B

e
c
a
u
s
e
T

INTRODUCTION
The Fast Moving Consumer Goods (FMCG) industry in India is one of the
largestsectors in the country and over the years has been growing at a
very steady pace.The sector consists of consumer non-durable products
which broadly consists, personal care, household care and food & beverages.
The Indian FMCG industry isl a rg e l y c l a s s i fi e d a s o r g a n i z e d a n d
u n o r g a n i z e d . T h i s s e c t o r i s a l s o b u o y e d b y intense competition. Besides
competition, this industry is also marked by a robustdistribution network
coupled with increasing infl ux of MNCs across the entire value chain. This
sector continues to remain highly fragmented.
Industry Classification
The FMCG industry is volume driven and is characterized by low margins.
The products are branded and backed by marketing, heavy advertising, slick
packagingand strong distribution networks. The FMCG segment can be classified
under the premium segment and popular segment. The premium segment
caters mostly to thehigher/upper middle class which is not as price
sensitive apart from being brandc o n s c i o u s . T h e p r i c e s e n s i t i v e
p o p u l a r o r m a s s s e g m e n t c o n s i s t s o f c o n s u m e r s belonging mainly to
the semi-urban or rural areas who are not particularly brandconscious.
Products sold in the popular segment have considerably lower prices than
their premium counterparts
What are Fast Moving Consumer Goods (FMCG)?
Products which have a quick turnover, and relatively low cost are known as
FastMoving Consumer Goods (FMCG). FMCG products are those that
get replacedwithin a year. Examples of FMCG generally include a wide range of
frequently purchased consumer products such as toiletries, soap, cosmetics, tooth
cleaning products, shaving products and detergents, as well as other non-durables
such asglassware, bulbs, batteries, paper products, and plastic goods. FMCG may
alsoinclude pharmaceuticals, consumer electronics, packaged food products,
softdrinks, tissue paper, and chocolate bars.A subset of FMCGs is Fast Moving
Consumer Electronics which includeinnovative electronic products such as mobile
phones, MP3 players, digitalcameras, GPS Systems and Laptops. These
are replaced more frequently than other electronic products.White goods in FMCG
refer to household electronic items such as Refrigerators,T.Vs, Music Systems,
etc.In 2005, the Rs. 48,000-crore FMCG segment was one of the
fast growingindustries in India. According to one study, the industry grew 5.3% in
value between 2004 and 2005.The Indian FMCG sector is the fourth largest in the
economy and has a market sizeof US$13.1 billion. Well-established distribution
networks, as well as intensecompetition between the organized and unorganized
segments are thecharacteristics of this sector. FMCG in India has a strong and
competitive MNC presence across the entire value chain.
It has been predicted that the FMCG market will reach to US$ 33.4 billion in 2015from US $ billion
11.6 in 2003. The middle class and the rural segments of theIndian population are the most promising
market for FMCG, and give brandmakers the opportunity to convert them to branded products. Most of
the productcategories have potential for growth is huge.The Indian Economy is surging ahead by

leaps and bounds, keeping pace withrapid urbanization, increased literacy levels, and rising per capita
income.The big firms are growing bigger and small-time companies are catching up aswell.

FAST MOVING CONSUMER GOODS (FMCG)

