ABSTRACT

Investment decision is a part of our economic life. Everybody takes such decision at different
context. Investment decisions are to be made in a systematic manner with two approaches
such as technical and fundamental analysis. The present study aims to analyse the
fundamental analysis of BSE listed FMCG companies in India with a sample size of five
companies for a period from 2006-07 to 2012-13. The objectives of the study are to conduct
Fundamental analysis for BSE listed FMCG companies and the PESTEL analysis for the
FMCG industry. The Economic, Industry and company analysis have been made to attain the
objectives of the study. From the Economic analysis, it is found that Gross National Product,
Inflation, Interest rates, Exchange rate, Foreign exchange reserves, Agricultural production,
Government Receipts and Expenditure has a positive growth rate during the study period.
Gross Domestic Product, Gross Domestic Capital Formation, Gross Domestic Savings and
Balance of Payments have a negative growth rate during the study period. The industry
analysis found that India.s FMCG sector is the 4th largest sector with the total market
size of US$ 13 billion during the year 2012. This sector is expected to grow to US$ 33.1
billion by 2015. Hence, it has great potential in rural as well as urban market and it provides
more employment opportunities.



INTRODUCTION
Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods.
Items in this category include all consumables (other than groceries/pulses) people buy at regular
intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving
products, shoe polish, packaged foodstuff, and household accessories and extends to certain
electronic goods. These items are meant for daily of frequent consumption .The Indian FMCG
sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1
billion .It has a strong MNC presence and is characterised by a well established distribution
network, intense competition between the organised and unorganised segments and low operational
cost. Availability of key raw materials, cheaper labour costs and presence across the entire value
chain gives India a competitive advantage. 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. Growth is also likely to come from consumer 'upgrading' in the matured product
categories. With 200 million people expected to shift to processed and packaged food by 2010, India
needs around US$ 28 billion of investment in the food-processing industry.
.
.

IMPACT OF INFLATION ON FMCG SECTOR
India, Asias third largest economy, saw urban consumers spend less in calendar year 2012-13
due to high inflation, muted salary hikes, and slowing economic growth that affected both real
wages and sentiment. During 2012, the overall slowdown in the economy has begun to affect
the FMCG sector with companies posting deceleration in volume growth in the recent
quarterly results. Discretionary spending has been hit severely due to the ongoing slowdown.
The prevailing high inflation level is also a cause of concern for the sector. The trends seen in
2012 -13 are likely to accelerate in 2014. Growth will come from rural dwellers that are
expected to see a rise in disposable incomes due to the direct cash transfer scheme, while
urban consumers will continue to be affected by the macroeconomic environment.

FACTORS AFFECTING FMCG SECTORS IN INDIA (PESTEL
ANALYSIS)

PESTEL ANALYSIS:-
Pestel analysis is a tool to understand the environment in which business operates, & the
opportunities & threats that lie within it. By understanding the environment in which it
operates, it can take advantage of the opportunities & minimizing the threats. Specifically
PESTEL analysis is useful tool for understanding risks associated with markets growth or
decline, & directing business to grow.
P Political factors
E Economic factors
S Socio-cultural factors
T Technological factors
E Environment factors
L Legal factors


POLITICAL FACTORS

Political stability : Political stability is one of the important factor which influence the
growth of business directly. If Political stability is higher, then it leads to perfection in
business & on the other hand if there is unstability the business will have to suffer.

Taxation policy : Tax policy of government will affect the price of inputs & it ultimately
affect the prices of final products & it will directly affect the sale of product.

Government intervenes : This indicates that at what level the government intervences in the
economy. If the government intervence is more sometimes it helps the organization at large
extent.

Subsidies : The subsidies which are provided by government to different organisation at
different level also help it to grow at faster rate & helps the organisation in reducing the
finance which is to be funded from outside & it directly reduces interest amount paid in
favour of fund raised from outside.

Trading policies : This indicates the policies related to import & export of goods and services
from different nations. If the policies are favourable more goods & services will be imported
& exported, & on the other hand if policies are unfavourable it will restricts the import &
export.

Labour law : Labour law also affect the organisation, for example- child labour, a child
below 14 year of age can not work In factory or any hazardious place.

ECONOMIC FACTORS

Interest rates : Interest rate directly affect the cost of capital, if the interest rate is higher the
cost of capital will increase & if it is lower then cost of capital will be lower. This directly
affect the profit of the organization & its growth.

Tax charges : If the tax charged by the government is lower then it will reduce the product
price & if it is higher then it will increase the prices of the products.

Exchange rates : This shows that what is the exchange rate or foreign currency rate. If
exchange rate is higher more amount is paid on import of goods & if it lowers less amount is
to be paid & on the other hand if it is higher the amount received will be more & if it is lower
the amount received will be low.

National income : National income is important factor as if affect the growth of the
organisation. If per capita income is more the amount spend will be more & if it will be lower
the amount spent will be less.

