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CHAPTER – IV

PROFILE AND PERFORMANCE ANALYSIS OF FMCG

COMPANIES IN INDIA 4.1 Introduction

The FMCG industry in India include segments like cosmetics, toiletries, glassware,

batteries, bulbs, pharmaceuticals, packaged food products, white goods, house care products,

plastic goods, consumer non-durables, etc.

The FMCG market is highly concentrated in the urban areas as the rise in the income of

the middle income group is one of the major factors for the growth of the Indian FMCG market.

The penetration in the rural areas in India not high as yet and the opportunity of the growth in

these areas is huge by means of enhanced penetration in to the rural market and conducting

awareness programmes in these areas. The scopes for the growth of the FMCG industry are high

as the per capita consumption of the FMCG products in India is low in comparison to the other

developed countries. The manufacturing of the FMCG goods is concentrated in the western and

southern belt of the country1.

The top ten highest purchasing towns in India are as follows.

1. Chandigarh

2. Greater Mumbai

3. Chennai

4. Ahmedabad

5. Vadodara

6. Pune

7. Coimbatore

8. Ludhiana

9. Faridabad

10. Hydrabad 1 [email protected]

59

The following chart clearly indicates that the top ten towns with highest spending on

FMCG products in India.

Figure No. 4.1 Top Ten Towns With Highest Spending on FMCG Products

Source: [email protected]

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4.2 Scope of the Sector The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector

in the economy. A well-established distribution network, intense competition between the

organized and unorganized segments characterize the sector. FMCG Sector is expected to grow

by over 60 per cent by 2010. That will translate into an annual growth of 10 per cent over a

5-year period. It has been estimated that FMCG sector will rise from around Rs 56,500 crores in

2005 to Rs 92,100 crores in 2010. Hair care, household care, male grooming, female hygiene,

and the chocolates and confectionery categories are estimated to be the fastest growing segments,

says an HSBC report. Though the sector witnessed a slower growth in 2002-2004, it has been

able to make a fine recovery since then.

With the presence of 12.2 per cent of the world population in the villages of India, the

Indian rural FMCG market is something no one can overlook. Increased focus on farm sector

will boost rural incomes, hence providing better growth prospects to the FMCG companies.

4.3 Growth Prospects Facilities will improve their supply chain. 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 the country, FMCG companies have immense possibilities for growth. And if the

companies are able to change the mindset of the consumers, i.e. if they are able to take the

consumers to branded products and offer new generation products, they would be able to

generate higher growth in the near future. It is expected that the rural 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 long term. Also, increase in the urban population, along with increase

in income levels and the availability of new categories, would help the urban areas maintain their

position in terms of consumption. At present, urban India accounts for 66 per cent of total FMCG

consumption, with rural India accounting for the remaining 34 per cent2. However, rural India

accounts for more than 40 per ccent 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. 2 http://www.naukrihub.com

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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 Indian FMCG sector is the fourth largest in the economy and has a market size of

$ 13.1 billion. Well established distribution network, as well as intense competition between the

organized and unorganized segments are the characteristics of this sector. FMCG in India has a

strong competitive MNC presence across the entire value chain. It has been predicted that the

FMCG market will reach to $ 33.4 billion in 20153. The middle class and the rural segments of

the Indian population are the most promising market for FMCG, and give brand makers the

opportunity to convert them to branded products.

Most of the product categories like, Jams, Skin Care , Shampoos, etc., in India have low

per capita consumption as well as low penetration level, but the potential for the growth is huge.

The Indian economy is surging ahead by leaps and bounds, keeping pace with rapid urbanization,

increased literacy levels and rising per capita income. The big firms are growing bigger and

small-time companies are catching up as well. According to the study conducted by

A.C .Nielsen, 62 of the top 100 brands are owned by MNCs.

The following table clearly indicates the top ten FMCG companies in India.

3 Business Standard: 19th Sep. 2013.

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Table No. 4.1

The Top 10 FMCG Companies in India

Sl. No. Companies

1 Hindustan Unilever ltd.

2 ITC (Indian Tobacco Company)

3 Nestlé India

4 GCMMF (Amul)

5 Dabur India

6 Asian Paints (India)

7 Cadbury India

8 Britannia industries

9 Procter & Gamble

10 Marico industries Source: naukrihub.com

4.4 Select international consumable FMCG brands The Indian market is obsessed with international brands and especially, when it comes to

the FMCG sector, India is quite lucky that it has got all the major international global brands to

its market. However, though India is lucky to have such brands, the Indian consumer is very

choosy in selecting the brands and especially in the consumable sector, where many brands are

present, but their future is very uncertain.

Indians have upgraded their standards in terms of adopting the global brands, but the

consumer mostly evaluates the brands from the perspective of value-for- money criteria. It is to

notice that the Indian consumer is not price-sensitive; rather, he/she buys the brand based on the

value that it can offer to him/her in lieu of the price he/she pays.

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Table No. 4.2

Select International Consumable FMCG Brands Market Share Matrix 2012

S.No. Successful

brand

International

company

Market

share

Less

successful

brand

International

company

Market

share

1 Colgate Palmolive 38.20% Pepsodent P & G 18%

2 Pepsi Pepsico 40.40% Rc Cola Cott

beverages

2%

3 Lays Pepsico 57% Pringles P & G 19.20%

4 Maggie

Noodles

Nestle 45% Top ramen Nissin foods 20%

5 Maggie

ketchup

Nestle 53% Heinz H.j. Heinz

company

2.20%

6 Orbit Wrigley 25% Happy dent Perfetti van

melle

17%

7 Halls Cadbury 25% Chlormint Perfetti van

melle

20%

8 Dairy milk Cadbury 70% Bar one Nestle 10%

Inference It is observed that among the successful brands of international companies, Dairy milk,

Cadbury secured as first 70 per cent, Lays, Pepsico 57 per cent, Maggie ketchup from Nestlé earns

53 per cent, Maggie Noodles of Nestlé comes 45 percent, Pepsi Pepsico 40.40 per cent, Colgate and

Palmolive 38.20 per cent and Orbit of Wrigley and Hall from Cadbury secures each 25 per cent.

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Simultaneously, the first less successful brand in international company is Top Ramen Nissin

foods and Chlormint of Perfetti vanmelle each 20 per cent, second stands, Pringles of P & G 19.20 per

cent, the third is Pesodent of P & G 18 per cent, fourth is Happy dent of Perfetti vanmelle stands for 17

per cent, fifth brand is Bar one of Nestle 10 per cent, Heinz of H.j. Heinz company 2.20 per cent is

the sixth one, and the last one R c Cola of Hot beverages stands for 2 per cent.

Hence it is concluded that among the successful brand of international companies, Dairy

milk, Cadbury secured as first with 70 per cent, and Simultaneously, the first less successful brand

in international company is Top ramen Nissin foods and Chlormint of Perfetti vanmelle with each 20 per

cent.

4.5 Overview of FMCG retailing in India Fast-moving consumer goods (FMCG) can be defined as packed goods that are consumed

or sold at regular and small intervals. The prices of the FMCG are relatively less and profits

earned through such sales are more volume based. The organized FMCG retailing in India is a

new concept and is fast catching up in urban and semi-urban India.

4.5.1 Hindustan Unilever Limited (HUL) is an Indian consumer goods company based

in Mumbai, Maharashtra. It is owned by Anglo-Dutch company Unilever which owns a 67 per

cent controlling share in HUL. HUL's products include foods, beverages, cleaning agents and

personal care products.

HUL was established in 1933 as Lever Brothers and, in 1956, became known as

Hindustan Lever Limited, as a result of a merger between Lever Brothers, Hindustan Vanaspati

Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and employs over

16,500 workers, whilst also indirectly helping to facilitate the employment of over 65,000

people. The company was renamed in June 2007 as "Hindustan Unilever Limited". Hindustan

Unilever's distribution covers over 2 million retail outlets across India directly and its products

are available in over 6.4 million outlets in the country. As per Nielsen market research data, two

out of three Indians use HUL products.

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HUL has produced many business leaders for corporate India, including Harish

Manwani, the non-executive chairman of HUL and currently the chief operating officer of

Unilever. He is also a member of Unilever Leadership Executive team (ULE), which comprises

the company's top management and is responsible for managing Unilever's profit and loss and

delivering growth across its regions, categories and functions. Sanjiv Mehta was appointed as

the Managing Director and Chief Executive Officer of HUL with effect from 10 October 2013.

He has also been appointed as Executive vice-president, South Asia, Unilever and is also the

executive head of the South Asia cluster for Unilever.

HUL was ranked 4th in the Hewitt Global Leadership Survey 2007 with only GE, P&G

and Nokia ranking ahead of HUL in the ability to produce leaders. A study conducted by Aon

Hewitt, The RBL Group and Fortune in 2011, ranked the company number six in the list of 'Top

Companies for Leaders 2011 Study Results'. The company was awarded the CII- Prize for

Leadership in HR Excellence at the 2nd CII National HR Conclave 2011 held in October 2011.

Hindustan Unilever Limited is an India-based fast-moving consumer goods company.

