September 2012 I. Executive Summary II. Market Overview Industry Overview Evolution of the Indian FMCG Sector Porters Five Forces Model SWOT Analysis III. Industry Analysis Key Challenges Trends in the Industry Growth Drivers Government Policies Major Segments IV. Investments in the Sector Recent M&A Deals Recent Private Equity Deals V. Major Players Major Players Common Stock Comparison 1 Index VI. Profiles of the Major Players ITC HUL Nestle Dabur Godrej Consumer Colgate-Palmolive Marico GSK Consumer Britannia VII. Corporate Profile (Dinodia Capital Advisors) 2 Index 3 Executive Summary (1/2) The Fast Moving Consumer Goods (FMCG) sector in India has been growing at a healthy CAGR of 11% over the last decade Riding on the back of increasing demand and changing consumer preferences, thanks to higher disposable incomes and the retail revolution, the sector has been posting double-digit growth over the past couple of years The industry is volume driven and is characterized by low margins. The products are branded and backed by skilled marketing, heavy advertising, slick packaging and strong distribution networks. Also, raw material prices play an important role in determining the pricing of the final product Modern retail formats too have contributed in a major way in pushing the growth in the FMCG sector. With rising income levels and the spread of modern retail, the FMCG industrys future prospects look bright which is expected to further boost sales Growth in the sector is led by higher urban and rural demand. Going forward , the governments growing support to agriculture will drive long-term growth in consumption from the rural sector In our view, amongst all the FMCG segments, the food segment will outperform over the coming years 4 Executive Summary (2/2) The Indian food industry is a significant part of the Indian economy,(food constitutes about 36% of the consumer wallet) The Indian food industry is poised to grow by a whopping 63.5% from Rs 788,100crs now to Rs.1,288,900crs in next 5 years and by 137.8% to Rs. 1,874,100crs in next 10 years, throwing up huge opportunities for investments across the entire value chain 1 India faces contrasting problems of having one of the highest malnutrition cases and also being the diabetes capital of the World.In our view, both of these are an opportunities for Food companies. The Health foods segment is likely to see one of the highest growth in the Food segment To exploit this trend many companies have launched health based products viz. Britannia launched Nutrichoice biscuits, Danone launching probiotic yogurt, Dabur introduced a juice with fiber and HUL introduced Soya and multigrain atta, iodized salt, energy drinks We believe that the demand for these products is going to outpace the overall Food Category growth for the years to come Source: 1 India Food Guide, Edelweiss Feb12 5 Market Overview MARKET OVERVIEW Industry Overview Evolution of Indian FMCG Sector Porters Five Forces Model SWOT Analysis Fast Moving Consumer Goods (FMCG) goods, popularly named as consumer packaged goods, play a vital role as a necessity and as an inelastic product The Indian FMCG sector is the fourth largest sector the economy with a total market size of Rs. 167,100crs 1 The market is estimated to grow to US$ 100 billion by 2025, according to market research firm Nielsen In the last decade the FMCG sector has grown at an average of 11% a year; in the last five years, annual growth accelerated to 17% The FMCG Industry is characterized by a well established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments FMCGs are slowly and gradually positioning and deeply penetrating in the fast growing rural market. The Rural mindset is open to consumption of newer, more contemporary food categories and as a result, drive consistent growth 6 Industry Overview Source: 1 Dabur Corporate Presentation March12 CY 10 CY 11 FMCG Industry Rural (in Rs bn) CY 10 CY 11 FMCG Industry Urban (in Rs bn) CY 10 CY 11 FMCG Industry Size (in Rs bn) 7 The FMCG sector in India continues on a strong growth path with both Urban and Rural India contributing to its growth. Rural India contributes one third of FMCG sales in India Growth driven by increasing consumption led by rise in incomes, changing lifestyles and favorable demographics 1,451 1,671 1,111 960 559 491 Source: 1 Dabur Corporate Presentation March12 Industry Overview Urban Vs. Rural # According to Nielsen, FMCG growth was 10.7% in the rural market and 10.8% in the urban market during the quarter ended December 2011; for the quarter ended March 2012, while growth in the urban market improved to 16.5%, it rose even higher, to 17.2%, in the rural market* 8 Rural India accounts for more than 700 