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Im Indiv Assign

Im Indiv Assign

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Published by Jyoti Anand

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Categories:Types, Reviews
Published by: Jyoti Anand on Sep 02, 2012
Copyright:Attribution Non-commercial


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Individual Assignment
Overview of an Article in a Periodical
Submitted To: Dr. Poonam ShramaSubmitted By: Jyoti Anand
Monday, August 27, 2012, Delhi, Page No.16(MARKETS & FINANCE-mint money)
P&G improves sales growth andprofitability in India
India saw the highest growth among the BRICcountries for Procter and Gamble
Mark to Market | Ravi Ananthanarayanan
Procter and Gamble Co.’s
(P&G) listed subsidiaries in India have done well in the June quarter to support the
company’s 21% organic sales growth. Organic growth for P& 
G strips out the effect of foreign exchange andacquisitions on growth. India saw the highest growth among the BRIC (Brazil, Russia, India and China) countriesfor P&G, and much better than the 10% growth in its developing markets. It has two listed subsidiaries in India.
Procter and Gamble Hygiene and Health Care
sells Vicks and Whisper products in India, and its sales rose by 27.8% to Rs. 313 crore. Its materialconsumption cost rose by a lower figureof 15%, and advertising and promotioncosts rose by only 2.5%, but royalty andother expenses rose substantially. Royalty as a percentage of sales rose by 19 basispoints sequentially, while other expensesrose by 57% year-on-year (y-o-y). Onebasis point is one-hundredth of apercentage point.Still, lower material cost growth enabledP&G to easily cover the increase inexpenses, and operating profit grew by 75.8% y-o-y to Rs. 44 crore. Net profitdeclined chiefly because of higherdepreciation, lower other income and a
Naveen Kumar Saini/Mint
Tax write-back in the year-ago quarter. The company has not given a category-wise growth number in itsstatement, making it difficult to evaluate how these businesses have done. But the reported sales growth, and the3.8 percentage point growth in operating profit margins, indicates it appears to be doing quite well.
Gillette India Ltd’s
performance was not as good, however, chiefly due to losses incurred in its oral care and
battery business. The company’s overall sales rose by 15%, driven by a healthy 20.4%
 growth in its shavingproducts business, but pulled down by single-digit growth in batteries and oral care. Its grooming business
performance is encouraging, as segment profit has increased by 55%, a sign that the company’s efforts to grow 
usage of twin-edge products and also upgrade users to higher-end products, are working.The batteries and oral care business have seen the company carry out aggressive marketing and pricing plans,which may have affected reported sales growth and margins. Reported profits have risen by 5.5 times, primarily due to sales growing ahead of material costs, and higher advertising costs in the year-ago quarter. Shareholders of both companies should be happy to see the healthy levels of sales growth that these companies are achieving.
Profitability in both companies has improved, chiefly due to some relief on the material inflation front. P&G’s
focus on developing markets, especially countries such as India, continues to be strong, and its poorerperformance in developed markets will mean the emphasis on growth in developing markets will continue.Its Indian listed subsidiaries should do well in 2012-13 (year ended June), too, barring adverse trends in materialcosts or aggressive marketing plans that may affect margins.
Abridged Form of the Article:
The article states about the Cincinnati based
Procter and Gamble’s
sales growth in India is improvingand that will be good news for the company as India is one of the emerging markets for the firm. Thecompany has done well compared to the other rival firms in the country and the organic sales growth of P&G in India has been at 21% in the month of June
. The company’s
excellent organic growth of thecompany will strip out the effect of foreign exchange and acquisitions on growth. As per the Procter andGamble report they have seen the best growth in India, compared to other countries where they have theirbusiness like Brazil, Russia, and China.The company has performed 10% better in India than other BRIC countries and that is what allows themto experiment
in Indian markets. The company’s
Vicks and Whisper sales in India rose by 27.8% to 313crore.
On the other hand, the company’s
material consumption cost also increased by 15% andadvertisement and promotion cost moved up by 2.5% for the month of Ju
ne. The company’s
entirebusiness is hard to evaluate at the moment but they will make sure that they expand in India to get betterprofit in the future.This growth rate of the company has been achieved by it as their core marketing strengths are;It is also worth noticing that no company in the world has
invested more in market research thanP&G.
The company interacts with more than five million consumers each year in nearly 100 countries. Itconducts over 20,000 research studies every year, and invests more than $400 million annually inconsumer understanding. These insights help it in identifying opportunities for innovation and betterserve and communicate with its consumers.Moreover, P&G is widely
recognized as the industry’s
global innovation leader
. Nearly all organic salesgrowth over the past decade has come from new brands or improved products. Globally and within India,the company is investing heavily in innovation, R&D and distribution. The strategy is to make several of its billion dollar brands more localized, accessible and affordable for consumers. In fact, Gillette'sHimalaya team, a Boston-based group focused on India worked on a razor-and-blade innovation,simplifying the essential features and making it affordable through manufacturing innovations to attractlower-income savers.Also P&G is the brand-building leader of the industry. It has built the strongest portfolio of brands in theindustry with 50 leadership brands that are among
some of the world’s best
-known household names
which together make up 90% of P&G’s sales and more than 90% of profits. Twenty
-four of these brandseach generate more than $1 billion dollars in annual sales.

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