barbican he moved to Primrose Street and after that to Commercial Street London. B.D.V, the packet tobacco with which the name of Godfrey Phillips was intricately connected, is practically contemporary with Mr. Phillips embarkation in tobacco cutting in the year 1887. At that time packet tobaccos were in their infancy. After B.D.V. came "Marigold" and Guinea Gold. Mr. Phillips, a splendid judge of tobacco himself, looked for appreciation of quality in his customers and stuck to his belief that quality will ultimately determine success, something that is still the strongest belief in the Company. Messrs Godfrey Phillips, D.H. Wilmer and H.C. Water incorporated GODFREY PHILLIPS INDIA as a Private Ltd. Co. on 3rd December 1936. The Company imported cigarettes from Godfrey Phillips Ltd. U.K. In the year 1942, plans for setting up a manufacturing facility in Calcutta were made, however it got shelved due to World War II. In 1944, after the war, GODFREY PHILLIPS bought Master Tobacco Co., Chakala, Andheri (Mumbai)

thereby establishing its first factory in the Country. In October 1946, GODFREY PHILLIPS became a Public Ltd. Co. with its manufacturing operations in Mumbai. GODFREY PHILLIPS was then primarily a manufacturing company and made cigarette brands like Cavanders, Abdulla No. 7, DERESKE, Marcovich, Red & White. In 1951/52 Godfrey Phillips UK bought out George Dobie & Son's, famous Four Square brand. In 1967, D. Macropolo & Co., which was the sole selling agent for GODFREY PHILLIPS, opened a subsidiary company called "International Tobacco Co.", with its manufacturing facility in Ghaziabad (near Delhi) to manufacture cigarettes for GODFREY PHILLIPS. In 1967-68, Philip Morris acquired substantial holding in Godfrey Phillips Ltd., U.K. and Godfrey Phillips Investment Corporation which was holding substantial shares of Godfrey Phillips India Ltd. It also acquired a large share holding interest in George Dobie & Sons. Thus in 1968, Godfrey Phillips Ltd., U.K., George Dobie & Sons, and GODFREY PHILLIPS became affiliates of Philip Morris. Philip Morris is a large professionally managed multinational with diversified business interests. It has a wide range of tobacco and other products, with "Marlboro" being its leading brand in the world. It took major initiatives in 1968 for GODFREY PHILLIPS to re-organise its operations. A major thrust was given to marketing & sales and it was decided to merge D. Marcopolo & Co. with Godfrey Phillips, a process, which began in 1969. The merger was finally completed on 31st December 1975, bringing the four sales branches and "International Tobacco Co." under its fold. In 1973 GODFREY PHILLIPS, successfully launched Four Square Kings, India 's first King Size filter cigarette. It was the sheer passion to be close to the consumer that helped the Company recognize the demands of the emerging consumer long before anyone in the cigarette industry. In 1979, Philip Morris. joined hands with the K.K. Modi Group and in the following year the Modi Enterprises took over the management of GODFREY PHILLIPS with a substantial financial stake. Modi enterprise was new to the cigarette business, but an area in which they saw a huge potential for growth. They took on this new challenge with a lot of passion, vigour and confidence. The business was given a fresh look in all its areas of operation. Professional managers were inducted to head the various functions to bring about change and vigor in the organization to meet the challenges of the eighties. The existing brand franchises were rejuvenated, each brand was modernized with the prime objective of growing their brand equity. Modernization of the factories was initiated; product development and research activities were stepped up.

Aggressive marketing and sales strategies were drawn up and implemented and each employee was empowered to bring about the desired change. Everything was restarted with renewed passion and determination. Godfrey Phillips is best known by the brands it manufactures and today the Company is the proud owner of some of the best FMCG brands of the country. At least 3 of our cigarette brands today feature in the top 50 FMCG list. They are: Four Square Special, Red & White and Cavanders. Apart from these champions, the Company also has other cigarette brands that cater to a large and varied range of consumer segments. The year 2002 also saw the Company re-launch some of its brands, by giving them an entirely new look & positioning, while some new, innovative products were also introduced. These brands are already making their presence felt in the industry. They are: Jaisalmer (re-launched in 2003), Tipper & Piper (new innovative products introduced in 2002) and Prince (another re-launch for the year 2002). Prepared with utmost dedication and passion, to deliver the customer with the most satisfying smoke, each cigarette going out into the market bears the Godfrey Phillips stamp of quality and assurance. Cigarette • • • • • • •

Four Square Jaisalmer Red & White Cavanders Tipper North Pole Prince

Cigars - Brands • • • •

Don Diego Hav-a-tampa Phillies Santa Damiana H-2000 Rothschild

8.

