Analysis Of Indian FMCG Industry – Investment Perspective
Security Analysis & Portfolio Management Project
(Under guidance of Prof.PritamShekade)
Ashish Kumar, Malla Bhaskar, Nilesh Narayanan, Rahul Prakash
FMCG Industry Overview ........................................................................................................................ 3 Structure and Characteristic of FMCG Industry ...................................................................................... 5 FMCG Sector Key Drivers ........................................................................................................................ 6 PEST Analysis ........................................................................................................................................... 8 FMCG Sector Sensitivity to Business Cycle ............................................................................................. 9 BSE and BSE FMCG Index ...................................................................................................................... 10 Porter’s Five Force Model Analysis ....................................................................................................... 14 SWOT Analysis....................................................................................................................................... 15 Indian Attractiveness ............................................................................................................................ 16 Prospect & Outlook ............................................................................................................................... 17 Sources .................................................................................................................................................. 19
FMCG Industry Overview
Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. India’s FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities and 14 million in total. The sub sectors of FMCG sector are Household Care, Personal Care and Food & Beverages. On the basis of price, FMCG goods are divided into three segments- low priced, mid-priced/ mass or popular and high-priced/ premium end. Typically the lower segments of the market drive volumes. The premium segment is less price-sensitive and more brand conscious. The total FMCG market is in excess of $ 28 billion. FMCG sector is growing at double digit growth rate of 15.4 per cent and is expected to maintain a high growth rate. FMCG is characterized by a well-established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments. Unlike other sectors, the FMCG industry did not slow down during recent recession. As it is meeting the every-day demands of consumers, it will continue to grow. Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, with domination in their key categories, have improved their market shares and outperformed peers in the FMCG sector. This has been also aided by the lack of competition in the respective categories. Single product leaders such as Colgate Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their respective categories, aided by innovations and strong distribution. Strong players in the economy segment like Godrej Consumer Products Ltd in soaps and Dabur in toothpastes have also posted market share improvement, with revived growth in semi-urban and rural markets.
Major Segments Of The FMCG Industry
Household Lighting Care 2% 10% Tobacco 15% Food and Beverages 53% Personal Care 20%
Household Care: The detergents segment is growing at an annual growth rate of 10 to 11 per cent during the past five years. The local and unorganized players account for a major share of the total volume of the detergent market. The preference is given to detergents in urban area compared to bars. Household care segment is featured by intense competition and high level of penetration. With rapid urbanization, emergence of small pack size and sachets, the demand for the household care products is booming. In washing powder segment, HUL is the leader with ~38 per cent of market share. Other major players are Nirma, Henkel and Proctor & Gamble. India has an abundant supply of caustic soda and soda ash, the chief raw materials required in the production of soaps and detergents, which enables the household section of the industry to excel and grow. Personal Care Personal care segment includes personal wash products, hair care products, oral care products, cosmetics etc. The Indian skin care and cosmetics market is valued at $274 million and is dominated by HUL, Colgate Palmolive, Gillette India and Godrej. The coconut oil market accounts for 72 per cent share in the hair oil market. The hair care market can be segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. In the branded coconut hair oil market, Marico (with Parachute) and Dabur are the leading players. Sachet makes up to 40 per cent of the total shampoo sale. Again the market is dominated by HUL with around 47 per cent market share; P&G occupies second position with market share of around 23 per cent. Personal wash can be further segregated into three segments namely Premium, Economy and Popular. Here also, HUL is the leader with market share of 53 per cent; Godrej occupies second position with market share of 10 per cent. Swelling disposable incomes of the Indian consumers, growth in rural demand and upgrading to the premium products are the key drivers for future demand growth in major FMCG categories. The skin care market is at a primary stage in India. With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming. The major players in this segment are Hindustan Unilever with a market share of 54 per cent, followed by CavinKare with a market share of 12 per cent and Godrej with a market share of 3 per cent. The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per cent; toothbrushes - 17 per cent. This segment is dominated by Colgate-Palmolive with market share of 49 per cent, while HUL occupies second
position with market share of ~30 per cent. In toothpowders market, Colgate and Dabur are the major players. Food and Beverages This segment comprises of the food processing industry, health beverage industry, bread and biscuits, chocolates & confectionery, Mineral Water and ice creams. The three largest consumed categories of packaged foods are packed tea, biscuits and soft drinks. Indian hot beverage market is a tea dominant market. The major share of tea market is dominated by unorganized players. Leading branded tea players are HUL and Tata Tea. Major players in food segment are HUL, ITC, Godrej, Nestle and Amul. Our country has a varied agro-climatic condition which enables to offer extended raw material base suitable for many FMCG sub sections like food processing industries etc.