Million consumers or 70% of the Indian population and accounts for 40% of the total FMCG market The Rural market is a large market space with very low organized player penetration. Across the globe, the Indian rural market is probably the single largest unit of opportunity Also with changing lifestyle and increasing consumer demand, the Indian FMCG market is expected to cross $80 billion by 2026 in towns with population of up to 10 lakh The sector has a tremendous opportunity for growth in India, with the growing population, the rising incomes, education and urbanization, the advent of modern retail, and a consumption-driven society Source: *Business Standard May12 Industry Overview 9 Source: HSBC Global Research December 2011 R u r a l
p e n e t r a t i o n
( % )
There is ample room for growth in various categories of FMCG products
100%
90%
Washing pow eders T oilet soap
Edible oil
Hair oil
80%
Tea Detergent bar
70%
60%
Biscuits
50%
40%
Toothpow der
Vanaspati
Balms
Shampoo
Toothpaste
20%
10%
Milk pow der Health
Coffee
Skin cream
Ice Cream Soft drinks
Talcum Pow der
Utensil clearners
Insencticides Baby oil Mints Chocolates Noodles
T oilet cleaners 0% Deodorants Ketchup
Floor cleaners Urban penetration (%) The following matrix shows the room for growth in various categories of the FMCG products: Industry Overview 10 Source: IBEF # The industry is volume driven and is characterized by low margins Evolution of the Indian FMCG Sector 11 Porters 5 Forces Model Threat of Substitutes : High Bargaining power of Suppliers: Moderate Rivalry among competitors: High Bargaining power of consumers: Low Threat of new entrants: Moderate Multiple brands positioned with narrow product differentiation Companies entering a category / trying to gain market share compete on pricing which increases product substitution Low regulatory barriers High competitive intensity requires large investments in brand building which deters small players More MNCs entering the country Advertising spends continue to grow and marketing budgets as well as strategies are becoming more aggressive High brand loyalty for some products, thereby discouraging customers product shift Low switching costs Aggressive marketing strategies induce customers to switch between products Overall: Moderately Attractive FMCG Industry Prices are generally governed by international commodity markets, making most FMCG companies price takers Due to the long term relationships with suppliers etc., FMCG companies negotiate better rates during times of high input cost inflation 12 SWOT Analysis Moderate operating costs Presence of established distribution networks in both urban and rural areas Presence of well-known brands in FMCG sector Favorable government policies Strengths Lower scope of investing in technology and achieving economies of scale, especially in small sectors Low exports levels Counterfeit Products Weaknesses Untapped rural market Rising income levels, i.e. increase in purchasing power of consumers Large domestic market- a population of over one billion Export potential High consumer goods spending Opportunities Removal of import restrictions resulting in replacement of domestic brands Slowdown in rural demand Tax and regulatory structure Threats 13 Industry Analysis INDUSTRY ANALYSIS Key Challenges Trends in the Industry Growth Drivers Opportunities in the Sector Government Policies Segment Overview 14 Key Challenges Commodity prices fluctuate, which make it difficult to finalize raw material prices, affecting the final price of the product Indian consumers are very price-sensitive and value conscious, making it difficult for FMCG firms to pass on the increased costs Price of inputs Private labels serve to lower the consumers price points, particularly at the mass level Conflicts of interest when a retail chain has its own label whose packaging looks like category leaders and stocks brands of other manufacturers, (in terms of display space, promotions etc) Emergence of Private Labels These products narrow the scope of FMCG products in rural and semi-urban market The spurious pass off products affect large, high quality brands which have actually invested money in research and development to create their products and build brand equity Counterfeit and Pass-offs Power Costs Transportation Infrastructure Agricultural Infrastructure Infrastructural Bottlenecks 15 Industry Trends Companies are now focused on improving their distribution networks to expand their reach in rural India Consolidation Product innovation Lifestyle products Expanding horizons Backward integration Expanding distribution networks Indian FMCG companies are consolidating their existing business portfolios Several companies have started