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 and have a high return.
The Indian FMCG sector with a market size of US$14.8 billion is the fourth largest sector in the economy. The
FMCG market is set to double from USD 14.7 billion in 2008-09 to USD 30 billion in 2012. FMCG sector will
witness more than 60 per cent growth in rural and semi-urban India by 2010. Indian consumer goods market
is expected to reach $400 billion by 2010.Hair care, household care, male grooming, female hygiene, and the
chocolates and confectionery categories are estimated to be the fastest growing segments. At present, urban
India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%.
However, rural India accounts for more than 40% consumption in major FMCG categories such as personal
care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care,
household care and feminine hygiene, will keep growing at relatively attractive rates. Within the foods
segment, it is estimated that processed foods, bakery, and dairy are long-term growth categories in both
rural and urban areas.The growing incline of rural and semi-urban folks for FMCG products will be mainly
responsible for the growth in this sector, as manufacturers will have to deepen their concentration for higher
sales volumes.
Major Players in this sector include Hindustan Unilever Ltd., ITC (Indian Tobacco Company), Nestl India,
GCMMF (AMUL), Dabur India, Asian Paints (India), Cadbury India, Britannia Industries, Procter & Gamble
Hygiene and Health Care, Marico Industries, Nirma,Coca-Cola, Pepsi and others.As per the analysis by
ASSOCHAM, Companies Hindustan Unilever Ltd , Dabur India originates half of their sales from rural India.
While Colgate Palmolive India and Marico constitutes nearly 37% respectively, however Nestle India Ltd and
GSK Consumer drive 25 per cent of sales from rural India.
A rapid urbanization, increase in demands, presence of large number of young population, a large number of
opportunities is available in the FMCG sector. The Finance Minister has proposed to introduce an integrated
Goods and Service Tax by April 2010.This is an exceptionally good move because the growth of consumption,
production, and employment is directly proportionate to reduction in indirect taxes which constitute no less
than 35% of the total cost of consumer products - the highest in Asia.. The bottom line is that Indian market
is changing rapidly and is showing unprecedented consumer business opportunity.

We can provide you detailed project reports on the following topics. Please select the projects
of your interests.
Each detailed project reports cover all the aspects of business, from analysing the market,
confirming availability of various necessities such as plant & machinery, raw materials to
forecasting the financial requirements. The scope of the report includes assessing market
potential, negotiating with collaborators, investment decision making, corporate diversification
planning etc. in a very planned manner by formulating detailed manufacturing techniques and
forecasting financial aspects by estimating the cost of raw material, formulating the cash flow
statement, projecting the balance sheet etc.
We also offer self-contained Pre-Investment and Pre-Feasibility Studies, Market Surveys and
Studies, Preparation of Techno-Economic Feasibility Reports, Identification and Selection of Plant

and Machinery, Manufacturing Process and or Equipment required, General Guidance, Technical
and Commercial Counseling for setting up new industrial projects on the following topics.
Many of the engineers, project consultant & industrial consultancy firms in India and worldwide
use our project reports as one of the input in doing their analysis.

Outlook
There is a huge growth potential for all the FMCG companies as the per
capitaconsumption of almost all products in the country is amongst the lowest in
theworld. Again the demand or prospect could be increased further if these
companiescan change the consumer's mindset and offer new generation
products. Earlier,Indian consumers were using non-branded apparel, but today,
clothes of different brands are available and the same consumers are willing to
pay more for brandedquality clothes. It's the quality, promotion and innovation of
products, which candrive many sectors
Most of the consumer durable goods will see a reduction in price as thegovernment of India decided to
reduce tax levied on them. 4 percentage pointreduction in the Cenvat to 10 per cent from 14 per cent is
the key driver.
SCOPE
The Indian FMCG sector with a market size of US$13.1 billion is the fourth
largestsector in the economy. A well-established distribution network,
intensecompetition between the organized and unorganized
segments characterize thesector. FMCG Sector is expected to grow by over 60%
by 2010. That will translateinto an annual growth of 10% over a 5-year period. It
has been estimated thatFMCG sector will rise from around Rs 56,500 crores in
2005 to Rs 92,100 croresin 2010. Hair care, household care, male grooming,
female hygiene, and thechocolates andconfectionery categories are estimated to
be the fastest growing segments, says anHSBC report. Though the sector
witnessed a slower growth in 2002-2004, it has been able to make a fine recovery
since then.For example, Hindustan Levers Limited (HLL) has shown a healthy
growth in thelast quarter. An estimated double-digit growth over the next
few years shows thatthe good times are likely to continue
Growth Prospects
With the presence of 12.2% of the world population in the villages of India,
theIndian rural FMCG market is something no one can overlook. Increased focus
onfarm sector will boost rural incomes, hence providing better growth prospects
tothe FMCG companies. Better infrastructure facilities will improve their
supplychain. FMCG sector is also likely to benefit from growing demand in the
market
Because of the low per capita consumption for almost all the products
in thecountry, FMCG companies have immense possibilities for growth. And