Structure and Characteristic of FMCG Industry
Competition: The market of FMCG is very competitive and manufacturers are coming forward with the latest ideas and techniques to beat the competition and remain on the top. . There are top business giants taking lead and several hundred emerging companies trying hard to come forward and stand with leading FMCG producers. The easing of the trade barriers encouraged the MNCs to invest in the Indian market to cater to the needs of the consumers. The living standards rose in the urban sector due to high disposable income along with the rise in the purchasing power of the rural families which increased the sales volume of various manufacturers of the FMCG products in India. The large-scale companies such as HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser and Colgate have targeted the rural consumers and have also expanded their retail chain in the midsized towns and villages. On the contrary to this, Nestle has always targeted the market of urban India and focuses largely upon the value added products for the elite class or upper middle class population. Branding: Creating strong brands is important for FMCG companies and they devote considerable money and effort in developing bands. With differentiation on functional attributes being difficult to achieve in this competitive market, branding results in consumer loyalty and sales growth. Leading FMCG firms like HUL, ITC, Nestle, Procter & Gamble and GlaxoSmithKline Healthcare – which account for almost 70 per cent of FMCG revenues in the country – spend almost 10 per cent of their turnover on advertising and brand promotion. The promotion strategy includes tying up with top actors and other celebrity brand ambassadors, besides going in for high-profile launches at leading retail mall and outlets.
Distribution Network: Given the fragmented nature of the Indian retailing industry and the problems of infrastructure, FMCG companies need to develop extensive distribution networks to achieve a high level of penetration in both the urban and rural markets. Once they are able to create a strong distribution network, it gives them significant advantages over their competitors. The supply chain of products in the FMCG market in India is one of the longest supply chains an industry could really have. What has been observed is that even though these FMCG companies are big multinationals and Indian but face a major challenge of making their products available in the market in the right quantities and in the right time. This is simply because these companies don’t really have a wide network of sales agents and other force which is required and is ideal for catering their products to the markets. This aspect is taken over by distributors, wholesalers and retailer whose margins on these products actually double the price of these products when a final consumer buys it. The products in this industry are transported from manufacturing units via c & f agencies or warehouse to distributors who further sell the same to wholesalers or stockiest who finally sell it to the retailers in the market. Contract manufacturing: As FMCG companies concentrate on brand building, product development and creating distribution networks, they are at the same time outsourcing their production requirements to third party manufacturers. Moreover, with several items reserved for the small scale industry and with these SSI units enjoying tax incentives, the contract manufacturing route has grown in importance and popularity. Large unorganized sector: The unorganized sector has a presence in most product categories of the FMCG sector. Small companies from this sector have used their geographical advantages and regional presence to reach out to remote areas where large consumer products have only limited presence. Their low cost structure also gives them an advantage.
