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Sector's Outlook |
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FMCG is the fourth largest sector of the Indian Economy. FMCG sector generates 5% of total factory employment in the country and is creating employment for three million people, especially in small towns and rural India.
According to a CII-A T Kearney report, the FMCG sector in India is expected to grow at a compounded annual growth rate (CAGR) of 9% to a size of Rs 1,43,000 crores by 2010 from Rs 93,000 crores at present.
With a growth of 52.5%, the BSE FMCG Index has, during the last one year, outperformed the Sensex, which could manage a growth of 41% only. A well-established distribution network, intense competition between the organized and unorganized segments, low operating cost, strong branding characterize the sector.
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The large consumer base, particularly in rural sector, and the growing middle class open up huge opportunities to FMCG companies to take the consumers to branded products and offer new generation products.
The sector's lack-luster performance in the last few years was due to price competition and increase in raw materials cost. However, in the FY06, the sector has witnessed a double-digit growth in profits and revenues. The sector has registered an up trend in growth across categories, such as health supplement, shampoo, toothpaste, hair oils, and mosquito repellant, as shown in table below:
Sales Value Growth %
Categories |
2004-2005 |
2005-2006 |
Apr.2006-Sept. 2006 |
Health Supplement (Chyawanprash) |
-5% |
0% |
23% |
Shampoo |
10% |
23% |
19% |
Toothpaste |
5% |
6% |
16% |
Hair Oils |
9% |
18% |
23% |
Mosquito Repellant |
13% |
10% |
29% |
Sector Financials |
In millions |
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31-03-2006 |
31-03-2005 |
31-03-2004 |
Net Sales
Sales Growth |
164,196
10.8% |
148,241
2.0% |
145,380
- |
Profit after Tax
PAT Growth |
19,595
16.6% |
17,001
-24.2% |
21,008
- |
Market Capitalization |
74,746 |
65,810 |
63,072 |
Enterprise Value |
662,540 |
645,477 |
551,971 |
Return on Capital Employed (ROCE) |
47.1% |
51.0% |
45.5% |
P/E Ratio |
26.7% |
27.1% |
21.0% |
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