innovating by launching or customizing their existing product portfolios for new consumer segments Lifestyle and premium range products are the current hot target product segments among Indian FMCG players A number of companies are exploring the business potential of overseas markets and several regional markets Backward integration is becoming the preferred strategy for increasing profit margins 16 FMCG players in India are focusing on reducing their carbon footprint. They generate the required energy from renewable sources and earn CER credits for the same Third-party manufacturing Rising importance of smaller-sized packs Increased hiring from tier II/III cities Focus on enhancing presence in Africa Reducing carbon footprint FMCG players often outsource manufacturing or processing of a certain range of products to small vendors. This approach has helped companies focus on front-end marketing Companies are increasingly introducing smaller stock keeping units at reduced prices. This helps them sustain margins, maintain volumes from price-conscious customers and expand their consumer base Small towns are emerging as significant hiring zones. FMCG companies are hiring field staff from areas such as Kalpa (Himachal Pradesh), Mangaliya (Madhya Pradesh), Kota (Rajasthan), and Shirdi (Maharashtra) to sell diverse products FMCG companies entering Africa as it helps to be close to consumption markets within Africa. Such foreign investments are encouraged by local governments, as they offer incentives to enter the markets Industry Trends 17 Growth Drivers Growth Drivers Large Market FDI Support Increasing per capita income of urban population Changing Profile and Mind Set of Consumer Growing popularity of organized retail Rise of rural consumers Spending Pattern 18 Opportunities in the Sector The fragmented and untapped huge rural market, which houses 2/3 rd of the total Indian population, is vital for the growth of FMCG sector as a whole In order to reduce the marketing costs and raise efficiency through van sales or by creating rural supermarkets, the FMCG companies should join forces in targeting the fragmented and broken rural market Untapped Rural Market Food-Processing Industry Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low, indicating the untapped market potential With 200 million people expected to shift to processed and packaged food, India needs around US$ 30 billion of investment in the food- processing industry Lack of Infrastructure and storage facilities Huge shortage of infrastructure facilities and storage facilities in rural areas of the country, which makes its difficult for FMCG companies to market their products Huge investments in developing rural infrastructure and efficient utilization of resources like our coast line, solar energy and vast human resources is imperative for FMCGs overall growth in India 19 Government Policies & Regulatory Framework Investment Approval: Automatic investment approval up to 100 per cent foreign equity for NRI and overseas corporate bodies. These investments are allowed in food processing segments such as coffee and tea FDI in organized retail: India currently allows 100 per cent FDI in Cash & Carry segment and 51% in single-brand retail, which is expected to be further increased to 100%. India is also expected to allow 51% FDI in multi-brand retail, which will boost the nascent organized retail market in the country Priority Sector: The Government of India recognizes food processing and agro industries as priority sectors Relaxation of license rules: Industrial licenses are not required for almost all food and agro-processing industries, barring certain items such as beer, potable alcohol and wines, cane sugar, and hydrogenated animal fats and oils as well as items reserved for exclusive manufacturing in the small-scale sector Statutory Minimum Price: In October 2009, the government amended the Sugarcane Control Order, 1966, and replaced the Statutory Minimum Price (SMP) of sugarcane with Fair and Remunerative Price (FRP) and the State- Advised Price (SAP) 20 Segment Overview The food and beverages segment is the highest contributor to the FMCG sector Market Segments The FMCG market has three major segments 21 Segment Overview Household Care The detergents segment dominates the household care segment and has been growing at an annual growth rate of 10-11% in the past five years Local and unorganized players account for a major share of the total volume of the detergent market The Household care segment is plagued by intense competition and high level of penetration. With rapid urbanization, emergence of small pack sizes and sachets is picking up In the washing powder segment, HUL is the leader and