FMCG Sector Key Drivers
Disposable Income:There is increase in disposable income, observed in both rural and urban consumers, which is giving opportunity to many rural consumers to shift from traditional unorganized unbranded products to branded FMCG products and urban fraternity to splurge on value added and lifestyle products. The increasing salaries, along with rising trend of perks in the corporate sector at regular intervals, have increased people’s spending power. As per some research, there is a high correlation between Disposable per capita and HPC per capita. Organized Retail:The emergence of organized retail have led to more variety with ease in browsing, opportunity to compare with different products in a category, one stop destination (entertainment, food and shopping) etc, which is playing an important role in bringing boom in the Indian FMCG market. Currently the modern
trade is capturing 5% of the total retail space, which will increase to 10% and 25% in 2010 and 2025 respectively. Also, as the credit card and organized retail trend picks up, people won’t think much while buying and buy more. Distribution Depth - Rural Penetration: There are 5500 towns and 6.38 Lacs villages with 2.5Mln and 5Mln outlets respectively. Due to saturation and cut throat competition in urban India, many FMCG companies are devising strategies for targeting rural consumers in a big way. Many FMCG companies are focusing on increasing their distribution network to penetrate with a step by step plan. This is the reason that FMCG urban market size has dropped from 50% to 29% in last 5 years. The FMCG market size for semi-urban and rural segment was 19% and 52% respectively for the year 2006-07. As per FICCI, the FMCG market size for urban, semi-urban and rural for year 2007-08 was expected to be 57%, 21% and 22%, which clearly shows that rural market is the growth engine for FMCG growth. Though the urban markets are growing too, the incremental addition in consumer’s households is much more in rural space as compared to urban markets. The planned development of roads, ports, railways and airports, will increase FMCG penetration in the long term. 180 million rural and semi-urban people’s attention has already been diverted towards FMCG products, according to latest estimates released by industry chamber, Assocham in 2008. The estimated number of households using FMCG products in rural India has grown from 131 million in 2004 to 140 million in 2007, according to market research company IMRB. Over 70% sale of FMCG products is made to middle class households and over 50% of middle class is in rural India. Buying Pattern Shift:The crisis of declining FMCG markets during 2001-04 was driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Now, as many consumers have already upgraded, their income is being directed towards pampering themselves. Favorable Indian Economy & Demographics:45% people in India are under 20 years of age. Per capita disposable income has increased from $550 to $600 in 2007 (9% increase). GDP is growing at a CAGR between 8 to 9%.In the next five years, affluent and aspirers as a total will supersede strivers and will be dominated by aspirers, as per NCAER.
Political Tax Structure: Complicated tax structure, high indirect tax, lack of uniformity, high octroi& entry tax and changing tax policies. Infrastructure Issues:Performance of FMCG is very much depended on government spending on Agricultural Infrastructure, Power, and Transportation Infrastructure. Regulatory Constraints: Requirement for multiplicity of permits and licenses for various states, prevailing outdated labor laws, Cumbersome and lengthy export procedures, confusing and time consuming subsidy availing procedures Policy framework: Approval related to investment of FDI into Retail sector (singlebrand retail &multi-brand retail, License rules in setting up of Industry, Changes in Statutory Minimum Price (SMP) of commodities and Priority sector classification of Industries. Economical GDP Growth: Growth of the industry is consistent with the Indian economy Inflation: Inflationary pressures alter the purchasing power of money. This has a direct impact on consumer spending and business investment Consumer Income: Increase in incomes is largely an outcome of economic growth across sectors. Over the past few years, India has seen increased economic growth, with a continuing and substantial impact on consumer disposable incomes enabling good growth for the FMCG sector. Private Consumption: The Indian economy, unlike other economies, has a very high rate of private consumption (61%) Urbanization: India has 70% of its population living in rural areas. With rising urbanization, more people will have exposure to modern products and brands and thus shift to branded and packaged goods and products. Social Change in consumer Profile:Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. Around 45 per cent of the population in India is below 20 years of age and the young population is set to rise further.
Change in Lifestyle: Changing Lifestyle of Indian consumers has led to focus on premium products among Indian FMCG players. Rural focus: As market is getting saturated, companies are focusing on rural area for penetration, by providing consumers with bite-sized or single-use packs. Technology Adoption of ERP, Supply Chain Optimization tools and Business Intelligence Tools will help FMCG companies to integrate business processes across the enterprise, suppliers and customers. With the level of competition and sluggish growth most FMCG corporates are looking at IT to reduce costs in the supply chain, and flatten the bottom line Marketing and advertising through mobile and social media platforms
Sensitivity to business cycle
Inflation: High food inflation has an adverse effect on the FMCG industry. People will spend less money on discretionary items which will hit the FMCG industry. The food inflation is very high around 12%, and the raw material cost has increased up to 15 to 20 per cent compared to last year. The operating margins which are typically about 20 per cent in the last few years have seen a drop to almost 16 per cent. FMCG is also dependent on the monsoons. A good monsoon will not give any inflation worries and also increases the consumption power creating demand for hair oil, biscuits, soaps, shampoos, laundry, and toilet soaps. Interest Rates: As many companies are taking debt for their daily operations, thus increase in interest rate will have adverse effect on the profitability of FMCG companies Consumer sentiments: Slowing global economy together with an overall moderating consumer sentiment might lead to a slow volume growth of FMCG segment.