GODREJ

The foods division of Godrej Industries produces and markets edible oils, vanaspati, fruit drinks, fruit nectar and bakery fats. The division has two state-of-the-art manufacturing facilities: at Wadala in Mumbai, the capital of the western Indian state of Maharashtra; and at Mandideep near Bhopal in the northern Indian state of Madhya Pradesh. It has a national distribution network consisting of 800 distributors and 24 consignment agents.The plants are equipped with the best of modern equipment for the processing and packaging of a wide variety of food products. These include:

The 'Jumpin' range of fruit drinks, which come in flavors such as mango, apple, pineapple and orange. The 'Xs' range of fruit nectar (mango, litchi, and sweet orange and pineapple flavors). Tomato Puree (under the Godrej brand). Fruit pulps and juices in bulk aseptic packaging. Health and dietetic foods. Refined edible oils of low color in different varieties of groundnut, sunflower and soyabean. Processed hydrogenated fats for edible purposes such as vanaspati and bakery shortenings. Godrej Industries, in keeping with the philosophy of the Godrej Group, believes that quality is the product of a combination of man and machine. The foods division has people of outstanding caliber to go with the modern technologies it uses. The result: the ability to deliver outstanding products. Soymilk is the rich creamy milk of whole soybeans. With its unique nutty flavor and rich nutrition, soymilk can be used in a variety of ways. Plain, unfortified soymilk is an excellent source of high-quality protein, B-vitamins and iron. Some brands of soymilk are fortified with vitamins and minerals and are good sources of calcium, vitamin D and vitamin B-12. Soymilk is free of the milk sugar lactose and is a good choice for people who are lactose intolerant. Also, it is a good alternative for those who are allergic to cow's milk. Children can enjoy homemade or commercially prepared soymilk after the age of 1 year. Infants under 1 year of age should be fed breast milk, commercially prepared infant formula or commercial soymilk infant formula. Soymilk is available as a plain, unflavored beverage or in a variety of flavors including apple, mango, malt and plain. Soymilk can be used in almost any way that cow's milk is used. Godrej Industries Limited is India's leading manufacturer of oleochemicals and makes more than a hundred chemicals for use in over two dozen industries. It also manufactures edible oils, vanaspati and bakery fats. Besides, it operates businesses in medical diagnostics and real estate.

GIL is a member of the Godrej Group, which was established in 1897 and has since grown into a Rs 6,000 crore conglomerate. The company was called Godrej Soaps Limited until March 31, 2001. Thereafter, the consumer products division got de-merged into Godrej Consumer Products Limited, and the residual Godrej Soaps became Godrej Industries Limited. This led to the formation of two separate corporate entities: Godrej Consumer Products and Godrej Industries. Besides its three businesses, Godrej Industries also runs four divisions — Corporate Finance, Corporate HR, Corporate Audit and Assurance and Research and Development — which operate on behalf of the entire Godrej Group. GIL has built a strong manufacturing base capable of delivering international quality products at competitive prices. It operates two plants, one at Valia in the Indian state of Gujarat and a second at Vikhroli in suburban Mumbai. The company's products are exported to 40 countries in North and South America, Asia, Europe, Australia and Africa, and it leads the Indian market in the production of fatty acids, fatty alcohols and AOS

9.

NIRMA

Nirma is one of the few names - which is instantly recognized as a true Indian brand, which took on mighty multinationals and rewrote the marketing rules to win the heart of princess, i.e. the consumer. Nirma, the proverbial ‘Rags to Riches’ saga of Dr. Karsanbhai Patel, is a classic example of the success of Indian entrepreneurship in the face of stiff competition. Starting as a one-man operation in 1969, today, it has about 14, 000 employeebase and annual turnover is above Rs. 25, 00 crores. India is a one of the largest consumer economy, with burgeoning middle class pie. In such a widespread, diverse marketplace, Nirma aptly concentrated all its efforts towards creating and building a strong consumer preference towards its ‘value-for-money’ products.