other major players like Nirma, Henkel and Proctor & Gamble continue to provide stiff competition/innovation The Indian personal care segment is set to change significantly in the coming years as consumption habits, fuelled by rising disposable income and changing lifestyles, align themselves with global trends. E.g. bath soaps are likely to be replaced by shower gel or liquid soap variants and there will be growing use of hair conditioners and electronic tooth brushes 22 The Personal care segment includes personal washing products, hair care products, oral care products, cosmetics, skin care etc The hair care market can be segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. The coconut oil market accounts for 72% share in the hair oil market The skin care market is at a primary stage in India. With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming The oral care market can be segmented into toothpaste 60%; toothpowder 23%; toothbrushes 17% Segment Overview Personal Care 23 The Food and Beverages segment comprises of the food processing industry, health beverage industry, bread and biscuits, chocolates & confectionery, Mineral Water and ice creams The three largest consumed categories of packaged foods are packed tea, biscuits and soft drinks The Indian hot beverage market is dominated by tea and the major share of the tea market is dominated by unorganized players India is one of the fastest growing branded restaurants markets in the world, where the organized eating-out market is currently estimated at US$ 2 billion and growing at a CAGR of 25% Sahara India reportedly plans to enter into dairy production business by opening the world's biggest dairy on April 1, 2013 and could be a serious threat for Anand based Amul Segment Overview Food and Beverages 24 Investments in the Sector INVESTMENTS IN THE SECTOR Recent M&A Deals Recent Private Equity Deals Announced Date Target Acquirer Details December 3, 2010 Naturesse Consumer Care Products (NC) and Essence Consumer Care Products Ltd (EC) (GCPL) GCPL has acquired a 100% stake in NC and EC for an undisclosed amount in order to extend its leadership in the specialty liquid detergent category February 19, 2011 International Consumer Products Corporation Marico bought an 85% stake in the maker of Vietnam's top male- grooming brand X-Men in a deal estimated at US$55-60mn in order to strengthen the presence in the male grooming space March 3, 2011 Soft drink and fruit based beverages business along with the brand, 'Fruitnik' from Siva's Soft Drink Pvt Ltd Amrutanjan Health Care Ltd (AHCL) With the deal size of US$ 5.70mn, AHCL diversified its business into 2 beverages business 25 Recent M&A Deals Announced Date Target Acquirer Details March 17, 2011 Jyothy Laboratories acquired a 14.9% stake in Henkel India for US$ 13.20mn in an all-cash deal in order to strengthen its urban distribution network, as Henkel has a strong presence in the modern retail formats March 28, 2011 Sweekar- Marico Ltd's brand With the deal size of US$ 13.04mn, for Marico, the move was in line with its decision to focus on its flagship brand 'Saffola' May 6, 2011 Henkel India Jyothy Laboratories Ltd Jyothy Laboratories increased its stake to 50.97% in Henkel India from Henkel AG & Co for US$ 25.80mn 26 Recent M&A Deals Announced Date Target Acquirer Details June 1, 2011 Darling Group Holdings Godrej Consumer Products Ltd Godrej Consumer Products Ltd acquired 51%stake in African hair care firm Darling Group Holdings in order to scale up its operations in the region and to strengthen its position in the hair care market June 6, 2011 VVF Ltd- Aramusk and Moloy brands Wipro Consumer Care With the undisclosed deal size, Wipros move was to strengthen its position in the increasingly competitive soap market in the country September 15, 2011 Blue park sea foods Pvt. Ltd Omega Ag- Seeds Punjab Ltd Omega Ag-Seeds (Punjab) acquired a 15% shareholding in Blue Park Sea Foods for a total consideration of US$ 1.63mn December 1, 2011 Agro Tech Foods Ltd ConAgra Foods Inc North American food giant ConAgra Foods Inc acquired 3.66% stake Agro Tech Foods US$ 11.27mn which increased its stake in the company to 51.77% 27 Recent M&A Deals Announced Date Target Acquirer Details December 21, 2011 Amrit Banaspati Company Ltd edible oil business New York based food company - Bunge Limited acquired the edible oils and fats business of Amrit Banaspati Company Limited for US$ 78mn February 16, 2012 Paras Pharmaceutical s- personal care business Marico Ltd Marico Limited is acquiring personal care business of Paras Pharmaceuticals from Reckitt Benckiser for an undisclosed amount June 15, 2012 Henkel India Ltd Jyothy Laboratories Ltd Consumer goods company