BSE and BSE FMCG
BSE FMCG has base index value of 1000 with base period 01 February, 1999. It is launched on full market capitalization method and effective August 23, 2004, calculation method shifted to free-float market capitalization
Returns - BSE FMCG SECTOR YTD : 6 Months: 20.82% 1 Week 19.40% 1 Year : 0.80% 1 Month: 30.50% 2 Year : 6.00% 3 Months: 53.10% 3 Year : 12.00% 114.50%
The Indian Fast Moving Consumer Goods (FMCG) sector is booming from last several years and given steady returns to its investors despite slowdown in the economy. FMCG sector has several multinational players with strong presence in India such as Nestle, Procter and Gamble, Gillette, etc. December 2011 and March 2012 quarter results have been pretty good for the top companies, a major reason for the overvaluation could be attributed to the current economic scenario. In times of economic uncertainty, investors tend to flock defensive sectors like FMCG driving up prices of the companies which seems to be the case with the FMCG sector currently. Index Composition Company Name HUL ITC Nestle Market Capitalisation (Rscrores) 99,518.19 1,95,890.62 43,543.75 Weight 23.22 45.7 10.16
The index is largely driven by ITC and HUL, as they contribute around 69% to the total index. Both companies have posted good results, thus helping the index to grow despite weak domestic market. If both these companies are excluded then the index comes out to be overvalued by only 7.82%. Therefore, the index has high dependency on these two companies. Comparison of BSE FMCG and Sensex
FMCG sector is performing well due to strong characteristics and dependence on consumption in domestic market. The returns table (above) portraits that it registered lower drop in 2008 i.e. during slowdown in the economy. The performance of FMCG sector was laggard in 2009 when economy was recovering and major sectors started performing well contributing to growth in SENSEX. However, performance of BSE FMCG index in 2010 was outstanding on back of fiscal stimulus but got hit again in 2011 due to European debt crisis and domestic reasons. In 2011, SENSEX was volatile and gave negative returns of approx. 25% at end of year whereas; FMCG is the only sector which gave strong returns of 9% in 2011. FMCG, top performer among other sector In last 15 months, FMCG sector attracted many investors and gave strong returns to them. The other sector indices gave negative returns in the range of 2% to 38% due to slowdown in the economy, high interest rates and rising inflation
Safe havens in a bear market The less cyclical an industry, the better its chances of riding out a recessive period. Non-cyclical industries have more stable growth rates. Non-cyclical industries also experience less volatile share prices. They tend to be low-beta and that's a major advantage if the market-wide trend is down. That leaves just FMCG as a safe growth area. By default, it's likely to be the only counter-cyclical defensive sectoral play. Dabur, ITC and Hindustan Unilever have already seen outperformance in the recent past. Colgate, Godrej Consumer and Marico, could all pick up steam even if the rest of the market gets weaker. There's a case for being seriously over-weight in the sector. Peers Comparison The peer table comprise of some listed FMCG companies in India. The outperformers among these companies are HUL and ITC with strong revenue Rs 199,390 mn and Rs 221,598 mn respectively in FY11. The EBITA margin across the sector has remained in the range of ~15% to ~26.5%. However, EBITDA margin for ITC in FY11 was 37.5%. The companies HUL and ITC registered PAT of Rs 23,066 MN and Rs 50,700 MN in FY11.
FMCG industry, as an investment: FMCG index has consistently given good return to investors over the years. Infact, FMCG index has given a return of 12% in 2011 despite negative returns from Sensex. Going forward, HUL and ITC are expected to record good performance, which could lead to positive impact on the valuation of the overall FMCG index. In FY-11, HUL has changed its business strategy and started focusing on rural market through increase in ad-spends, new launches and expanding distribution network. As a result, it posted good results so far and is expected to deliver good results in coming quarters as well. ITC, market leader in cigarettes, has benefitted by favourable announcement in the Union Budget-13 wherein the Government increased the excise duty on bidi and other tobacco products which could lead to consumers shifting to cigarettes. With favourable government policies and its focus on growing food processing category, ITC is expected to post good results in coming years. Thus, FMCG index, being a defensive sector, will remain a safe bet for investors.