The Company operates in five segments: Soaps and Detergents, Personal Products, Beverages,

Packaged Foods, and Others. Soaps and Detergents segment include soaps, detergent bars,

detergent powders, detergent liquids and scourers.

Personal Products segment include products in the categories of Oral Care, Skin Care

(excluding soaps), Hair Care, Deodorants, Talcum Powder, Color Cosmetics, Ayush services.

Beverages segment include tea and coffee. Packaged foods segment include Branded Staples

(Atta, Salt, Bread, etc.), Culinary Products (tomato-based products, fruit-based products, soups,

etc.) and Frozen desserts. Others segment include Exports, Chemicals, Water business and infant

Care Products.

4.5.1. a Awards Hindustan Unilever Limited was recognised as the 'Conscious Capitalist of the Year' at

the 2013 Forbes India Leadership Awards.

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HUL won 12 awards overall with 4 Golds, 4 Silvers and 4 Bronzes at the 2013 Emvies

Awards.

HUL ranks number two on Fortune India's 2013 '50 Most Admired Companies list'.

Hindustan Unilever Limited has emerged as the No. 4 'Most Respected Company in

India' in a survey conducted by Business World in 2013.

As per the latest Nielsen Campus Track-business school survey released in February

2013, Hindustan Unilever has emerged as the No.1 employer of choice for B-school

students who will graduate in 2013, across functions. HUL also retained the 'Dream

Employer' status for the 4th year running and continues to be the top company considered

for application by B-School student in India.

In 2012, HUL was recognised as one of the world's most innovative companies by

Forbes. With a ranking of number 6, it was the highest ranked FMCG company.

Hindustan Unilever Limited (HUL) won the first prize at FICCI Water Awards 2012

under the category of 'community initiatives by industry' for Gundar Basin Project, a

water conservation initiative.

Hindustan Unilever Limited won 13 awards at the Emvies 2012 Media Awards organised

by the Advertising Club Bombay in September 2012.

The company bagged four awards at the Spikes Asia Awards 2012, held in September.

The awards included one Grand Prix one Gold Award and two Silver Awards.

HUL's Chhindwara Unit won the National Safety Award for outstanding performance in

Industrial Safety. These awards were instituted by the Union Ministry of Labour and

Employment in 1965.

HUL was one of the eight Indian companies to be featured on the Forbes list of World's

Most Reputed companies in 2007.

In July 2012 Hindustan Unilever Limited won the Golden Peacock Occupational Health

and Safety Award for 2012 in the FMCG category for its safety and health initiatives and

continuous improvement on key metrics.

Pond's Talcum Powder's packaging innovation has bagged a Silver Award at the

prestigious 24th DuPont Global Packaging Award, in May 2012. The brand was

recognised for cost and waste reduction.

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In May 2012, HUL & Star Bazaar bagged the silver award for 'Creating Consumer Value

through Joint Promotional and Event Forecasting' at the 13th ECR Efficient Consumer

Response Asia Pacific Conference.

4.5.1.b Future Plan Unilever launched Sustainable Living Plan on 15 November 2010 at London, Rotterdam,

New York and New Delhi simultaneously.

The Unilever Sustainable Living Plan has three major goals, which Unilever aims to

achieve by 2020:

Help more than one billion people improve their health and well-being

Halve the environmental impact of their products

Source 100 per cent of their agricultural raw materials sustainably

The plan also sets out over 50 social, economic and environmental targets. In 2012

Hindustan Unilever featured in BSE's Greenex – India's first environment friendly equity index

the first environment friendly equity index, which will enable investors take more informed

decisions in the green theme of India.

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Table No. 4.3

The Balance Sheet of Hindustan Unilever Ltd for the year from

March 2010 to March 2014

in Rs. Cr.

Particulars Mar’10

12Months

Mar’11

12Months

Mar’12

12Months

Mar’13

12Months

Mar’14

12Months

Sources of Funds

Total Share Capital 218.17 215.95 216.15 216.25 216.27

Equity Share Capital 218.17 215.95 216.15 216.25 216.27

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 2,364.68 2,443.57 3,296.78 2,457.77 3,060.78

Revaluation Reserves 0.67 0.00 0.00 0.00 0.00

Net worth 2,583.52 2,659.52 3,512.93 2,674.02 3,277.05

Secured Loans 0.00 0.00 0.00 0.00 0.00

Unsecured Loans 0.00 0.00 0.00 0.00 0.00

Total Debt 0.00 0.00 0.00 0.00 0.00

Total Liabilities 2,583.52 2,659.52 3,512.93 2,674.02 3,277.05

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Particulars Mar '10

12 Months

Mar '11

12 Months

Mar '12

12 Months

Mar '13

12 Months

Mar '14

12 Months

Application of Funds

Gross Block 3,581.96 3,531.50 3,564.35 3,868.95 4,162.92

Less: Accum. Depreciation 1,419.85 1,362.40 1,416.88 1,576.05 1,740.86

Net Block 2,162.11 2,169.10 2,147.47 2,292.90 2,422.06

Capital Work in Progress 273.96 288.76 215.45 215.64 319.78

Investments 1,264.08 1,260.67 2,438.21 2,330.66 3,094.12

Inventories 2,179.93 2,810.77 2,516.65 2,526.99 2,747.53

Sundry Debtors 678.44 943.21 678.99 833.48 816.43

Cash and Bank Balance 231.37 1,628.47 1,830.04 1,707.89 2,220.97

Total Current Assets 3,089.74 5,382.45 5,025.68 5,068.36 5,784.93

Loans and Advances 1,068.31 1,061.68 1,131.46 1,604.91 1,377.51

Fixed Deposits 1,660.84 0.00 0.00 0.00 0.00

Total CA, Loans &

Advances 5,818.89 6,444.13 6,157.14 6,673.27 7,162.44

Defered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 5,493.97 5,782.84 5,499.42 6,260.09 6,925.65

Provisions 1,441.55 1,720.30 1,945.92 2,578.36 2,795.70

Total CL & Provisions 6,935.52 7,503.14 7,445.34 8,838.45 9,721.35

Net Current Assets -1,116.63 -1,059.01 -1,288.20 -2,165.18 -2,558.91

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 2,583.52 2,659.52 3,512.93 2,674.02 3,277.05

Contingent Liabilities 468.49 922.92 1,009.23 894.21 991.20

Book Value Rs) 11.84 12.32 16.25 12.37 15.15

Source: Religare Technova

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4.5.2 ITC Limited or ITC is an Indian conglomerate headquartered in Kolkata, West

Bengal. Its diversified business includes five segments: Fast-Moving Consumer Goods (FMCG),

Hotels, Paperboards & Packaging, Agri Business & Information Technology.

Established in 1910 as the Imperial Tobacco Company of India Limited, the company

was renamed as the Indian Tobacco Company Limited in 1970 and further to I.T.C. Limited in

1974. The periods in the name were removed in September 2001 for the company to be renamed

as ITC Ltd. The company completed 100 years in 2010 and as of 2012-13, had an annual

turnover of $8.31 billion and a market capitalisation of $45 billion. It employs over 25,000

people at more than 60 locations across India and is part of Forbes 2000.

ITC is one of India's foremost private sector companies, with a market capitalisation of

nearly $ 20 billion and a turnover of over $ 5 billion. The Group's principal activities are to

manufacture cigarettes and tobacco products. It operates through five main business segments

including Hotels, Paperboards, Specialty Papers and Packaging, Agricultural-Business, and

others. Its Agri Business includes Agri Commodities such as rice soya and leaf tobacco. Others

include information technology services, investments, Golf Resorts etc.

While ITC is an outstanding market leader in its traditional businesses of Cigarettes,

Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its

nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and

Stationery. The group has its operation in and outside India.

ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it

has a leadership position in every segment of the market. It’s highly popular portfolio of brands

includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan,

Berkeley, Bristol and Flake.

ITC was formed on 24 August 1910 under the name of Imperial Tobacco Company of

India Limited, and the company went public on 27 October 1954. The earlier decades of the

company's activities centered mainly around tobacco products. In the 1970s, it diversified into

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non-tobacco businesses. In 1975, the company acquired a hotel in Chennai, which was renamed

the 'ITC-Welcome group Hotel Chola' (now renamed to My Fortune, Chennai). In 1985, ITC

set up Surya Tobacco Co. in Nepal as an Indo-Nepali and British joint venture, with the shares

divided between ITC, British American Tobacco and various independent domestic shareholders

in Nepal. In 2002, Surya Tobacco became a subsidiary of ITC and its name was changed to

Surya Nepal Private Limited.

In 2000, ITC launched the Expressions range of greeting cards, the Wills Sport range of

casual wear, and a wholly owned information technology subsidiary, ITC InfoTech India

Limited. In 2001, ITC introduced the Kitchens of India brand of ready-to-eat gourmet Indian

recipes. In 2002, ITC entered the confectionery and staples segments and acquired the

Bhadrachalam Paperboards Division and the safety matches company WIMCO Limited. ITC

entered the Agarbattis (incense sticks) business in 2003, selling its products under the

Mangaldeep brand. ITC diversified into body care products in 2005. In 2010, ITC launched its

hand-rolled cigar - Armentieres - in the Indian market.

