FMCG to clock 18- 20% growth in net sales during Q2 FY’10:...

    FMCG to clock 18- 20% growth in net sales during Q2 FY’10: ASSOCHAM

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    The FMCG sector seems to have finally joined India Inc’s growth party by posting surprising double-digit growth in sales resisting the aftermaths of the downturn. The sector is likely to post a growth of 18 – 20 per cent in the second quarter of the current fiscal, according to The . In the first quarter of current fiscal, the growth in FMCG sector was around 12%.

    The ASSOCHAM Financial Pulse Study titled “Prospects in the FMCG sector“ stated that despite the negative impact of the scanty rainfall, demand from rural India is likely to remain robust complimented by a healthy rise from the urban areas going forward.

    The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of USD 14.7 billion. 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 50 per cent growth in rural and semi-urban India by 2010.

    As per the analysis of the listed companies in FMCG sector by ASSOCHAM, Hindustan Unilever and originates half of their sales from rural India. While Colgate Palmolive India and Marico constitutes near by 37 per cent respectively, however India and drives 25 per cent of sales from rural India. The financial analysis of these FMCG majors, the sector achieved the average growth in net sales by 16.71 per cent in Q1 2009-10, and despite the drought situation it is likely to grow by 18 to 20 per cent in Q2 2009-10.

    (HUL) reported a drop of 2.7 per cent in its net profit in comparison with the Q1 of 2008-09, besides the drop in net profits, the net sales of the company grew by 8 per cent. According to the analysis done by ASSOCHAM Research Bureau the company would achieve 7 per cent growth in its net profit and the net sales would grow by 9.3 per cent in Q2 of FY’10.

    Dabur India increased its net profit by 15.24 per cent, while the net sales of the company grew by 23 per cent in first quarter of 2009-10. In Q2 the company is expected to post 17 per cent growth in net profit while the net sales is likely to grow by 24.2 per cent.

    Colgate Palmolive India Limited, which covers nearly four major segments in FMCG sector, posted growth in net profit of 42.91 per cent and net sales increased by 16.40 per cent in first quarter of 2009-10 over the corresponding period last year. In Q2 2009-10, the company is expected to post a growth of 17 per cent and 45 per cent in net sales segment and net profit respectively.

    Marico industries which is in two major segments of FMCG i.e. hair care and processed foods recorded growth of 58.30 per cent in net profits and the net sales grew by 16.48 per cent in Q1 FY’10. As per the analysis, in Q2 FY’10, the company would achieve 17.52 per cent growth in net sales and the net profit is expected to grow by 63 per cent as against the corresponding period of last year.

    In Q1 FY’10, Nestle India, which is engaged in food business, beverages and processed foods products, recorded 33.80 per cent and 19.70 per cent growth in net sales and net profits respectively while in the second quarter the company is expected to post a growth of 21 per cent in net sales and 35 per cent in net profits.

    The study also analyzes the growth of different segments of FMCG sector in the first two quarters of the current fiscal (FY 2009-10) vis-à-vis the corresponding period of last fiscal.

    The demand of personal and fabric wash market including soaps and toilet soaps which witnessed a growth rate of 14.20 per cent in Q1 of 2009-10 is likely to grow by 15 per cent in Q2 FY’10. HUL and Colgate Palmolive India are the two major companies in this segment. In these two product categories, HUL is likely to grow by 11.10 per cent while Colgate Palmolive would register a growth of 17.30 per cent in their net sales for the second quarter.

    Oral Care segment which includes the tooth past, tooth brush and tooth powder having market size of 33.60 billion has grown by 10.8 per cent in the first quarter of 2009-10. In this segment the major growth has been seen in the tooth brush category. According to the analysis this segment is going to grow 11.50 per cent in the Q2 of 2009-10 and the market size will grow to 34.50 billion.

    Skin care and cosmetics valued at 18.50 billion market size including skin/fairness creams, shaving creams and deodorants grew by 11.52 per cent in the first quarter. This segment is expected to post a growth of 12 per cent in Q2 FY’10.

    Hair care market which valued at nearly 80 billion has grown by 14.68 per cent in Q1. It includes variety of hair oils, shampoos, creams, conditioners, hair dyes etc.
    As the companies are more aggressive in advertisements for this category, the market of hair care segment is likely to grow by 16 per cent in Q2 FY’10.

    The cleaner repellents market covering products like floor cleaners, phenyl and toilet cleaners have grown by 15 per cent in Q1 2009-10. The market size for insecticides and repellents is estimated to be around 10 billion and expected to grow 15.5 per cent in Q2.

    In the food segment which includes processed food and beverages having 71.98 billion market size grown by 17 per cent in Q1. The main players in this segment are Nestle India, Hindustan Unilever Limited and Dabur. In Q2 FY’10, this segment is expected to grow by 19 per cent.

    —IndiaRetailing Bureau