if thecompanies are able to change the mindset of the consumers, i.e. if they
are able totake the consumers to branded products and offer new generation
products, theywould be able to generate higher growth in the near future. It
is expected that therural income will rise in 2007, boosting purchasing power in
the countryside.However, the demand in urban areas would be the key growth
driver over the longterm. Also, increase in the urban population, along with
increase in income levelsand the availability of new categories, would help the
urban areas maintain their position in terms of consumption. At present,
urban India accounts for 66% of totalFMCG consumption, with rural India
accounting for the remaining 34%. However,rural India accounts for more than
40% consumption in major FMCG categoriessuch as personal care, fabric care,
and hot beverages. In urban areas, home and personal care category, including
skin care, household care and feminine hygiene,will keep growing at relatively
attractive rates. Within the foods segment, it isestimated that processed foods,
bakery, and dairy are long-term growth categoriesin both rural and urban areas.
Availability of raw materials :
Because of the diverse agro-climatic conditions in India, there is a large rawmaterial base suitable for
food processing industries. India is the largest producer of livestock, milk, sugarcane, coconut, spices
and cashew and is the second largest producer of rice, wheat and fruits &vegetables. India also
produces caustic sodaand soda ash, which are required for the production of soaps and detergents.
Theavailability of these raw materials gives India the location advantage.
FMCG during Recession :
At a time when the economy and industry sectors such as automobiles, aviation andfinancial
services are reeling from the global slowdown, the consumer goods sector inIndia has managed to buck
the trend with most companies posting double-digit growth innet profits in the first half of fiscal 2009
backed by healthy salesAccording to the recent reports, India's fast moving consumer goods industry
has so far been resilient to the slowdown in the economy and a dip in consumer sentiment. If we go by
the numbers for the past few months, the growth only seems to have got better whencompared to the
earlier months.As very categorically said by the Amway India Enterprises managing director and
chief executive, Mr. William Pinckney." I am not saying that our company (sector) is recession-proof
but it is recession-resilient.This statement on the whole stands strong for most the leading players in
the FMCGsector .
FMCG during Recession
At a time when the economy and industry sectors such as automobiles, aviation
andfinancial services are reeling from the global slowdown, the consumer goods
sector inIndia has managed to buck the trend with most companies posting
double-digit growth innet profits in the first half of fiscal 2009 backed by healthy
salesAccording to the recent reports, India's fast moving consumer goods industry
has so far been resilient to the slowdown in the economy and a dip in consumer
sentiment. If we go by the numbers for the past few months, the growth only
seems to have got better whencompared to the earlier months.As very
categorically said by the Amway India Enterprises managing director and

chief executive, Mr. William Pinckney." I am not saying that our company (sector)
is recession-proof but it is recession-resilient.This statement on the whole stands
strong for most the leading players in the FMCGsector.
ASIAN PAINTS:
Asian Paints was formed in 1942 in India. Asian Paints is dealing in
marine andindustrial coatings, automobile OEMs and refi nishes, wood
fi nishes, fi nish coatsand an ancillary product in decorative paints. It
manufactures and markets paints.The plants of the Group are located in:
Maharashtra
Gujarat
Andhra Pradesh
Uttar Pradesh
Tamil Nadu
Asian Paints is the largest paint company in India and the third-largest companyin
Asia. It has a turnover of US$ 680 million. The company is spread across
21countries and has 29 paint manufacturing facilities.Asian Paints serves through
its subsidiaries by the name of:Berger International Limited
Apco Coatings
SCIB Paints
Taubmans