The company began online sales in 2014.

4.5.2.a Awards and Recognitions In 1994 and 1995, the ILTD Division in Chirala and Anaparti won the "Best of all" Rajiv

Gandhi National Quality Award.

ITC features on the Forbes Global 2000 rankings for 2012 at position 841. In the same

rankings, the company's market value placed it as the 184th largest company in the

world. Forbes has also included the company in Asia's Fab 50 Companies list.

In 2013, ITC was ranked the third most admired company in India by Fortune. In 2011,

all of ITC’s super premium luxury hotels were accorded LEED Platinum certification,

making ITC Hotels the ‘Greenest Luxury Hotel Chain in the World’.

In 2010, ITC was ranked 6th amongst global consumer goods companies in sustainable

value creation during 2005-09, by Boston Consulting Group.

It received the National Award for Excellence in Corporate Governance from the Institute

of Company Secretaries of India in 2007.

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In 2006, ITC's e-Chou pal program won the Stockholm Challenge Award 2006 in the

Economic Development category. This program enables over 3.5 million farmers to

access crop-specific and customised information in their native village habitat and

language.

In 2014, The Brand Trust Report, published by Trust Research Advisory, a brand

analytics company, ranked ITC in the 9th position among India's most trusted brands in

the Diversified sector.

The ITC company Balance Sheet is furnished below for the past four years.

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Table No. 4.4

Table Showing Consolidated Balance Sheet of

Indian Tobacco Company from the year March 2010 to March 2014


12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months

Sources of Funds





Init. Contribution Settler 0.00 0.00 0.00 0.00 0.00

Preference Share Application

Money 0.00 0.00 0.00 0.00 0.00

Employee Stock Option 0.00 0.00 0.00 0.00 0.00

Reserves 26,441.64 22,367.72 18,676.74 15,716.09 13,999.37


Net worth 27,236.96 23,157.90 19,458.58 16,489.90 14,440.41

Secured Loans 150.24 0.00 1.89 25.06 0.95

Unsecured Loans 76.40 90.80 105.38 88.69 109.82

Total Debt 226.64 90.80 107.27 113.75 110.77

Minority Interest 203.03 179.89 157.09 140.82 126.38

Policy Holders Funds 0.00 0.00 0.00 0.00 0.00

Group Share in Joint Venture 0.00 0.00 0.00 0.00 27.70

Total Liabilities 27,666.63 23,428.59 19,722.94 16,744.47 14,705.26

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12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months


Gross Block 19,636.62 18,055.17 15,243.34 13,798.71 12,974.91

Less: Accum. Depreciation 6,709.65 5,909.67 5,230.25 4,621.32 4,218.72

Net Block 12,926.97 12,145.50 10,013.09 9,177.39 8,756.19

Capital Work in Progress 3,111.70 2,056.36 2,390.79 1,362.28 1,023.58

Investments 7,284.02 5,981.28 5,206.83 4,867.80 4,996.51

Inventories 8,255.24 7,522.09 6,426.87 5,734.80 5,079.98

Sundry Debtors 2,439.21 1,395.76 1,200.20 1,086.68 1,007.44

Cash and Bank Balance 3,490.19 3,828.30 3,130.12 2,426.87 265.48

Total Current Assets 14,184.64 12,746.15 10,757.19 9,248.35 6,352.90

Loans and Advances 3,376.60 2,424.09 1,733.67 1,748.75 1,548.07

Fixed Deposits 0.00 0.00 0.00 0.00 1,082.03

Total CA, Loans &

Advances 17,561.24 15,170.24 12,490.86 10,997.10 8,983.00

Defered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 7,129.08 6,585.65 5,899.90 5,497.45 4,508.18

Provisions 6,088.22 5,339.14 4,478.73 4,162.65 4,586.48

Total CL & Provisions 13,217.30 11,924.79 10,378.63 9,660.10 9,094.66

Net Current Assets 4,343.94 3,245.45 2,112.23 1,337.00 -111.66

Minority Interest 0.00 0.00 0.00 0.00 0.00

Group Share in Joint

Venture 0.00 0.00 0.00 0.00 40.43


Total Assets 27,666.63 23,428.59 19,722.94 16,744.47 14,705.26

Contingent Liabilities 510.96 2,380.30 2,698.74 2,378.43 315.14

Book Value (Rs) 34.25 29.31 24.89 21.31 37.67

Source: Dion Global Solutions Limited

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4.5.3 Nestlé India is a subsidiary of Nestle S.A. of Switzerland. With seven factories and

a large number of co-packers, Nestlé India is a vibrant Company that provides consumers in

India with products of global standards and is committed to long-term sustainable growth and

shareholder satisfaction.

The Company insists on honesty, integrity and fairness in all aspects of its business and

expects the same in its relationships. This has earned it the trust and respect of every strata of

society that it comes in contact with and is acknowledged amongst India's 'Most Respected

Companies' and amongst the 'Top Wealth Creators of India'.

Nestlé was founded in 1867 on the shores of Lake Geneva in Vevey, Switzerland and its

first product was “Farine Lactée Nestlé”, an infant cereal specially formulated by Henri Nestlé

to provide and improve infant nutrition. From its first historic merger with the Anglo-Swiss

Condensed Milk Company in 1905, Nestlé has grown to become the world’s largest and most

diversified food Company, and is about twice the size of its nearest competitor in the food and

beverages sector.

Nestlé’s trademark of birds in a nest, derived from Henri Nestlé’s personal coat of arms,

evokes the values upon which he founded his Company. Namely, the values of security,

maternity and affection, nature and nourishment, family and tradition. Today, it is not only the

central element of Nestlé’s corporate identity but serves to define the Company’s products,

responsibilities, business practices, ethics and goals.

In 2004, Nestlé had around 247,000 employees worldwide, operated 500 factories in

approx. 100 countries and offered over 8,000 products to millions of consumers universally.

The Company’s transparent business practices, pioneering environment policy and respect for

the fundamental values of different cultures have earned it an enviable place in the countries it

operates in. Nestlé’s activities contribute to and nurture the sustainable economic development

of people, communities and nations.

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Nestlé’s relationship with India dates back to 1912, when it began trading as The Nestlé

Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished

products in the Indian market.

After India’s independence in 1947, the economic policies of the Indian Government

emphasized the need for local production. Nestlé responded to India’s aspirations by forming a

company in India and set up its first factory in 1961 at Moga, Punjab, where the Government

wanted Nestlé to develop the milk economy. Progress in Moga required the introduction of

Nestlé’s Agricultural Services to educate, advice and help the farmer in a variety of aspects.

From increasing the milk yield of their cows through improved dairy farming methods, to

irrigation, scientific crop management practices and helping with the procurement of bank

loans. Nestlé set up milk collection centres that would not only ensure prompt collection and

pay fair prices, but also instill amongst the community, a confidence in the dairy business.

Progress involved the creation of prosperity on an on-going and sustainable basis that has

resulted in not just the transformation of Moga into a prosperous and vibrant milk district

today, but a thriving hub of industrial activity, as well.

4.5.3.1 Operations Nestlé has been a partner in India's growth for over nine decades now and has built a

very special relationship of trust and commitment with the people of India. The Company's

activities in India have facilitated direct and indirect employment and provides livelihood to

about one million people including farmers, suppliers of packaging materials, services and

other goods. The Company continuously focuses its efforts to better understand the changing

lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health

and Wellness through its product offerings. The culture of innovation and renovation within

the Company and access to the Nestlé Group's proprietary technology / Brands expertise and

the extensive centralized Research and Development facilities gives it a distinct advantage in

these efforts. It helps the Company to create value that can be sustained over the long term by

offering consumers a wide variety of high quality, safe food products at affordable prices.

77

Nestlé India manufactures products of truly international quality under internationally

famous brand names such as Nescafé, Maggi, Milkybar, Milo, Kit Kat, Bar-One,

Milkmaid and Nestea and in recent years the Company has also introduced products of daily

consumption and use such as Nestlé Milk, Nestlé Slim Milk, Nestlé Fresh 'N' Natural

Dahi and Nestlé Jeera Raita. Nestlé India is a responsible organization and facilitates initiatives

that help to improve the quality of life in the communities where it operates.