It was way back in ‘60s and ‘70s, where the domestic detergent market had only premium segment, with very few players and was dominated by MNCs. It was 1969, when Karsanbhai Patel started door-to-door selling of his detergent powder, priced at an astonishing Rs. 3 per kg, when the available cheapest brand in the market was Rs. 13 per kg. It was really an innovative, quality product – with indigenous process, packaging and low-profiled marketing, which changed the habit of Indian housewives’ for washing their clothes. In a short span, Nirma created an entirely new market segment in domestic marketplace, which is, eventually the largest consumer pocket and quickly emerged as dominating market player – a position it has never since relinquished. Rewriting the marketing rules, Nirma became a one of the widely discussed success stories between the four-walls of the B-school classrooms across the world. The performance of Nirma during the decade of 1980s has been labeled as ‘Marketing Miracle’ of an era. During this period, the brand surged well ahead its nearest rival – Surf, which was well-established detergent product by Hindustan Lever. It was a severing battering for MNC as it recorded a sharp drop in its market share. Nirma literally captured the market share by offering value-based marketing mix of four P’s, i.e. a perfect match of product, price, place and promotion. Now, the year 2004 sees Nirma’s annual sales touch 800,000 tones, making it one of the largest volume sales with a single brand name in the world. Looking at the FMCG synergies, Nirma stepped into toilet soaps relatively late in 1990 but this did not deter it to achieve a volume of 100,000 per annum. This makes Nirma the largest detergent and the second largest toilet soap brand in India with market share of 38% and 20% respectively. It has been persistent effort of Nirma to make consumer products available to masses at an affordable price. Hence, it takes utmost care to provide finest products at the most affordable prices. To leverage this effort, Nirma has gone for massive backward integration along with expansion and modernization of the manufacturing facilities. The focal objective behind modernization plan is of up gradation with resourcesavvy technology to optimize capabilities. Nirma’s six production facilities, located at different places, are well equipped with state-of-art technologies. To ensure regular supply of major raw materials, Nirma had opted for backward integration strategies. These strategic moves allowed Nirma to manage effective and efficient supply-chain.

Nirma has always been practiced ‘value-for-money’ plank. Nirma plans to extend the same philosophy in categories as commodity food products, personal care products and packaged food. Distinct market vision and robust infrastructure allowed Nirma to have cost leadership. Apart from this, lean distribution network, umbrella branding and low profile media promotions allowed it to offer quality products, at affordable prices. In present scenario, an inspiring 59-year-old persona, Dr. Karsanbhai K. Patel, leads Nirma, playing role of key strategic decision-maker, whereas his next generation has already skilled management capabilities. Shri Rakesh K Patel – a qualified management graduate, is spearheading the procurement, production and logistic functions, whereas Shri Hiren K Patel – a qualified Chemical engineer and management graduate, heads the marketing and finance functions of the organization. Shri Kalpesh Patel, Executive Director, leads the professional organizational structure.

Products • • • • • • • • • • • • • •

Nirma Bath Soap Nirma Beauty Soap Nirma Lime Fresh Soap Nima Rose Nima Sandal Nirma Washing Powder Nirma Detergent Cake Super Nirma Washing Powder Super Nirma Detergent Cake Nirma Popular Detergent Powder Nirma Popular Detergent Cake Nirma Shudh Iodized Salt Nirma Clean Dish Wash Bar Nima Bartan Bar

10.

ITC

ITC is one of India's foremost private sector companies with a market capitalization of over US $ 13 billion and a turnover of US $ 3.5 billion. Rated among the World's Best Big Companies by Forbes magazine and among India's Most Respected Companies by Business World, ITC ranks third in pre-tax profit among India's private sector corporations. ITC has a diversified 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. 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 and Greeting Cards. As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices 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." ITC'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 India. Products •

Cigarettes

ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it has a leadership position in every segment of the market. Its highly popular portfolio of brands includes Wills, Insignia, India Kings, Gold Flake, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake. •

Foods

ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of the Kitchens of India brand. A more broad-based entry has been made since June 2002 with brand launches in the Confectionery, Staples and Snack Foods segments.

