NH 44, Kompally, Medchal, Telangana 500100

Assignment Answer Booklet

Name of the Programme : TPS - A

Roll No : 28-011 28-028 28-044

Name of the Student : D.V. Ravikiran

N. Santoshkumar Reddy
V. Lakshmi Tripura

Year & Trimester : Ist Year & IIIrd Trimester

Name of the Course : INDUSTRY REVIEW SESSION

Title of the Assignment : Fast Moving Consumer Goods

(FMCG) Industry

Assignment No : 01

Max.Marks :

Alloted Marks :

Faculty Name : Mr. K. Sree Hari

Mr. S. Sashidhar

Faculty Member’s :
Remarks
 FMCG SECTOR

INTRODUCTION:

Products which have a quick turnover, and relatively low cost are known as Fast Moving
Consumer Goods (F.M.C.G.). These products are those that get replaced within a year. Fast-
moving consumer goods (FMCG) sector is the 4th largest sector in the Indian economy with
Household and Personal Care accounting for 50 per cent of FMCG sales in India. Growing
awareness, easier access and changing lifestyles have been the key growth drivers for the
sector. The urban segment (accounts for a revenue share of around 55 per cent) is the largest
contributor to the overall revenue generated by the FMCG sector in India However, in the last
few years, the FMCG market has grown at a faster pace in rural India compared with urban
India. Semi-urban and rural segments are growing at a rapid pace and FMCG products
account for 50 per cent of total rural spending. Revenues of FMCG sector reached Rs 3.4
lakh crore (US$ 52.75 billion) in FY18 and are estimated to reach Rs 6.6 lakh crore in 2020.
The market research firm analyzed the FMCG sector growth at 8-9 percent, since January-
March—the slowest for the period in three years.

Company’s Name Market Share (%)

ITC 12%

Hindustan Unilever (HUL) 10%

Nestlé 3%

Britannia 3%

Patanjali Ayurved 2%

Dabur 2%

Godrej Group 2%

Marico 1%

GlaxoSmithKline 
1%
(GSK)

Colgate 1%
IMPACT OF COVID-19 OVER FMCG Companies:

• Godrej Consumer Products is stepping up production of soaps, hand washes and

sanitizers. Managing director Vivek Gambhir said soap production is up 30% and
hand washes by 3.5 times. Soap prices have been kept unchanged. “It’s a combination
of our own plant and third-party manufacturers with spare capacities, which will come
up into effect by April. The situation is pretty dynamic right now”

• ITC has intensified efforts to ensure adequate supply of all food products and staples
including atta and noodles, said Hemant Malik, divisional chief executive, foods.

• Mayank Shah, category head at Parle Products, “We are seeing a surge in demand for
two weeks and don’t want any unnecessary panic with supply shortages and prices
going up. We want to ensure we don’t go out of stock at any point of time,” which has
raised production 10-15% and will review this on a weekly basis depending on
demand.

• India’s largest dairy company Amul India said the company has increased production
by 15-20% for its biggest-selling products such as tetrapak milk, paneer, cheese and
butter. “This is to ensure supplies considering there are shortages,” said Amul
managing director RS Sodhi. “We would review the production level once every trade
partner is stocked again. However, products for hotels and restaurants have taken a
beating, so we have enough capacities.” Sodhi took to Twitter and other social media
platforms to ask consumers not to hoard stock and said supplies were ample.

 TOP 4 FMCG COMPANIES

Hindustan Unilever Limited (HUL)

The Journey of the company was started in 1933 and has head office in Mumbai. It is
INDIA’S largest FMCG company with a historical presence of over 80 years. 9 out of 10
Indian households use one or more of HUL products Company has been manufacturing
products that includes foods, beverages. Over 17000 employees are working in different
units of company. Company has distributers in every part of India and over 2 million
retail shops are selling HUL products.
NESTLE INDIA:

Nestle is a Switzerland based company, that has started operations in India after seeing
growth opportunity. Till date company has launched more than 2000 brands and has been
selling their products across the globe. In India, company has 8 manufacturing units with
latest technology in manufacturing process. In the area of social responsibility, nestle has
been working hard and helped more than 15 Million children's to live a better life. Overall,
Nestlé owns over 2000 brands in over 150 countries. Nestle India reported a net profit of Rs
595.41 crore up 33.46% in the quarter ended September 30, 2019 due to lower tax expenses
and strong domestic sales.