Table No. 4.5

Consolidated Balance Sheet of Nestlé Company for the year from December

2009 to December 2013

Rs. In Crores

Particulars Dec'13 Dec'12 Dec'11 Dec'10 Dec'09

Liabilities 12 Months 12 Months 12 Months 12 Months 12 Months

Share Capital 96.42 96.42 96.42 96.42 96.42

Reserves & Surplus 2272.33 1701.99 1177.54 759.00 484.85

Net Worth 2368.75 1798.41 1273.95 855.41 581.26

Secured Loan .01 .24 .84 .00 .00

Unsecured Loan 1189.48 1049.95 970.03 .00 .00

TOTAL LIABILITIES 3558.24 2848.60 2244.82 855.41 581.26

Assets

Gross Block 4844.28 4368.68 2552.21 1854.70 1640.79

(-) Acc. Depreciation 1474.97 1164.41 976.46 841.96 744.59

Net Block 3369.31 3204.27 1575.75 1012.74 896.20


Investments 851.08 364.86 134.37 150.68 203.26

Inventories 735.93 745.58 734.04 575.95 498.74

Sundry Debtors 84.27 87.57 115.42 63.29 64.19

Cash and Bank 749.36 236.96 227.21 255.29 155.59

Loans and Advances 229.61 180.60 256.36 200.17 184.85

78

Total Current Assets 1799.17 1250.71 1333.03 1094.70 903.36

Current Liabilities 1348.76 1259.51 1113.13 843.68 666.39

Provisions 1407.27 1055.81 1103.83 907.94 834.79

Total Current Liabilities 2756.03 2315.32 2216.96 1751.61 1501.18

NET CURRENT ASSETS -956.86 -1064.61 -883.93 -656.91 -597.82

Misc. Expenses .00 .00 .00 .00 .00

TOTAL

ASSETS(A+B+C+D+E) 3558.24 2848.60 2244.82 855.41 581.26

4.5.4 The Amul Plant Amul is an Indian dairy cooperative, based at Anand in the state

of Gujarat, India. The word amul is derived from the Sanskrit word amulya, meaning

priceless. The co-operative was initially referred to as Anand Milk Federation Union Limited

hence the name AMUL.

Formed in 1946, it is a brand managed by a cooperative body, the Gujarat Co-operative

Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3 million milk

producers in Gujarat. Amul spurred India's White Revolution, which made the country the

world's largest producer of milk and milk products. In the process Amul became the largest

food brand in India and has ventured into markets overseas.

Dr Verghese Kurien, founder-chairman of the GCMMF for more than 30 years (1973–

2006), is credited with the success of Amul. Amul the co-operative registered on 1 December

1946 as a response to the exploitation of marginal milk producers by traders or agents of the only

existing dairy, the Polson dairy, in the small city distances to deliver milk, which often went sour

in summer, to Polson. The prices of milk were arbitrarily determined. Moreover, the government

had given monopoly rights to Polson to collect milk from Anand and supply it to Bombay city.

Angered by the unfair trade practices, the farmers of Kaira approached Sardar Vallabhbhai

Patel under the leadership of local farmer leader Tribhuvandas K. Patel. He advised them to form

a cooperative and supply milk directly to the Bombay Milk Scheme instead of Polson (who did

the same but gave them low prices). He sent Morarji Desai to organise the farmers. In 1946, the

milk farmers of the area went on a strike which led to the setting up of the cooperative to collect

79

and process milk. Milk collection was decentralized, as most producers were marginal farmers

who could deliver, at most, 1–2 litres of milk per day. Cooperatives were formed for each

village, too.

The cooperative was further developed and managed by Dr.Verghese Kurien with H.M.

Dalaya. Dalaya's innovation of making skim milk powder from buffalo milk (for the first time in

the world) and a little later, with Kurien's help, making it on a commercial scale, led to the first

modern dairy of the cooperative at Anand, which would compete against established players in

the market.

4.5.4.a Development of Company The trio's (T. K. Patel, Kurien and Dalaya) success at the cooperative's dairy soon spread

to Anand's neighborhood in Gujarat. Within a short span, five unions in other districts –

Mehsana, Banaskantha, Baroda, Sabarkantha and Surat – were set up. To combine forces and

expand the market while saving on advertising and avoid competing against each other, the

GCMMF, an apex marketing body of these district cooperatives, was set up in 1973. The Kaira

Union, which had the brand name Amul with it since 1955, transferred it to GCMMF. In 1999, it

was awarded the "Best of all" Rajiv Gandhi National Quality Award.

In June 2013, it was reported that the Kaira District Cooperative Milk Producers Union

Limited, better known as Amul Dairy, had signed a tripartite agreement to start a dairy plant in

Waterloo village in upstate New York. The plant will initially manufacture paneer and ghee.

Amul will use an existing dairy plant owned by New Jersey-based NRI Piyush Patel for

manufacturing. The plant is strategically located, as it is close to supply centres from where raw

material is procured, and is near New Jersey, which has a large Indian population. Amul said

that it will be able to produce and supply Amul products in the US as well as Canada and export

it to Europe, under the arrangement.

80

4.5.5.b Awards GCMMF (Amul) won the World Dairy Innovation Awards-2014 of Best Marketing

Campaign for its “Eat Milk with Every Meal” campaign. The finalists and winners in the World

Dairy Innovation Awards 2014 were announced on 17 June 2014 at the 8th Global Dairy

Congress in Istanbul, Turkey. Sh K.M Jhala, Chief General Manager, received the award. Also,

the entry of launch of Amul Kool in PET bottle was chosen as a finalist for the best innovation in

brand extension.

The Table 4.4 showing the sales turnover of the company from 1994 – 95 to 2013 – 14.

Table No. 4.6

Table Showing the Sales Turnover of Nestlé Company from the year

1994 – 95 to 2013-14

Sales Turnover Rs. (million) US$ (in million)

1994-95 11140 355

1995-96 13790 400

1996-97 15540 450

1997-98 18840 455

1998-99 22192 493

1999-00 22185 493

2000-01 22588 500

2001-02 23365 500

2002-03 27457 575

2003-04 28941 616

2004-05 29225 672

2005-06 37736 850

81

Sales Turnover Rs. (million) US$ (in million)

2006-07 42778 1050

2007-08 52554 1325

2008-09 67113 1504

2009-10 80053 1700

2010-11 97742 2172

2011-12 116680 2500

2012-13 137350 2540

2013-14 181434 3024

4.5.5 Dabur India Ltd is one of the leading FMCG Companies in India. The

company is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic

products. They operate in key consumer products categories like Hair Care, Oral Care, Health

Care, Skin Care, Home Care and Foods. The company's FMCG portfolio includes five flagship

brands with distinct brand identities, Dabur as the master brand for natural healthcare products,

Vatika for premium personal care, Hajmola for digestives, Real for fruit juices and beverages

and Fem for fairness bleaches and skin care products.

The origin of Dabur can be traced back to 1884 when Dr. S.K. Burman started a health

care products manufacturing facility in a small Calcutta pharmacy. In 1896, as a result of

growing popularity of Dabur products, Dr. Burman set up a manufacturing plant for mass

production of formulations. In early 1900s, Dabur entered the specialized area of nature-based

Ayurvedic medicines. In 1919, Dabur established research laboratories to develop scientific

processes and quality checks. In 1936, Dabur became a full-fledged company with the name

Dabur India (Dr. S.K. Burman) Pvt Ltd. Dabur shifted its operations to Delhi in 1972.

4.5.5. a Development and Growth Dabur became a Public Limited Company in 1986 and Dabur India Limited came into

existence after reverse merger with Vidogum Limited. In 1992, Dabur entered into a joint

82

venture with Agrolimen of Spain to manufacture and market confectionary items in India. In

1994, Dabur raised its first IPO. In 1998, day to day running of the company was handed over to

professionals. In 2000, Dabur achieved a turnover of Rs 1000 crores. In 2005, Dabur acquired

Balsara. Dabur crossed $ 2 billion market cap in 2006.

Some of the well-known brands of Dabur are: Amla Chyawanprash, Hajmola, Lal

Dantmanjan, Nature Care, Pudin Hara, Babool Toothpaste, Hingoli, Dabur Honey, Lemoneez,

Meswak, Odonil, Real, RealActiv and Vatika.

The company operates through three business units, namely consumer care division

(CCD), international business division (IBD) and consumer health division (CHD). Their CCD

business is divided into four key portfolios: healthcare, personal care, home care and foods.

Their CHD business offers a range of healthcare products. Their IBD business includes brands,

such as Dabur Amla and Vatika. The company has 19 state-of-the-art manufacturing facilities

spread across the globe. Of these, 12 production facilities are located in India with key

manufacturing locations being Baddi (Himachal Pradesh) and Pantnagar (Uttaranchal) besides

seven factories located at Sahibabad (Uttar Pradesh), Jammu, Silvassa, Alwar, Katni,

Narendrapur, Pithampur and Nasik.

The Foods business is serviced by manufacturing facilities at Newai (Rajasthan) and

Siliguri (West Bengal). Outside India, the company has manufacturing facilities in Dubai,

Sharjah, Ras-al- Khaimah, Egypt, Nigeria, Nepal and Bangladesh.

The company has a wide distribution network, covering over 2.8 million retail outlets

with a high penetration in both urban and rural markets. Their products also have a huge

presence in the overseas markets and are available in over 60 countries across the globe. Their

brands are highly popular in the Middle East, SAARC countries, Africa, US, Europe and Russia.

Dabur India Ltd was incorporated on September 16, 1975 for manufacture of high-grade edible

& industrial guargum powder and its sophisticated derivatives. In the year 1978, the company

launched Hajmola tablet, an Ayurvedic medicine used as a digestive aid. In the year 1979, they

set Dabur Research Foundation.