Jyothy Laboratories Ltd is merging Henkel India Ltd with itself to consolidate its personal care products business under a single umbrella August 13, 2012 BP Egro Ltd HNI Corporation American Furniture company HNI Corp has acquired 95% stake in office furniture company BP Egro for~ Rs.200 crores 28 Recent M&A Deals Announced Date Investee Investor % Stake Investment Value (US$ mn) February 1, 2011 Milk Mantra Dairy Pvt Ltd Aavishkaar Venture Management services Pvt Ltd NA 5 March 28, 2011 Hector Beverages Pvt Ltd Catamaran Investment Pvt Ltd, Footprint Ventures, and four angel investors NA 1.30 April 6, 2011 Bush Foods Overseas Standard Chartered PE NA 25 June 27, 2011 Prakash Snacks Sequoia Capital NA 30 August 12, 2011 Capital Foods Future Ventures India Ltd 3% NA August 19, 2011 Manpasand Beverages Pvt Ltd SAIF Partners India NA 10 October 18, 2011 VVF Ltd Reliance Equity Advisors NA 29.57 29 Recent Private Equity Deals Announced Date Investee Investor % Stake Investment Value (US$ mn) November 14, 2011 VKS Farms Pvt Ltd Ventureast Life Fund NA 5.43 December 6, 2011 Sresta Natural Bioproducts Ltd Peepul Capital NA 15 January 23, 2012 Godrej Consumer Ltd Temasek through Baytree Investments 4.9% 136.45 April 10, 2012 Marico Ltd GIC and Baring Private Equity Partners India 5% 100 April 25, 2012 Adiga's- fast food chain New Silk Route Partners NA NA May 24, 2012 STEAMMO (F&B Chain) IncuCapital NA 0.07 July 13,2012 Blue Star Ltd Saif Partners NA 8.57 30 Recent Private Equity Deals 31 Major Players MAJOR PLAYERS Strong FMCG Brands Common Stock Comparable Analysis 32 Strong FMCG Brands 33 Common Stock Comparison (Rs. In Crs) Source: As per research reports available from leading brokers like Goldman Sachs, Citi Group etc. S no. Company Name 1 ITC (standalone) 31-Mar-12 226.85 781.84 Rs. 177,360.96 (Rs. 2,739.84) Rs. 174,621.12 2 HUL (consolidated) 31-Mar-12 409.90 216.15 88,600.40 (1,978.13) 86,622.27 3 Nestle (Consolidated)* 31-Dec-11 4,602.85 9.64 44,378.71 798.20 45,176.91 4 Dabur (consolidated) 31-Mar-12 106.40 174.21 18,535.95 629.19 19,165.14 5 Godrej (consolidated) 31-Mar-12 479.65 34.03 16,322.37 924.17 17,246.54 6 Colgate (Standalone) 31-Mar-12 1,116.00 13.60 15,176.80 (309.80) 14,867.00 7 Marico (consolidated) 31-Mar-12 174.50 61.49 10,730.61 606.92 11,337.53 8 GSK Consumer* 31-Dec-11 2,541.10 4.21 10,686.73 (1,200.10) 9,486.63 9 Britannia (Consolidated) 31-Mar-12 592.50 11.95 7,077.46 119.57 7,197.03 Financials as on . Share Price Shares Outstandi ng March'12 Market Cap Net Debt 2012 EV S no. Company Name 2012 2013E 2012 2013E 2012 2013E 1 ITC (standalone) Rs. 24,798.00 Rs. 29,183.40 Rs. 8,474.00 Rs. 10,621.80 Rs. 6,162.37 Rs. 7,277.70 2 HUL (consolidated) 22,987.73 25,826.40 3,034.96 3,500.40 2,790.66 3,025.20 3 Nestle (Consolidated)* 9,125.40 11,124.70 1,871.60 2,311.20 1,187.10 1,429.10 4 Dabur (consolidated) 5,305.42 5,960.30 890.17 1,044.90 644.11 759.40 5 Godrej (consolidated) 4,850.94 5,646.10 840.18 1,010.70 726.72 662.00 6 Colgate (Standalone) 2,623.85 3,051.30 509.14 691.30 446.47 514.50 7 Marico (consolidated) 3,996.81 4,850.99 474.09 642.76 317.11 432.01 8 GSK Consumer* 3,118.30 3,643.30 477.90 580.40 413.20 498.50 9 Britannia (Consolidated) 5,460.75 6,355.70 286.25 412.60 199.55 264.60 Sales EBITDA Net Income 34 Common Stock Comparison (Rs. In Crs) Source: As per research reports available from leading brokers like Goldman Sachs, Citi Group etc. S no. Company Name EBITDA Margin PAT Margin 2012 2013E 2012 2013E 2012 2013E 1 ITC (standalone) 34.17% 24.85% 7.04x 5.98x 20.61x 16.44x 28.78x 24.37x 2 HUL (consolidated) 13.20% 12.14% 3.77 3.35 28.54 24.75 31.75 29.29 3 Nestle (Consolidated)* 20.51% 13.01% 4.95 4.06 24.14 19.55 37.38 31.05 4 Dabur (consolidated) 16.78% 12.14% 3.61 3.22 21.53 18.34 28.78 24.41 5 Godrej (consolidated) 17.32% 14.98% 3.56 3.05 20.53 17.06 22.46 24.66 6 Colgate (Standalone) 19.40% 17.02% 5.67 4.87 29.20 21.51 33.99 29.50 7 Marico (consolidated) 11.86% 7.93% 2.84 2.34 23.91 17.64 33.84 24.84 8 GSK Consumer* 15.33% 13.25% 3.04 2.60 19.85 16.34 25.86 21.44 9 Britannia (Consolidated) 5.24% 3.65% 1.32 1.13 25.14 17.44 35.47 26.75 Mean 17.09% 13.22% 3.98x 3.40x 23.72x 18.79x 30.92x 26.26x Median 3.61x 3.22x 23.91x 17.64x 31.75x 24.84x Maximum 7.04x 5.98x 29.20x 24.75x 37.38x 31.05x Minimum 1.32x 1.13x 19.85x 16.34x 22.46x 21.44x P/E EV/Sales EV/EBITDA 35 Profiles of the Major Players PROFILES OF THE MAJOR PLAYERS 36 Indian Tobacco Company Company Profile Company Snapshot Incorporation Year 1910 Industry Group FMCG Main Product Cigarettes Board of Directors Chairman Yogesh Chander Deveshwar Exec. Director N Anand Exec. Director P V Dhobale Exec. Director K N Grant Director A Baijal ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports It is the leading cigarette manufacturer based out of Kolkata with a 67% share of the market by volume and 83% by value The company is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery ITC's Agri-Business is one of India's largest exporters of agricultural products ITC is one of the eight Indian companies to figure in Forbes A-List for 2004, featuring 400 of "the world's best big companies". Forbes has also named ITC among Asia's'Fab 50' and the World's Most Reputable Companies Company Overview 37 Products Snapshot Indian Tobacco Company Product Portfolio 38 Products Snapshot Indian Tobacco Company Product Portfolio 39 Financial Highlights (Rs. In Crs.) Financial Summary Source: Annual Report * Debt includes Long term and short term borrowings Indian Tobacco Company Financial Performance 40 Financial Summary Indian Tobacco Company Financial Performance 41 Hindustan Unilever Company Profile Company Snapshot Incorporation Year 1933 Industry Group Household Care Main Product Cosmetics, toiletries, soaps & detergents Board of Directors Chairman Harish Manwani MD & CEO Nitin Paranjpe Exec. Director Sridhar Ramamurthy Exec. Director Gopal Vittal Exec. Director Pradeep Banerjee Company Overview HUL, a 51%subsidiary of Unilever Plc, is the largest Indian FMCG company (excluding cigarettes) based out of Mumbai It has a portfolio of over 50 brands across categories such as soaps, detergents, foods, ice cream and water purifiers The key strengths of the company are an extensive distribution network (its products are available in over 6mn outlets), powerful brands (most of its brands are market leaders and straddle price segments), strong balance sheet, and high-quality management 42 Company Snapshot Hindustan Unilever Product Portfolio 43 Financial Highlights (Rs. In Crs.) Financial Summary Source: Annual Report * Debt includes Long term and short term borrowings Hindustan Unilever Financial Performance 44 Financial Summary Hindustan Unilever Financial Performance 45 Nestle India Company Profile Company Snapshot Incorporation Year 1959 Industry Group Food & Bevrages Main Product Dairy products Board of Directors Chairman & MD Antonio Helio Waszyk Director Shobinder Duggal Director Christian Schmid Director Pradeep Baijal Director Rakesh Mohan Company Overview Nestle, a 62.8% subsidiary of its parent Nestl S.A. of Switzerland, is Indias third largest consumer goods company after HUL and ITC Nestl India manufactures products of truly international quality under internationally famous brand names such as NESCAF, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID and NESTEA Nestle enjoys leadership position in its core categories such as baby foods, instant noodles, and instant coffee It enjoys a distinct advantage over competitors in the F&B space on account of its strong focus on developing products around the nutrition, health, and wellness platform, and a culture of renovation and innovation in its offerings, backed by strong parent support 46 Company Snapshot Category Category Nestle India Product Portfolio 47 Financial Highlights (Rs. In Crs.) Nestle India, a subsidiary of Nestle SA, the Swiss major in food and beverages, plans to invest nearly Rs 5 billion in a Maggie noodles and confectionery- manufacturing plant in Gujarat Source: Annual Report * Financial Year Ends in December Financial Summary Nestle India Financial performance 48 Financial Summary Nestle India Financial performance 49 Dabur Company Profile Company Snapshot Incorporation Year 1975 Industry Group Personal Care Main Product Diversified Board of Directors Chairman Anand Burman (Dr.) Vice Chairman Amit Burman Exec. Director Pradip Burman Exec. Director P D Narang Director Mohit Burman Company Overview Dabur is one of Indias most trusted names and the worlds largest Ayurvedic and Natural Health Care Company and is the second largest FMCG company in India, in terms of Product portfolio Dabur has three divisions in India apart from its international operations : - o First, The Consumer care division (CCD) offers a wide range of products in hair care, oral care, health supplements, digestives and candies, and baby and skin care products, based on ayurveda o Second, The consumer health division (CHD) includes overthecounter(OTC) products, Asavs, and branded ethical, and classic products. The CHD division has been merged with CCD to leverage the companies distribution networks o The third, Dabur Foods Ltd produces fruit juices, cooking pastes, sauces, and items for institutional food purchases 50 Company Snapshot Dabur Product Portfolio 51 Financial Highlights (Rs. In Crs.) Financial Summary Source: Annual Report * Debt includes Long term and short term borrowings Dabur