Porter’s Five Force Model Analysis
Barriers to Entry >Strong distribution network required >Geographic factors limit competition >High capital requirements >Strong brand names are important >Patents limit new competition
Supplier Power Diverse distribution channel Large number of substitute inputs Low cost of switching suppliers Inputs have little impact on costs Volume is critical to suppliers
Rivalry Government limits competition Low storage costs Large industry size Relatively few competitors Exit barriers are low
Buyer Power High price sensitivity Low buyer price sensitivity Product is important to customer Large number of customers Limited buyer choice
Substitutes Limited number of substitutes (Fmcg) Substantial product differentiation (Fmcg)
Rivalry among Competing Firms: In the FMCG Industry, rivalry among competitors isvery fierce. Players from unorganized and organized sectors continue to grab each other’s market shares.Low brand awareness enables local players to market their spurious look-alike brands. Organized retailers are competing for a limited density of population in a crowded market and the competitors try to snatch their share of market. Market Players use all sorts of tactics and activities from intensive advertisement campaigns to promotional stuff and price wars etc. Hence the intensity of rivalry is very high. Potential Entry of New Competitors: FMCG Industry does not have any measures
whichcan control the entry of new firms. The resistance is very low and the structure of the industry is so complex that new firms can easily enter and also offer tough competition due to cost effectiveness. Huge investments in promoting brands, setting up distribution networks and intense competition, but the sector is not capital intensive. Existing large players have competitive advantage on others because of their large scale of operation, brand attachment, deeply entrenched distribution network and the experience curve. Potential Development of Substitute Products: There are complex and never endingconsumer needs and no firm can satisfy all sorts of needs alone. There are plenty of substitute goods available in the market that can be re-placed if consumers are not satisfied with one. The wide range of choices and needs give a sufficient room for new product development that can replace existing goods. This leads to higher consumer’s expectation. Bargaining Power of Suppliers: The bargaining power of suppliers of raw materials andintermediate goods is not very high. There is ample number of substitute suppliers available and the raw materials are also readily available and most of the raw materials are homogeneous. There is no monopoly situation in the supplier side because the suppliers are also competing among themselves. Bargaining Power of Consumers: Bargaining power of consumers is also very high. This isbecause in FMCG industry the switching costs of most of the goods is very low and there is no threat of buying one product over other. Customers are never reluctant to buy or try new things off the shelf.
Strengths: • Low operational costs • Presence of established distribution networks in both urban and rural areas • Presence of well-known brands in FMCG sector • Favourable governmental Policy: Indian Government has passed the policies aimed at attaining international competitiveness through Weaknesses: • Lower scope of investing in technology and achieving economies of scale, especially in small sectors • Low exports levels
lifting of the quantitative restrictions, reducing excise duties, 100 per cent export oriented units can be set up by government approval and use of foreign brand names etc. • FDI: Automatic investment approval up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies investment is allowed for most of the food processing sector except malted food, alcoholic beverages and those reserved for small scale industries (SSI). Opportunities: • Untapped rural market, changing life style • Rising income levels, i.e. increase in purchasing power of consumers • Large domestic market with more population o • High consumer goods spending • India is the largest milk producer in the world, yet only around 15 per cent of the milk is processed. The organized liquid milk business is in its infancy and also has large long-term growth potential. Even investment opportunities exist in value-added products like desserts, puddings etc. • Only about 10-12 per cent of output is processed and consumed in packaged form, thus highlighting the huge potential. • India is under penetrated in many FMCG categories as shown in below diagram. With rise in per capita incomes and awareness, the growth potential is huge. • Lower price and smaller packs are also likely to drive potential up trading for major FMCG products • Rural demand etc.
Threats: • Removal of import restrictions resulting in replacing of domestic brands • Tax and regulatory structure • Rural demand is cyclical in nature and also depends upon monsoon.