83

Also, they commenced commercial production at the most modern herbal medicines plant

in Sahibabad. In the year 1986, the company was converted into a public limited company. In the

year 1988, they launched the pharmaceutical medicines. In the year 1989, the company

converted the Ayurvedic digestive formulation into a children's fun product with the launch of

Hajmola Candy. In the year 1992, they launched a new range of coconut oil under the brand

name 'Anmol'. Also, they developed Dab 10, an intermediate for anti-cancer drug namely Taxol.

The company entered into a joint venture agreement with Guldenhorst BV Netherland to

form a company for manufacture and marketing of all types of bubble gum, chewing gum,

toffees, chocolate, cocoa related products and sugar based spreading creams etc. In the year

1994, the company entered into capital market with their public issue. Also, they entered into

oncology segment during the year. In the year 1996, the company entered into foods business

with the launch of Real Fruit Juice, the first local brand of 100 per cent pure natural fruit juices

made to international standards.

In 1997, the company set up a new manufacturing unit with a high degree of automation

at Baddi (H.P.) to produce company's well-known brands, namely Chyawanprash, Janma Ghunti,

Ayurvedic Oils and Asva-Arishtas. In the year 1998, Burman family handed over management

of the company to professionals. The company signed a joint venture with Bongrain International

SA of France to form a new company under the name of Dabon International Ltd. In the year

1999, the company entered into an agreement with their Spanish partner Agrolimen to offload

their 49% stake in the joint venture company General De Confiteria India Ltd in favour of an

Agrolimen group company. In the year 2000, the company launched Efarelle Comfort, a natural

menstrual pain reliever.

Also, the company's ayurvedic specialties division launched plain isabgol husk under the

brand name Nature Care. In the year 2001, the company entered into the highly specialized area

of cancer therapy In the year 2003, the company demerged their pharmaceuticals business from

the FMCG business into a separate company as part of plans to provider greater focus to both the

businesses.

84

With this, the company now largely comprises of the FMCG business that include

personal care products, healthcare products and Ayurvedic Specialities, while the

Pharmaceuticals business would include Allopathic, Oncology formulations and Bulk Drugs.

Dabur Oncology Plc, a subsidiary of Dabur India, would also be part of the Pharmaceutical

business.

Also, they made a tie-up with Free Markets Inc for using leading edge technologies to

execute online markets for its procurement needs. In the year 2005, the company acquired

Balsara's Hygiene and Home products businesses, a leading provider of Oral Care and

Household Care products in the Indian market for the consideration of Rs 143-crore all-cash

deal. In the year 2006, Besta Cosmetics Ltd was amalgamated with the company with effect

from April 1, 2006. Also, the company incorporated a subsidiary company under the name Asian

Consumer Care Pakistan Pvt Ltd to sell FMCG products in Pakistan. In the year 2007, Dabur

Foods Ltd was amalgamated with the company with effect from April 1, 2007 to extract

synergies and unlock operational efficiencies.

In the year 2008, they acquired Fem Care Pharma, a leading player in the women's skin

care market. During the year 2009-10, the company acquired 20 per cent of the equity share

capital of Fem Care Pharma Limited (FEM) from the public shareholders, in addition to the

controlling stake of 72.15 per cent acquired from their existing promoters thereby increasing the

total controlling stake to 92.15 per cent. Also, as per the scheme of amalgamation, Fem Care

Pharma Ltd was amalgamated with the company with effect from April 1, 2009.

The scheme became effective on June 18, 2010 During the year 2010-11, the company

acquired Turkey's leading personal care products maker Hobi Kosmetik Group, a leading

personal care products through Dabur International Ltd, a wholly owned subsidiary of the

company for USD 69 million.

In January 2011, they acquired 100 per cent equity in Namaste Laboratories LLC of the

US, a leading ethnic hair care group based in Chicago with operations in US, Europe and Africa,

through Dermoviva Skin Essentials Inc, a wholly owned subsidiary of the Company for USD

85

100 million. They launched India's first fruit-flavoured Chyawanprash. Dabur Chyawanprash

was launched in Orange and Mango flavoured variants. In the year 2011, the company launched

their first-ever online shopping portal www.daburuveda.com.

With this, the company is the first Indian FMCG company to launch a dedicated online

shopping portal for its beauty products range. The portal will be the online gateway for

consumers to know, understand, buy and gift the exclusive Dabur Uveda range of skincare

products. The company acquired Ajanta Pharma's over-the-counter energizer brand '30-Plus'. In

January 31, 2012, the company's step down subsidiary, Zeki Plastik Imalati Sanayi ve Ticaret

Anonim Sirketi merged with another step down subsidiary - Hobi Kozmetik Imalat Sanayi Ve

Ticaret Anonim Sirketi. Accordingly, Zeki Plastik Imalati Sanayi ve Ticaret Anonim Sirketi

ceased to be the company's step down subsidiary company with effect from January 31, 2012.

4.5.5. a Awards and Achievements of Dabur India Ltd Dabur India Ltd CEO Mr. Sunil Duggal ranked amongst India’s Best CEOs by Business

Today.

Mr. Sunil Duggal ranked by analysts as the Top Performing CEO in Asia in the

Consumer space. The list was released in the International Institutional Investor

magazine.

Dabur Chairman Dr. Anand Burman named the Ernst & Young Entrepreneur Of The

Year 2011 in the Consumer Products Sector.

Dr. Anand Burman ranked amongst India’s Most Powerful CEOs by Economic Times

Corporate Dossier.

86

Table No. 4.7

Table Showing The Consolidated Balance Sheet of Dabur India Ltd

from the year March 2010 to March 2014

Rs. In Crores


12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months

Source of Funds

Owners fund

Equity share capital 174.38 174.29 174.21 174.07 86.76

Share application money - - - - 0.14

Preference share capital - - - - -

Reserves & surplus 1,727.96 1,420.49 1,128.28 927.09 662.48

Loan funds

Secured loans 17.79 22.47 19.12 17.57 24.27

Unsecured loans 26.50 219.11 254.15 235.78 81.80

Total 1,946.63 1,836.36 1,575.76 1,354.51 855.45

Uses of funds

Fixed assets

Gross block 1,017.04 937.70 883.23 766.88 687.23

Less : revaluation reserve - - 0.78 - -

Less : accumulated

depreciation 363.39 321.12 297.90 269.32 236.28

Net block 653.65 616.58 584.55 497.56 450.95

Capital work-in-progress 16.73 17.07 25.12 11.92 23.31

Investments 1,118.42 729.41 552.72 519.23 348.51

Net current assets

Current assets, loans &

advances 1,333.00 1,464.83 1,647.64 1,317.26 941.77

Less : current liabilities &

provisions 1,175.17 991.53 1,288.10 1,074.41 911.83

87

Total net current assets 157.83 473.30 359.54 242.85 29.94

Miscellaneous expenses

not written - - 53.83 82.95 2.74

Total 1,946.63 1,836.36 1,575.76 1,354.51 855.45

Notes: Mar’14

12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months

Book value of unquoted

investments 742.80 434.33 342.49 101.60 98.60

Market value of quoted

investments 377.26 295.06 210.23 421.02 250.52

Contingent liabilities 1,338.05 1,719.07 1,337.82 1,075.89 173.48

Number of equity shares

outstanding accounts) 17438.13 17429.35 17421.01 17407.24 8675.86

Source : Secondary data

88

4.6 Asian Paints is India's largest paint company in India and Asia's third largest paint

company with a turnover of Rs. 54.63 billion. The company operates in 20 countries and has 28

paint manufacturing facilities in the world servicing consumers in over 65 countries.

Besides Asian Paints, the group operates around the world through its

subsidiaries BergerInternational Limited, ApcoCoatings, SCIBPaints and Taubmans. Forbes Glo

bal magazine USA ranked Asian Paints among the 200 Best Small Companies in the World for

2002 and 2003 and presented the 'Best under a Billion' award, to the company. The present MD

& CEO of the company is P.M. Murty.

The company has come a long way since its small beginnings in 1942. Four friends who

were willing to take on the worlds biggest, most famous paint companies operating in India at

that time set it up as a partnership firm. Chimanlal Choksi, Champaklal Choksey, Suryakant

Dani and Arvind Vakil were the four friends who started the company. Suryakant Dani owned a

garage where he did the painting work for Machines & vehicles. The same garage is where Asian

Paints started off its operations. Over the course of 25 years Asian Paints became a corporate

force and India's leading paints company. Driven by its strong consumer-focus and innovative

spirit, the company has been the market leader in paints since 1968. Today it is double the size

of any other paint company in India. Asian Paints manufactures a wide range of paints for

Decorative and Industrial use.

4.6.1 Operations The company at present has vertically integrated in diverse products such as Ophthalmic

Anhydride and Pentaerythritol, which are used in the paint manufacturing process. Asian Paints

along with PPG Inc, USA, one of the largest automotive coatings manufacturers in the world has

begun a 50:50 joint venture, Asian PPG Industries to service the increasing requirements of the

Indian automotive coatings market. Another wholly owned subsidiary, Asian Paints Industrial

Coatings Limited has been set up to cater to the powder coatings market which is one of the

fastest growing segments in the industrial coatings market.