ITC LIMITED

ITC Limited is an Indian multinational company headquartered in Kolkata. Established in

1910 as the 'Imperial Tobacco Company of India Limited', the company was renamed as
the 'India Tobacco Company Limited' in 1970 and in September 1974 they renamed as 'ITC
Limited' The company completed 100 years in 2010 and it employs over 30,000 people at
more than 60 locations across India. ITC Ltd sells 81% of the Cigarettes, Bidi in Asia, where
275 million people use tobacco products and the total cigarette market is worth close to $11
billion.

Britannia:

Britannia Industries Limited is an Indian food-products corporation. Founded in 1892 and

headquartered in Kolkata, it is one of India's oldest existing companies. The company sells
its Britannia and Tiger brands of biscuits, breads and dairy products throughout India and in
more than 60 countries across the world. Company has been listed in stock market and in last
5 years company market share price has been increased by 1000 times.  However, it enjoys a
large market share and is exceedingly profitable. Biscuits account for 90% of Britannia's
annual revenue
DEVELOPMENTS IN FMCG SECTOR:

• The sector witnessed healthy FDI inflows of US$ 15.36 billion, during April 2000 to
June 2019.

• In November 2019, ITC Ltd acquired 33.42 per cent stake in Delectable
Technologies, which is a vending machine start-up.

• Nestle plans to invest Rs 700 crore (US$ 100.16 million) to open a new plant in
Sanand for Maggi.

• ITC to invest Rs 700 crore (US$ 100 million) in food park in Madhya Pradesh

• Patanjali will spend US$743.72 million in various food parks in Maharashtra, Madhya
Pradesh, Assam, Andhra Pradesh and Uttar Pradesh.

• Dabur is planning to invest Rs 250-300 crore (US$ 38.79-46.55 million) for capacity
expansion and is also planning to make acquisitions in the domestic market.

Some of the major initiatives taken by the Government:

• The Government of India has approved 100% FDI in single-brand retail along with
51% FDI in multi-brand retail.

• The Government of India has drafted a new Consumer Protection Bill with special
emphasis on setting up an extensive mechanism to ensure simple, speedy, accessible,
affordable and timely delivery of justice to consumers.

• The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of
the products such as Soap, Toothpaste and Hair oil now come under 18% tax bracket
against the previous 23-24% rate and rates on food products and hygiene products
have been reduced to 0-5% and 12-18% .

• The GST is expected to transform logistics in the FMCG sector into a modern and
efficient model as all major corporations are remodeling their operations into larger
logistics and warehousing.
Porter’s Five Force Model:

Suppliers power:

• E- Commerce is one among the multiple channels for selling the products to the
customers

• Low switching cost for the E-commerce companies.

Buyer’s power:

• Multiple options to choose.

• Cost sensitivity.

Threats of new entry:

• No major barrier for new entrants as initial investment can be less and set up business
is not so complex.

• Lot of funding options for further expansion.

• High growth opportunities.

Threat of substitutes:

• Lot of alternative products available in market.

• No product differentiation.

Competitive Rivalry:

• High exist cost for inventory-based business model.

• High number of established players.

Trends in FMCG Sector:

• Rise in income levels that drives to increase in purchases.

• Rise in rural consumption.

• Favorable FDI policies and Government initiations.

• Adoption of GST.

• Digital transactions and evolving distribution channels.

OPPORTUNITIES:

• Rural consumption has increased, led by a combination of increasing

incomes increased demand for branded products.

• Demand for food services in India is the growing youth population, primarily in the
country’s urban regions.

• The Internet has contributed in a big way, facilitating a cheaper and more convenient
means to increase the reach.

• Investing in R&D to create innovative products.

Challenges:

• Established players in the market.

• COVID-19 may affect the business in various aspects of supply chain, manufacturing,
sales and exports & imports of products will be difficult.