Industry has witnessed heavy foreign direct investment (FDI) inflows as they accounted for 2.1 per cent of the country’s total FDI during April 2000 - March 2010. Food processing is the most popular FMCG category; it attracts over 53 per cent of total FDI in the industry. India currently allows 100 per cent FDI in cash and carry segment and 51 per cent in single-brand retail, which is expected to be further increased to 100 per cent. India is also expected to allow 51 per cent FDI in multi-brand retail, which will boost the nascent organised retail market in the country.
Leading players of consumer products have a strong distribution network in rural India and are looking to capitalise on rising brand consciousness. Technological advances such as internet and e-commerce would enable better logistics in these areas. Indian and multinational FMCG players can leverage India as a strategic sourcing hub for cost-competitive product development and manufacturing to cater to the international markets. The emergence of organised retail has boosted the distribution of FMCG sector. A total of 7.8 million retail outlets sell FMCG in India. The consumer story in India makes fast moving consumer goods (FMCG) space an attractive destination for private equity and venture capital investors. Compared to the typical $20-50 million deals that took place in the past few years, 2012 witnessed one of the largest PE deals in FMCG space with the Singapore Government owned Temasek Holdings buying a five per cent stake in Godrej Consumer Products Ltd (GCPL) for Rs 685 crore ($135 million).
Fast-moving consumer goods companies sustained sales momentum in the quarter ended March 31, at a time when inflationary pressures were high. Most companies reported double-digit top line growth, varying from 13 per cent (Nestle) to 39 per cent (P&G Hygiene and Health care). Barring Nestle and Marico, most other companies have seen bottom line growth between 15 and 35 per cent during the quarter.
Prospect & Outlook
The FMCG industry has benefitted from rising domestic consumption. Total consumption expenditure forms a lion's share of 69% of GDP. Growing employment, rising disposable income, a relatively young population (median age of 26 years) and changing consumption pattern have led to higher domestic consumption. The FMCG industry grew at a compounded annual growth rate of 11% in the past decade. India is at the cusp of yielding the demographic dividend. As per the
International Labour Organisation, India will have the highest working age population in the world by 2020. As per National Council of Applied Economic Research, the proportion of middle class population will swell from 13.1% at present to 37.2% by 2025-26. Thus higher working-age population and rising middle class will translate into higher purchasing power & boost consumerism. In the rural markets, deepening penetration and evolution in consumption pattern will drive demand. As per Associated Chambers of Commerce & Industry, the FMCG sector will witness more than 50% growth in rural and semi-urban segments by 2012. The per-capita expenditure in rural market is half that of the urban market. But at 150 million household, rural India is nearly three times bigger than urban India holding immense potential demand. The FMCG sector is expected to grow at a compounded annual growth rate of 12% and reach market size of $ 74 bn by 2018. While the homegrown companies are looking to expand overseas, the MNC subsidiaries are strengthening their domestic base to capitalize on the growing demand. Going forward more MNCs will enter India, as the government is likely to clear 51% FDI in multi-brand retail. Currently organized retail comprises only 5% of FMCG sales with the market dominated by more than 12 m small 'kirana' stores. Strong macroeconomic fundamentals, burgeoning disposable income, robust consumerism, greater rural penetration and growing organized retail will drive future demand in FMCG industry. The Union Budget 2012-13 proved to a mixed bag for the FMCG industry. On one hand, minor increase in the tax exemption limits and some incentives on equity investments were positives as this would increase the disposable income levels. But on the other hand, the increase in excise duty more or less offset the above effect. We feel that smaller players would find it difficult to pass on the duty hikes to end consumers and will chose to take the brunt of this hike in a bid to maintain and grow market share. On the other hand, deep-pocket players like Nestle, ITC and HUL with their leadership position and strong brands will be able to pass on the hike to consumers. Going forward, the easing of raw material prices and appreciation of rupee against dollar would help the FMCG companies to maintain their margins in future. With increase in disposable income and favourable government policies, net sales growth is expected to remain robust in coming quarters. Considering on-going economic uncertainty, we expect that FMCG industry will remain an attractive industry for investment, being a safe haven for investors.
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