89

Asian Paints operates in 22 countries across the world. It has manufacturing facilities in

each of these countries and is the largest paint company in ten overseas markets. Asian Paints

operates in five regions across the world viz. South Asia, Southeast Asia, South

Pacific, Middle East and Caribbean region through the five corporate brands viz. Asian Paints,

Berger International, SCIB Paints, Apco Coatings and Taubmans. In ten markets, it operates

through its subsidiary, Berger International Limited; in Egypt through SCIB Paints; in five

markets in the South Pacific it operates through Apco Coatings and in Fiji and Samoa it also

operates through Taubmans.

In October 2008 the company acquired Sri Lanka's second largest paint company,

spending nearly about Rs 360 million ($8 million) for this deal. With the acquisition of Delmege

Forsyth & Co, ended two years of inertia caused by a split within Asian Paints’ four founding

families. With that chapter closed, India’s biggest paints maker can now focus on challenging

Sherwin-Williams Co, whose ‘Dutch Boy’ brand is the world market leader.

4.6.1.a Awards and Recognition Awarded the "Sword of Honour" by the British Safety Council for all the paint plants in

India. This award is considered as the pinnacle of achievement in safety across the world.

Forbes Global magazine, USA ranked Asian Paints amongst the 200 'Best Small

Companies of the world' in 2002 and 2003 and amongst the top 200 'Under a Billion

Firms' of Asia in 2005.

Ranked 24th amongst the top paint companies in the world by Coatings World - Top

Companies Report 2006.

The Asset - one of Asia's leading financial magazine ranked Asian Paints amongst the

leading Indian companies in Corporate Governance in 2002 and 2005.

Received the Ernst & Young "Entrepreneur of the Year - Manufacturing" award in 2003.

90

Table No.4.8

Table Showing the Consolidated Balance Sheet of Asian Paints from the Year


Rs. in Crores


12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months

Source of Funds

Owners fund

Equity share capital 95.92 95.92 95.92 95.92 95.92

Share application money - - - - -

Preference share capital - - - - -

Reserves & surplus 3,505.01 2,926.34 2,391.86 1,879.40 1,461.30

Loan funds

Secured loans 6.65 9.28 17.01 23.43 25.59

Unsecured loans 32.86 37.48 151.21 40.70 40.70

Total 3,640.44 3,069.02 2,656.00 2,039.45 1,623.51

Uses of funds

Fixed assets

Gross block 2,908.10 2,803.73 1,659.51 1,611.22 1,194.39

Less : revaluation reserve - - - - -

Less : accumulated

depreciation 895.90 701.84 650.47 554.03 486.93

Net block 2,012.20 2,101.89 1,009.04 1,057.19 707.46

Capital work-in-progress 37.95 52.55 827.30 67.32 380.72

Investments 1,030.19 449.70 542.22 1,034.76 703.69

Net current assets

Current assets, loans &

advances 3,601.37 2,410.26 2,626.85 1,729.79 1,364.85

Less : current liabilities &

provisions 3,041.27 2,579.26 2,349.41 1,849.61 1,533.21

91

Total net current assets 560.10 -169.00 277.44 -119.82 -168.36

Miscellaneous expenses

not written - - - - -

Total 3,640.44 2,435.14 2,656.00 2,039.45 1,623.51

Notes:

Book value of unquoted

investments 362.12 235.63 222.79 632.33 155.31

Market value of quoted

investments 870.91 391.03 210.08 568.57 186.79

Contingent liabilities 447.75 464.28 414.71 505.87 223.80

Number of equity shares

outstanding (Lacs) 9591.98 959.20 959.20 959.20 959.20

Source: Secondary data.

92

4.7 Cadbury is a British multinational confectionery company owned by Mondelez

International. It is the second largest confectionery brand in the world after Wrigley's. Cadbury is

headquartered in Uxbridge in Greater London and operates in more than fifty countries

worldwide.

Cadbury is best known for its confectionery products including the Dairy Milk chocolate,

the Creme Egg, and the Roses selection box. Cadbury was established in Birmingham in 1824,

by John Cadbury who sold tea, coffee and drinking chocolate. Cadbury developed the business

with his brother Benjamin, followed by his sons Richard and George. George developed

the Bournville estate, a model village designed to give the company's workers improved living

conditions. Dairy Milk chocolate, introduced in 1905, used a higher proportion of milk within

the recipe compared with rival products. By 1914, the chocolate was the company's best-selling

product. Cadbury merged with J. S. Fry & Sons in 1919, and Schweppes in 1969. Cadbury was

a constant constituent of the FTSE 100 from the index's 1984 inception until the company was

bought by Kraft Foods in 2010.

In 1824, John Cadbury began selling tea, coffee, and drinking chocolate in Bull Street

in Birmingham, England. From 1831 he moved into the production of a variety of cocoa and

drinking chocolates, made in a factory in Bridge Street and sold mainly to the wealthy because of

the high cost of production. In 1847 John Cadbury became a partner with his brother Benjamin

and the company became known as "Cadbury Brothers". The brothers opened an office in

London, and in 1854 they received the Royal Warrant as manufacturers of chocolate and cocoa

to Queen Victoria.

The company went into decline in the late 1850s. John Cadbury's

sons Richard and George took over the business in 1861. At the time of the takeover, the

business was in rapid decline: the number of employees had reduced from 20 to 11, and the

company was losing money. By 1864 Cadbury was profitable again. The brothers had turned

around the business by moving the focus from tea and coffee to chocolate, and by increasing the

quality of their products.

93

The firm's first major breakthrough occurred in 1866 when Richard and George

introduced an improved cocoa into Britain. A new cocoa press developed in the Netherlands

removed some of the unpalatable cocoa butter from the cocoa bean. The firm began exporting

its products in the 1870s. In the 1880s the firm began to produce chocolate confectioneries.

In 1878 the brothers decided to build new premises in countryside four miles from

Birmingham. The move to the countryside was unprecedented in business. Better transport

access for milk that was inward shipped by canal, and cocoa that was brought in by rail from

London, Southampton and Liverpool docks was taken into consideration.

With the development of the Railway along the path of the Worcester and Birmingham

Canal, they acquired the Bournbrook estate, comprising 14.5 acres (5.9 ha) of countryside 5

miles (8.0 km) south of the outskirts of Birmingham. Located next Stirchley Street railway

station, which itself was opposite the canal, they renamed the estate Bournville and opened the

Bournville factory the following year.

In 1893, George Cadbury bought 120 acres (49 ha) of land close to the works and

planned, at his own expense, a model village which would 'alleviate the evils of modern more

cramped living conditions'. By 1900 the estate included 314 cottages and houses set on 330 acres

(130 ha) of land. As the Cadbury family was Quakers there were no pubs in the estate.

In 1897, following the lead of Swiss companies, Cadbury introduced its own line of milk

chocolate bars.

In 1899 Cadbury became a private limited company.

4.7.1 Operations As of 2013 Cadbury operates its head office at the Cadbury House in the Uxbridge

Business Park in Uxbridge, London Borough of Hillingdon, England. The building occupies

84,000 square feet (7,800 m2) of space inside Building 3 of the business park. Cadbury, which

leases space in the building it occupies, had relocated from central London to its current head

office.

94

Cadbury previously maintained its head office was at 25 Berkeley Square

in Mayfair, City of Westminster. In 1992 the company leased the space for £55 per 1 square foot

(0.093 m2). In 2002 the company agreed to pay £68.75 per square foot. The Daily

Telegraph reported in 2007 that the rent was expected to increase to a "three-figure sum". In

2007 Cadbury Schweppes had announced that it would move to Uxbridge to cut costs. As of that

year the head office had 200 employees. After Kraft Foods acquired Cadbury, Kraft announced

that the Cadbury head office would remain the "Cadbury House".

Cadbury India began its operations in India in 1948 by importing chocolates. It now has

manufacturing facilities in Thane, Induri ( Pune ) and Manalpur (Gwalior), Hydrabad, Bangalore

and Baddi ( Himachal Pradesh) and sales office in New Delhi, Mumbai, Kolkatta and Chennai.

The corporate head office is in Mumbai. The head office is presently situated at Pedder Road,

Mumbai, under the name of "Cadbury House".