Economic growth : Economic growth is important factor in the development of the
organization. If economy grows at a higher speed it will directly affect the growth of the
organization.

Inflation rate : Inflation means the rise in the value of all the product in the economy, if
inflation rate is higher the cost of products will be higher & if inflation rate is lower the cost
of product will be lower. This directly affect the growth of the organization.




SOCIO CULTURAL FACTORS

Demographics : Demographics is the study of human population in the economy. It helps the
organization to divide the markets in different segments to target a large of customers. For
Example- according to race, age, gender, family, religion, & sex.

Distribution of income : This shows that how income is distributed in the economy. It
directly affect the purchasing power of the buyers. And ultimately leads to increase or
decrease in the consumption level of the products.

Changes in life style : Change in life style also leads to increase or decrease in the demand
for different commodities. For example- presently LCD & LED TVs have replaced Digital
displayed TV set, this shows that the changes in life style of consumers.

Consumerism : This indicates that a large number of options are available while purchasing
of goods to consumers, so the choice becomes easy & quality products can be choose by
consumers. So while purchasing a consumer have different choices to select product
according to his needs.

Education levels : Education is one of the most important factor which influence the buying
power of consumer, while selecting a particular good a consumer should know all its features
so it can differentiate them with another products.

Law affect social behaviour : Different laws are made by the government to safe guard the
rights of consumers. For example- Consumer protection act, this law indicates that a
consumer can file a case against a seller if he finds that he is cheated.

TECHNOLOGICAL FACTORS

Advancement in technology : New technology helps in economising the scale of production,
this means that new technology helps in increasing the level of production, & reducing the
costs of inputs, & maximising the level of profits.

Discoveries & innovation : Advancement in technology will leads to discoveries &
innovations & further improvements in technology so as to improve perfections in the
production process.

Competitive forces : Advancement in technology will also leads to competition in the
markets, more quality products will be provided to consumers to cover a large number of
market.

Automation : Change in technology will leads to automation, this means that with new
technology labour required is less as machines are automatic. All the works are done
automatically by the machines as earlier it is labour oriented. Now all the work is machine
oriented.

Obselete rate : Day-by-day new inventions are made so the rate of obselete is higher, as in
Computer laptops have replaced the PC. This shows that the technology becomes obselete
very fast
.
Research & development : This department plays a vital role in the development of the
organization. As this department always do research that what are the demand of the markets
& how to make advancements so the organization can survive in the competitive world




.
ENVIRONMENTAL FACTORS

Ecological : The ecological and environment aspects such as weather, climate, & climate
changes, which may especially affect industry such as tourism, farming, & insurance. In
FMCG Air conditioners demand increase in summer season.

Environmental issues : Global warming is one of the major issue now-a-days as external
factor is becoming a significant issue for firms to consider. Many remedies have been taken to
reduce Global warming.

Environmental regulations : Various regulations have been declared by government to safe
guard the environment. For example- no company should through its waste in rivers.

LEGAL FACTORS

Employment law : Employment law provides equal opportunities to every citizen to work &
earn his livelihood. It provides equal opportunities to every citizen
.
Consumer protection : This law helps to protect the rights of consumers & he can file a case
against seller if he fined that he is cheated.

Industry-specific regulations : These laws are related to industry for example- no industry
can establish in between cities i.e. it should be outside the cities.



SWOT Analysis of Indias FMCG Sector
Weaknesses
1. Lower scope for investing in technology and achieving economies of
scale, especially in small sectors
2. Low exports levels
3. Me-too products, which illegally mimic labels of established brands.
These products narrow the scope for FMCG products in rural and
semi-urban markets

Opportunities
1. Untapped rural markets
2. Rising income levels, leading to higher purchasing power of consumers
3. Large domestic market with a population of over one billion
4. Export potential
5. High consumer goods spending

.
Threats
1. Removal of import restrictions resulting in cheap alternatives to domestic
brands
2. Slowdown in rural demand
3. Tax and regulatory structure
Threats
Strengths
1. Low operational costs
2. Presence of established distribution networks in both urban and rural
areas
3. Presence of well-known brands in the FMCG sector












ITC

1910 On 24th August the Company was incorporated as a Private Limited Company under
the name, Imperial Tobacco Co. of India Ltd. The Company manufacture and distribute
cigarettes and smoking tobaccos and speciality papers including cigarette tissue papers (Sole
manufacturer in the country). Other activities include tobacco leaf processing, printing and
packaging, hotels, food and exports.