Financial Performance 52 Financial Summary Dabur Financial Performance 53 Godrej Consumer Products Company Profile Company Snapshot Incorporation Year 2000 Industry Group Personal Care Main Product Diversified Board of Directors Chairman A B Godrej Director Jamshyd N Godrej Director Nadir B Godrej Additional Director Tanya Dubash (Ms.) Additional Director Nisaba Godrej (Ms.) Company Overview Godrej Consumer is among the leading FMCG companies in India - second largest player in soaps and largest in hair color Godrej Consumer brands, which include Good knight, Cinthol, Godrej No. 1, Expert, Hit, Jet, Fairglow, Ezee, Protekt and Snuggy, among others, are household names across the country Major brands include Godrej Hair Dye (liquid and powder), Godrej Kesh Kala oil and Nupur hair dyes in the lower end and Renew and Coloursoft in the higher segment and give stiff competition to foreign brands in the hair colour segment In June 2009, GCPL completed the acquisition of 49% stake in Godrej Sara Lee Limited which had several leading brands such as Good Knight, JET, HIT, Brylcreem and KIWI The company employs 950 people and has three state-of-the-art manufacturing facilities at Malanpur (M.P.), Guwahati (Assam) and Baddi (H.P.) 54 Company Snapshot Source: HSBC Global Research December 2011 Godrej Consumer Products Product Portfolio 55 Financial Highlights (Rs. In Crs.) Financial Summary Source: Annual Report * Debt includes Long term and short term borrowings Godrej Consumer Products Financial Performance 56 Financial Summary Godrej Consumer Products Financial Performance 57 Colgate-Palmolive Company Profile Company Snapshot Incorporation Year 1937 Industry Group Household Care Main Product Preparations for oral or dental hygiene Board of Directors Chairman D Samuel Vice Chairman R A Shah Deputy Chairman P K Ghosh MD M V Deoras Director P E Alton Company Overview Colgate, 51% owned by Colgate USA, is the largest oral-care company in India. Supported by a wide distribution network, it derives over 96% revenue from this category The company's 51% stake is owned by the foreign promoters (colgate-palmolive group), around 26%by individuals and around 21% by institutional investors. Colgate has also driven inorganic growth through acquisitions, namely Hindustan Ciba- Geigy Ltd, CC Health Care Products Pvt Ltd, Professional Oral Care Products Pvt. Ltd., Advanced Oral Care Products and SS Oral Hygiene Prod Colgate Palmolive is a market leader in the toothpaste segment with a market share of ~50%in India, but is seeing increasing competition from domestic players Oral Care Toothpastes, Toothbrushes, Toothpowder, Whitening products, Kids products, And Mouthwashes. Personal care Body Wash Liquid Hand Wash Skin Care Hair Care Products Household Care Dish washing pastes 58 Company Snapshot Product Categories Further, it provides various dental care products for gingivitis treatment, sensitivity treatment, tooth whitening, fluoride therapy, mouth ulcer treatment, and specialty cleaning Colgate-Palmolive Product Portfolio 59 Financial Highlights (Rs. In Crs.) Financial Summary Source: Annual Report * Debt includes Long term and short term borrowings Colgate-Palmolive Financial Performance 60 Financial Summary Colgate-Palmolive Financial Performance Marico has evolved into one of the leading Indian FMCG companies from a coconut oil manufacturer over the past few years It has positioned itself on the beauty and wellness platform and caters to the hair care, health care, and skin care segments The company operates in India, the Middle East, SAARC countries, Egypt, Malaysia, South Africa, Singapore, and Vietnam and is headquartered in Mumbai, India Its manufacturing facilities are located at Goa, Kanjikode (Kerala), Jalgaon (Maharashtra),Saswad(Maharashtra), Pondicherry, Dehradun (UP) and Daman Marico is present in more than 25 countries across Asia and the African continent 61 Marico Company Profile Company Snapshot Incorporation Year 1988 Industry Group Household Care Main Product Oils Board of Directors Chairman & MD Harsh Charandas Mariwala Director Rajeev Bakshi Director Atul Champaklal Choksey Director Nikhil Khatau Director Anand Kripalu Company Overview 62 Company Snapshot Category Range Marico Product Portfolio 63 Financial Highlights (Rs. In Crs.) Financial Summary Source: Annual Report * Debt includes Long term and short term borrowings Marico Financial Performance 64 Financial Summary Marico Financial Performance 65 GSK Consumer Healthcare Ltd. Company Profile Company Snapshot Incorporation Year 1958 Industry Group Dairy products Main Product Malted milk foods Board of Directors Chairman S J Scarff MD Zubair Ahmed Director Kunal Kashyap Director Mukesh H Butani