This monumental structure at Pedder Road has been a landmark for the citizens of

Mumbai since its creation. Since 1965 Cadbury has also pioneered the development of cocoa

cultivation in India. For over two decades, Cadbury has worked with the Kerala Agricultural

University to undertake cocoa research

4.7.2 Awards and achievements of Cadbury’s India Ltd Apart from pioneering the cultivation of cocoa in India in 1965, this company of India

has earned many respectable awards while their operation lasting for over 60 years in the

country. Names of some of the most recent awards won by this Indian chocolate company are

mentioned in the table below:

95

Table No. 4.9

Awards and Achievements of Cadbury’s India Ltd

Sl. No. Name of Award or

Recognition Year Details of Award or Recognition

1 A. P. P. I. E. S. Awards

(Gold Standard) 2011

For the campaign of the "Shubh Aarambh"

of Cadbury Dairy Milk

2

U. A. and P. (University of

Asia and Pacific) Tambuli

Awards

2011

Silver Trophy in the category of Best

Insights and Strategic Thinking and Bronze

Trophy in Best Creative Ideas and Execution

for the campaign of ‘Mithaas’ of Cadbury

Celebrations during Diwali

3 Asian Marketing

Effectiveness Award 2011

Gold Medal in Strategic Thinking and

Insights Category for the campaign of Shubh

Aarambh

4 Goa Fest Creative Abby

Awards 2011

8 Awards between the campaigns for

"Shubh Aarambh" as well as "Diwali

Celebrations" and Grand Prix for the 1st one

5 Make - A - Wish

Corporate Partner Award 2011

This is an award from the U. S. based Make

– A - Wish foundation

6 India’s Most Respected

Companies 2011

As per the survey of Business World

Magazine, this company occupied the 3rd

rank in F. M. C. G. sector

7 Best Companies to Work

For 2011

Ranked 6th in the Business Today

Magazine’s survey of the durables sector

96

4.8 Britannia is a Mutual Insurance Association of ship-owners throughout the world,

which is registered in the United Kingdom (see details at bottom of the page), authorised by the

Prudential Regulation Authority ("PRA") and is regulated by the PRA and the Financial Conduct

Authority ("FCA"), reference number 202047.

The fundamental distinction between a Mutual and other types of insurance company is

that a Mutual is not trying to make a profit, has no shareholders and exists purely for the benefit

of its Members. The funds of the Mutual are invested and the investment return is used to benefit

the Members. The Members are both the insurer and the insured. Mutual insurance is collective

self-insurance which operates at cost. A Committee, comprising up to 30 Directors - 26 elected

from the membership - determines matters of policy on the advice of the Managers, Tindall Riley

(Britannia) Limited to whom the day-to-day management of Britannia is delegated. The

Chairman and Chief Executive of the Managers are members of the Committee.

4.8.1 Formation and Development On May 1 1855, the day the UK Merchant Shipping Act 1854 came into force, the Ship

owners’ Mutual Protection Society commenced business in London as the first ship owners’

Protection Association. Whilst the 1854 Act did provide ship-owners, for the first time, with a

measure of limitation of liability for loss of life and personal injury - it stipulated that the value

of the ship for limitation purposes should be assessed at not less than £15 per ton - many ships in

fact had a lower value and the ship owner’s liabilities potentially exceeded the value of his ship.

It was such liabilities, not covered by the conventional marine market, which the Protection

Society met.

The Britannia Steam Ship Insurance Association was formed in 1871 as a mutual

insurance association for steamships with Classes 1 and 2 covering hull and machinery risks and

freight risks respectively. Five years later Class 3 of Britannia took over the protection risks

which had until then been covered by the Shipowners' Mutual Protection Society. The first two

Classes were subsequently wound up but Class 3 has continued to the present day to cover the

liability risks of shipowners. In 1886 Britannia became a Protection & Indemnity (P&I) Club by

treating cargo or 'indemnity' risks separately from the other 'protection' risks. Over succeeding

97

years cover was widened to meet the increasing liabilities of shipowners. In 1899 Britannia

joined five other P&I Clubs in a Pooling Agreement to share the cost of exceptionally large

claims. Today thirteen Clubs are parties to the Agreement. Together they cover over 90 per cent

of the world's merchant fleet and form the core of the International Group of P&I Clubs.

Since its inception the cover provided by the Association has developed to meet the needs

of different types of ships and to respond to the impact of new legislation and regulations around

the world. For example, cover was expanded to include new oil pollution liabilities under the

1969 Civil Liability Convention which followed the 1967 Torrey Canyon disaster. Oil pollution

has since become an increasingly high profile risk. Nevertheless, traditional risks involving loss

of life, personal injury, collisions, property damage and cargo claims still account for much the

greater part of the cost of claims insured by Britannia.

While Class 3 (P&I) is by far the largest area of Britannia's business, it also conducts

insurance business through Class 6 (Freight, Demurrage and Defence - legal expenses

insurance).

4.8.2 Growth Britannia has grown substantially in the last 50 years. In 1960 the gross tonnage entered

in the Association was 3 million. By 1970 it had reached 10 million and by 1980 had quadrupled

to 40 million. Britannia now insures approximately 138 million tons of owned and chartered

tonnage and is one of the largest P&I Clubs, accounting for over 10 per cent of the world

merchant fleet, with many of the world's best-known ship owners as Members.

4.8.3 Service, Strength and Quality Britannia is determined to maintain a position at the forefront of the P&I insurance world.

The principal factors which have governed its successful progress and which will provide the

foundation for its future development are:

98

A high quality membership selected from the world's leading shipowners.

A thorough understanding of Members' businesses backed up by a realistic risk

management programme.

Prudent underwriting leading to unrivalled predictability of insurance cost.

The application of legal, marine and commercial expertise in the active management of

claims so as to minimize Members' ultimate liabilities.

A successful investment policy which has made a substantial contribution to the reduction

of Members' costs.

A world-wide network of correspondents, including many who are exclusive to Britannia,

who provide assistance to Members on all aspects of P&I.

A highly motivated management team which keeps close control on all aspects of the

business.

Financial strength, underpinned by total assets of over US$1 billion.

In summary, the objective is to provide a strong membership with high quality service at

low cost.

99

Table No. 4.10

Balance Sheet of Britannia Company from the Year



12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months

Source of Funds





Reserves 829.47 612.50 496.15 427.41 372.36


Networth 853.46 638.70 520.04 451.30 396.25

Secured Loans 4.62 5.23 0.58 407.76 408.10

Unsecured Loans 0.00 189.24 27.57 23.68 21.51

Total Debt 4.62 194.47 28.15 431.44 429.61

Total Liabilities 858.08 833.17 548.19 882.74 825.86

100


12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months


Gross Block 929.10 777.53 673.06 593.56 547.83

Less: Accum. Depreciation 383.44 325.85 293.97 289.86 266.33

Net Block 545.66 451.68 379.09 303.70 281.50


Investments 372.99 279.60 428.94 545.00 490.64

Inventories 366.86 331.49 382.28 311.20 268.34

Sundry Debtors 53.69 77.12 52.14 57.27 39.49

Cash and Bank Balance 65.78 64.48 30.94 27.25 18.11



Fixed Deposits 0.00 0.00 0.00 1.50 5.25

Total CA, Loans &

Advances 828.57 823.31 784.58 648.33 552.19

Deffered Credit 0.00 0.00 0.00 0.00 0.00


Provisions 325.38 272.96 241.62 219.33 165.02

Total CL & Provisions 986.36 849.86 1,124.15 625.96 510.10

Net Current Assets -157.79 -26.55 -339.57 22.37 42.09


Total Assets 858.08 833.17 548.19 882.76 825.87

Contingent Liabilities 250.36 351.20 71.71 359.63 318.67

Book Value (Rs) 71.17 53.24 43.54 37.78 165.86

Source: Secondary data

101

4.9 Procter and Gamble Company (P&G) was founded by William Procter and

James Gamble, in 1837. Both men were immigrants to the United States. The company began

by selling soap and candles, but after the invention of Edison's electric light bulb in 1850,

candle sales were so slow that they stopped production. Things looked up, however, because the

U.S. Government began to order loads of soap from Procter and Gamble for Union soldiers

during the Civil War. With the increase of production demands, the company began

to investigate more productive and less time-consuming ways to make soap. That eventually

led the firm to many more innovative ideas and many more lines of soap, for hair, laundry, and

eventually dishwashers. Other kinds of products would be born as well.

The two men might not have met had they not married the sisters Olivia and Elizabeth

Norris. Their new father-in-law suggested that they become business partners. In 1837, the

Procter and Gamble Company was born. With intentions of heading farther west than they

managed, William Procter (emigrating from England), and James Gamble (emigrating from

Ireland), settled in Cincinnati, the "Queen City of the West." Procter had a sick wife to look

after, while Gamble had medical problems of his own to overcome. Those factors compelled the

future proprietors to "stay put," so that destiny would ensure a great company in Ohio. After

Proctor's wife died of a terminal illness, he quickly prospered as a candle maker. Meanwhile,

Gamble was making ends meet as an apprentice soap maker. A few months later, on April 12th,

1837, Procter and Gamble started to make and sell mass quantities of candles and soap.

In 1859, 22 years after the partnership was formed, P&G had reached $1 million in total

sales, in spite of declining candle sales. Fortunately, three years later during the Civil War,

Procter and Gamble was awarded numerous contracts to supply soap and candles to Union

armies. Those orders kept the factory of 80 employees busy day and night. The fact that P&G

supplied soldiers enhanced the company's reputation for heavy-duty quality. That was

reinforced when troops came home from the war carrying P&G's soap among their belongings.

By the year 1879, a new generation of the company was emerging - while unveiling

improved ideas. Founders' sons Harley Procter and Norris Gamble helped to put a new spark

102

into P&G. Norris Gamble developed an inexpensive white soap equal to the former high-

quality, imported castiles.