The packaged foods business is an ideal avenue to leverage ITC's proven strengths in the areas of hospitality and branded cuisine, contemporary packaging and sourcing of agricultural commodities. ITC's world famous restaurants like the Bukhara and the Dum Pukht, nurtured by the Company's Hotels business, demonstrate that ITC has a deep understanding of the Indian palate and the expertise required to translate this knowledge into delightful dining experiences for the consumer. The Foods business is today represented in 4 categories in the market. These are: • • • •

Ready To Eat Foods Staples Confectionery Snack Foods

•

Lifestyle Retailing

Over the last six years, ITC's Lifestyle Retailing Business Division has established a nationwide retailing presence through its Wills Lifestyle chain of exclusive specialty stores. Beginning with its initial offering of Wills Sport relaxed wear from the first store at South Extension, New Delhi in July 2000, it has expanded its basket of offerings to the premium consumer with Wills Classic work wear, Wills Clublife evening wear and a tempting range of designer accessories that complete the Look. •

Greeting, Gifting & Stationery

ITC's stationery brands Paper Kraft & Classmate are the most widely distributed brands across India. ITC's Greeting & Gifting products include Expressions greeting cards and gifting products like autograph books, slam books, party invitations, pop up & mini books. The business also markets Expressions Regalia, a collection of premium greeting cards & social cause cards & desk calendars in association with SOS Children's Villages of India. Expressions greetings & gifting products are available in multi brand retail outlets across India. (Rs. in Crores) 1996 1997 1998 1999

2000

2001

2002

2003

2004

2005

GROSS INCOME

5188 5991 6924 7701

8069

8827

9982 11194 12040 13585

Excise Duties etc.

2580 3078 3694 4063

4134

4475

4781

5159

5345

5710

Net Income

2608 2913 3230 3638

3935

4353

5202

6035

6695

7875

Cost of Sales

2024 2143 2271 2443

2475

2516

3156

3712

4110

4847

PBDIT

584

770

958

1194

1460

1836

2046

2323

2585

3028

PBDT

500

650

877 1040

1347

1740

1979

2294

2561

2986

48

63

102

119

140

198

237

242

313

PBIT

536

707

873 1092

1342

1696

1847

2086

2344

2716

PROFIT BEFORE TAX

452

587

791

938

1229

1600

1780

2056

2319

2673

Tax

191

240

265

315

437

594

591

685

726

836

PROFIT AFTER TAX BEFORE EXCEPTIONAL ITEMS

261

347

526

623

792

1006

1190

1371

1593

1837

Depreciation

86

EXCEPTIONAL ITEMS (NET OF TAX) PROFIT AFTER TAXATION

354

347

526

623

792

1006

1190

1371

1593

2191

61 108*

121*

150*

225*

270*

334

419*

559*

882*

405

474

568

736

856

953

1034

1310

Basic (Rs.)

10.64 14.14 21.44 25.40 32.29 41.00 48.07 55.41 64.34

73.74

Adjusted @ (Rs.)

34.05 45.25 68.61 81.28 103.33 131.20 155.14 178.81 207.69 239.54

Dividends Retained Profits

261

200

239

Earnings Per Share on profit after tax before exceptional items

Earnings Per Share on profit after taxation Basic (Rs.)

10.64 14.14 21.44 25.40 32.29 41.00 48.07 55.41 64.34

Adjusted @ (Rs.)

34.05 45.25 68.61 81.28 103.33 131.20 155.14 178.81 207.69 285.74

Dividend Per Share (Rs.)

2.50 4.00

4.50

5.50

7.50 10.00 13.50 15.00 20.00

87.97

31.00

Market 5571 8792 17523 23633 18038 19987 17243 15581 25793 33433 Capitalisation ** Foreign Exchange Earnings

619

635

759

650

688

697

948

1294

1078

1269

An Assignment on FMCG Industry

Submitted By: Shivani Mohan Nipun Bhalla Ayu Bhatia Abhishek Arora Akansha Aggarwal

E32 E18 E64 E01 E03