DABUR

Dabur India Ltd is one of Indias leading FMCG Companies with Revenues of over Rs
7,073 Crore & Market Capitalisation of US $5 Billion. Building on a legacy of quality an
experience of over 130 years, Dabur is today Indias most trusted name and the worlds
largest Ayurvedic and Natural Health Care Company.
Dabur India is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic
products. Dabur's FMCG portfolio today includes five flagship brands with distinct brand
identities -- Dabur as the master brand for natural healthcare products, Vatika for premium
personal care ,Hajmola for digestives, Ral for fruit juices and beverages and Fem for
fairness bleaches and skin care products.
Dabur today operates in key consumer products categories like Hair Care, Oral Care,
Health Care, Skin Care, Home Care and Foods. The company has a wide distribution
network, covering over 5.8 million retail outlets with a high penetration in both urban and
rural markets.
Dabur's products also have a huge presence in the overseas markets and are today available
in over 60 countries across the globe. Its brands are highly popular in the Middle East,
SAARC Africa, US, Europe and Russia. Dabur's overseas revenue today accounts for over
30% of the total turnover..
The 130-year-old company, promoted by the Burman family, had started operations in 1884
as an Ayurvedic medicines company. From its humble beginnings in the Bylanes of Calcutta,
Dabur India Ltd has come a long way today to become one of the biggest Indian-owned
consumer goods companies with the largest herbal and natural product portfolio in the world.
Overall, Dabur has successfully transformed itself from being a family-run business to
become a professionally managed enterprise. What sets Dabur apart from the crowd is its
ability to change ahead of others and to always set new standards in corporate governance &
innovation.
HUL
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company
with a heritage of over 80 years in India and touches the lives of two out of three Indians.
HUL works to create a better future every day and helps people feel good, look good and get
more out of life with brands and services that are good for them and good for others.
With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin
care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water
purifiers, the Company is a part of the everyday life of millions of consumers across India. Its
portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel,
Fair & Lovely, Ponds, Vaseline, Lakm, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup,
Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit.
The Company has over 16,000 employees and has an annual turnover of27408crores
(financial year 2013 - 2014). HUL is a subsidiary of Unilever, one of the worlds leading
suppliers of fast moving consumer goods with strong local roots in more than 100 countries
across the globe with annual sales of 49.8 billion in 2013. Unilever has 67.25% shareholding
in HUL.

GODREJ
Godrej Consumer Products Ltd (GCPL) is a major player in the Indian FMCG market, with
leading Household and Personal Care Products. Our brands, which include GoodKnight,
Cinthol, Godrej No. 1, Expert, Nupur, aer, Hit, Fairglow, Ezee are household names across
the country. We are one of the largest marketers of toilet soaps in the country and are also
leaders in hair colours and household insecticides. Four of our brands (GoodKnight, Cinthol,
Godrej No.1 and Godrej Expert Hair Colour) are ranked among the 100 Most Trusted
Brands in the country by Economic Times - Brand Equity 2012.

Their mission is to continuously enhance the quality of life of consumers in high-growth
markets with superior-quality and affordable home care, personal care and hygiene
products.They also have a strong emerging presence in markets outside India. As part of
increasing our global footprint, they recently acquired 60% rights in Cosmetica Nacional, a
Chilean hair colour company. The acquisition of the pan-African Darling Group, and Rapidol
and Kinky in South Africa have given GCPL leading positions in the fast growing African
ethnic hair care market. With acquisitions in West Africa, the Megasari Group, a leading
household care company in Indonesia and Issue Group and Argencos, two leading hair
colorant companies in Argentina, Keyline Brands in the United Kingdom, and Godrej Global
Mideast FZE, they own international brands and trademarks in Asia (ex. India), Latam,
Africa, Europe, Australia, Canada and the Middle East.

MARICO
Marico is one the leading company in FMCG sector incepted in year 1988. The company has
created one of biggest brands in India. Every month ,over 70 million packs from Marico reach
approximately 130 million consumers in about 23 million households through a widespread
distribution network of more than 2.5 Million outlets in India and overseas.
Products
Consumer products business
Maricos consumer products has prominent market share in coconut oil,hair oils,post wash
hair care,anti lice treatment ,edible oil ,fabric care,etc.Under this it created brands like
Parachute, Safola, Revive, Starz, Medikar, hair & care etc.
It has also entered food segment through Saffola Diabetes Management Atta mix.
International products
Marico presence in international market became more evident through its major acquisition of
international brands namely camellia, aromatic ,Fiance, Hair Code ,Sundari, etc .Acquisition
of Fiance & Hair Code gave Marico a customer base of 26 million.
KAYA
With KAYA Marico entered into skin care segment .Its KAYA Skin clinic offers
dermatological & scientific procedures most of them approved by USFDA. Today there 65
Skin Clinics in 19 Indian cities, 9 in Middle East has a customer base of 350,000.


www.marketresearch.com/.../FMCG-Sector

www.cii.in/Sectors.aspx?SectorID=S000000081

http://www.ukessays.com/essays/economics/pestel-analysis-on-fmcg-industry-economics-
essay.php#ixzz35T3DqNg5

www.hul.co.in/

http://www.moneycontrol.com/company-facts/itc/management/ITC#ITC

info.shine.com