Inspiration for the soap's name-Ivory-came to Harley Procter, where he would place

$11,000 towards well-spent advertising. The name became an ideal match for the soap's virtual

purity ("99 and 44/100ths percent pure"), mildness, and long-lasting quality. By 1890, P&G

was selling more than 30 types of soap, including Ivory. The year 1890 also brought an end to

53 years of the business as a partnership. The partners incorporated, and raised additional

capital for expansion. William A. Procter, one of two sons of the founder, was then named the

first president. P&G then set up one of the earliest product research labs in America at Ivory

dale (a newly constructed plant in Cincinnati) to study and improve the soap-making process. In

1907, following the death of his father, William A. Procter, a new president was named,

William C. Procter.

4.9.1 Expansion and Crisco The year 1911 saw the introduction of P&G's new Crisco product, and by 1915, the

company built its first manufacturing facility outside of the United States, in Canada. The plant

employed 75 people. By 1943, following the passing of William C. Procter, new president

Richard R. Deupree continued the company's robust progress. The introduction of hair products

and household cleaning products gained the growing company even more ground, responding to

an increasing demand for daily consumer products. When Dupree took the helm in 1930, he

didn't take long to supply the Far East with such products - by means of the Philippine

Manufacturing Company.

4.9.2 Household products and pharmaceuticals P&G weathered the Great Depression and World War II kept it perking. Most people

who grew accustomed to P&G's convenience products couldn't put them down. What that

allowed was more research and development of past products as well as newly introduced

"conveniences."

103

By 1978, Procter and Gamble seemed to have covered all bases in household products.

From "Tide" laundry detergent to feminine products, P&G dominated the industry with

company expansions throughout Japan, China, Europe, and other parts of the world. The

company's introduction of pharmaceuticals in the form of Didronel (a treatment for Paget's

disease), spurred a further upward spiral of corporate profits.

Today, after nearly two centuries of research, development, and expansion, there are

more than 300 P&G products available to the general public. If you brush your teeth, wash your

hair, or take a prescription drug, chances are good that what you're using originated in a Procter

and Gamble plant.

4.9.3 Awards and Achievements Each day, we strive to touch and improve the lives of the world's consumers. That is our

single focus and we are humbled when we are recognized by leading publications and

organizations for these efforts.

P&G was ranked 3rd on Barron's "World's Most Respected Companies 2010" list,

maintaining its position from the 2009. This marks the sixth consecutive year the

company has been recognized.

Fortune Magazine ranked P&G #8 on its "America's Most Admired" list and #6 on its

"Global Most Admired" list. P&G was also listed #1 in the Soaps and Cosmetics industry

category for the fourth successive year. This accomplishment marks the 26th consecutive

year that P&G has participated in this widely-recognized survey that honors those

companies with the best reputations.

United Way Worldwide recognized P&G for our commitment to touch and improve

lives, including P&G's contributions of more than $100 million annually in cash and

product donations, raising more than $17.6 million for communities through the United

Way campaign in Cincinnati and elsewhere. P&G received three individual Summit

Awards – for community investment, community impact and community volunteerism.

104

The National Association for Female Executives (NAFE) recognized P&G as one of its

"Top Companies for Executive Women" for the eighth consecutive year. P&G's ranking

was based on the advancement of women, the recognition of top female role models at

top management levels, and the commitment to talent development and diversity

programs.

DiversityInc Magazine ranked P&G No. 18 on The 2010 DiversityInc Top 50

Companies for Diversity® list. The company was also ranked No.6 on The DiversityInc

Top 10 Global Diversity Companies and No. 3 on The DiversityInc Top 10 Companies

for People with Disabilities.

105

Table No - 4.11

Consolidated Statements of Earnings of Procter & Gamble from the year

June 2010 to June 2012

Amounts in millions except per share amounts

Years ended June 30 2012 2011 2010

NET SALES $ 83,680 $ 81,104 $ 77,567

Cost of products sold 42,391 39,859 37,042

Selling, general and administrative expense 26,421 25,750 24,793

Goodwill and indefinite lived intangible asset

impairment charges 1,576 — —

OPERATING INCOME 13,292 15,495 15,732

Interest expense 769 831 946

Other non-operating income, net 262 333 82

EARNINGS FROM CONTINUING OPERATIONS

BEFORE INCOME TAXES 12,785 14,997 14,868

Income taxes on continuing operations 3,468 3,299 4,017

NET EARNINGS FROM CONTINUING

OPERATIONS 9,317 11,698 10,851

NET EARNINGS FROM DISCONTINUED

OPERATIONS 1,587 229 1,995

NET EARNINGS 10,904 11,927 12,846

Less: Net earnings attributable to non-controlling

interests 148 130 110

NET EARNINGS ATTRIBUTABLE TO

PROCTER & GAMBLE $ 10,756 $ 11,797 $12,736

BASIC NET EARNINGS PER COMMON SHARE

(1):

Earnings from continuing operations $ 3.24 $4.04 $3.63

Earnings from discontinued operations 0.58 0.08 0.69

106

BASIC NET EARNINGS PER COMMON SHARE 3.82 4.12 4.32

DILUTED NET EARNINGS PER COMMON

SHARE (1):

Earnings from continuing operations 3.12 3.85 3.47

Earnings from discontinued operations 0.54 0.08 0.64

DILUTED NET EARNINGS PER COMMON

SHARE 3.66 3.93 4.11

DIVIDENDS PER COMMON SHARE $ 2.14 $ 1.97 $ 1.80

Source : Secondary data

4.10 Marico can be traced all the way back to 1857, when a young man Kanji

Moorarji, set up a modest trade-in spices which, in time, grew to include other export worthy

commodities this firm's success gave birth to The Bombay Oil Industries in 1948, set up to

convert the traditional buying strengths of the firm in the commodities areas, to value added

manufactured products. At first Bombay Oil was involved in copra trading besides crushing and

refining of vegetable oils. Gradually, the company established itself firmly as a marketer of

branded vegetable oils and later expanded into fatty acids, specialty chemicals and spice extracts.

In 1983, Bombay Oil divisionalised its operations to create three Businesses: a Consumer

Products Division; a Fatty acids and Chemicals Division and an Oleoresins Division, also called

the Spice Extracts Division. In 1990, Bombay Oil again restructured itself to form several

companies, each focusing on a specialized area of business. In April 1990, the Consumer

Products Division became Marico. The history of Marico can be traced all the way back to

1857, when a young man Kanji Moorarji, set up a modest trade in spices which, in time, grew to

include other export worthy commodities. This firm's success gave birth to The Bombay Oil

Industries in 1948, set up to convert the traditional buying strengths of the firm in the

commodities areas, to value added manufactured products

107

4.10.a Marico Industries - Awards In 2007, the company received the Bronze Effie for its brand Saffola and for its corporate

campaign the company received the Gold Effie.

In 2007, the company received the Business Leadership Award from NDTV Profit, in the

category of FMCG personal hygiene.

In 2006, the company received the Gulf Marketing Review Award.

In 2006, the company received the award of being one of the ten best marketers in the

country.

In 2006, the company received the award for Brand Leadership.

108

Table No. 4.12

Table Showing Consolidated Statements of Marico Industries from the year



12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months

Sources of Funds





Reserves 1,908.85 1,926.95 1,062.63 811.68 510.73


Net worth 1,973.34 1,991.43 1,124.12 873.12 571.66

Secured Loans 302.71 289.57 310.53 332.42 99.61

Unsecured Loans 105.42 366.62 242.62 220.07 277.31

Total Debt 408.13 656.19 553.15 552.49 376.92

Total Liabilities 2,381.47 2,647.62 1,677.27 1,425.61 948.58

109


12Months

Mar’13

12Months

Mar’12

12Months

Mar’11

12Months

Mar’10

12Months

Application Of Funds

Gross Block 686.26 499.60 466.81 421.20 294.45

Less: Accum. Depreciation 192.12 164.37 226.72 198.74 164.48

Net Block 494.14 335.23 240.09 222.46 129.97


Investments 1,366.76 1,316.47 672.17 470.36 209.11

Inventories 663.96 708.98 530.04 454.22 369.90

Sundry Debtors 148.45 123.85 101.04 118.98 94.51

Cash and Bank Balance 128.95 22.03 6.12 13.95 7.02



Fixed Deposits 0.00 0.00 30.96 4.22 4.19

Total CA, Loans &

Advances 1,280.62 1,371.23 1,115.03 961.30 792.53

Deffered Credit 0.00 0.00 0.00 0.00 0.00


Provisions 41.65 54.19 53.20 31.96 62.24

Total CL & Provisions 762.11 520.65 396.55 274.03 292.99

Net Current Assets 518.51 850.58 718.48 687.27 499.54


Total Assets 2,381.7 2,647.62 1,677.27 1,425.61 948.58

Contingent Liabilities 879.80 808.28 457.68 429.13 209.30

Book Value (Rs) 30.60 30.89 18.28 14.21 9.38

Source : Secondary data.

110

Conclusion In the above analysis, it can very easily be concluded that HUL, holds major portion of

the FMCG market. It holds major shares in the soap & shampoo’s category. HUL’s products are

mainly in demand, because they provide these products in different packs. They consider the fact

that rural buyers do not have that much money to be spent on these products. So, they prefer

buying the small or the medium packs. However, large or family packs are still been bought by a

few buyers, who are from well-off families.

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