Director Naresh Dayal Company Overview GSK Consumer Healthcare Ltd., an Indian group company of GSK plc UK (which holds 43% in GSK), is one of the largest players in the Indian malted food drinks (MFD) industry It is Indias leading health food drinks (HFD) manufacturer (69% market share in HFD) with growing presence in categories such as biscuits, noodles, snacks, sports drinks, glucose powder etc The company has manufacturing facilities in Nabha (Punjab), Rajamundry (Andhra Pradesh) and Sonepat (Haryana) and has a strong marketing and distribution network in India with direct coverage of over 700,000 retail outlets Headquartered in the UK, GSK has over 100,000 employees worldwide, including around 35,000 employees at 85 manufacturing sites in 37 countries 66 Company Snapshot GSK is the undisputed dominant player in the fastgrowing underpenetrated domestic malted health drink segment (~70% market share) with Horlicks, Boost, Maltova and Viva GSK Consumer Healthcare Ltd. Product Portfolio 67 Financial Highlights (Rs. In Crs.) Glaxo Smithkline Consumer Healthcare posted a net profit of Rs 1.31 billion for the quarter ended March 31, 2012 as compared to Rs 1.10 billion in the same period last year Source: Annual Report * Financial Year Ends on December Financial Summary GSK Consumer Healthcare Ltd. Financial Performance 68 Financial Summary GSK Consumer Healthcare Ltd. Financial Performance 69 Britannia Company Profile Company Snapshot Incorporation Year 1918 Industry Group Household Care Main Product Bisciuts Board of Directors Chairman Nusli N Wadia MD Vinita Bali (Ms.) Director K K Dadiseth Director Avijit Deb Director Anil K Hirjee Company Overview Britannia Industries Limited is based in Kolkata and is famous for its Britannia and Tiger brands of biscuits, which are popular throughout the country With an estimated market share of ~38%, the company's principal activity is to manufacture and sell biscuits, bread, rusk, cakes and dairy products The Britannia brand is the trust of almost one-third of India's one billion population CRISIL has assigned a credit rating to Britannia Industries as AAA rating The biscuit industry is the largest processed foods segment in India with size exceeding Rs.11,500crs, growing at 13-14%CAGR Britannia has enhanced its premium cream portfolio with a launch of several differentiated products including Bourbon Cappuccino, Pure Magic Praline and a new range of creamy flavours for Treat 70 Category Range Britannia Britannia Product Portfolio 71 Financial Highlights (Rs. In Crs.) Britannia Source: Annual Report * Debt includes Long term and short term borrowings Britannia Financial Performance 72 Britannia Britannia Financial Performance 73 Dinodia Capital Advisors CORPORATE PROFILE 74 Dinodia Capital Advisors Dinodia Capital Advisors Corporate Profile Dinodia Capital Advisors is a Financial Consulting firm based in New Delhi, India. It assists clients across all industries grow, both organically and inorganically. The firm helps clients Raise Capital. Execute Mergers & Acquisitions opportunities. Restructure, Transform and Turnaround businesses. Resolve challenging problems. Take advantage of financial and strategic opportunities. Balance investor expectations. DELIVER VALUE 75 Dinodia Capital Advisors Service Offerings Dinodia Capital Advisors Advice Clients on : Mergers and Acquisitions We help in conducting a robust scan of the market and selecting the most suitable buyer or seller Capital Raising We advice clients on their capital needs and find them the right partner who brings more than just capital Restructuring We advise on business restructurings to help achieve financial, strategic and operational efficiency India Entry Strategy We help set up and incubate businesses in India, acting as a trusted advisors to facilitate the India entry strategy Organizational Transformation We work with companies to put systems, processes and people in place to help take advantage of both organic and inorganic synergies Turnarounds We work closely with companies to help devise and implement a turnaround strategy by plugging the deficiencies of management, technology, capital or partnerships Dinodia Capital Advisors Private Limited C-37, Connaught Place , New-Delhi 110001, Website - www.dinodiacapital.com Tel No: +91 11 2341 7692, 2341 5272, Fax No: +91 11 4151 3666 Email: dinodiacapital@dinodiacapital.com We at Dinodia Capital Advisors believe in building long-term relationships based on trust with our clients, providing the highest quality and timely advice, creating an environment of teamwork, developing deep expertise in our areas of operations, hand-holding clients from start to finish and caring deeply for every match that we make