CMP 130.25

Target Price 147.00

ISIN: INE016A01026

JAN 29th

, 2013

DABUR INDIA LIMITED Result Update: Q3 FY13

BUYBUYBUYBUY

Stock Data

Sector FMCG

BSE Code 500096

Face Value / Div. Per Share 1.00

52wk. High / Low (Rs.) 140.00/92.05

Volume (2wk. Avg ) 83000

Market Cap ( Rs in mn ) 227012.73

Annual Estimated Results (A*: Actual / E*: Estimated)

Years FY12A FY13E FY14E

Net Sales 53054.20 63039.00 71864.46

EBITDA 9475.70 11287.49 12822.96

Net Profit 6448.90 7751.65 8870.63

EPS 3.70 4.45 5.09

P/E 35.19 29.29 25.59

Shareholding Pattern (%)

1 Year Comparative Graph

BSE SENSEX DABUR INDIA LTD

SYNOPSIS

• Dabur India Limited is one of the India’s leading FMCG Company. Quality and experience for over 125 years, it’s most trusted name and the world’s largest Ayurvedic & Natural Health Care Company.

• During the quarter ended, Dabur's International Business recorded a robust performance in Jordan, Lebanon & other neighboring markets, reported a 36%, while sales in GCC markets grew by 22%. Egypt too reported a 15% growth.

• During the quarter ended, the robust growth of Net Profit is increased by 22.16% to Rs.2111.10 million.

• The Shampoo business for Dabur ended the third quarter of 2012-13 fiscal with a strong 29.6% growth.

• Dabur announced the launch of Odonil Good Living range of refreshing air freshening gels in four natural fragrances – Soothing Jasmine, Enamoring Lavender, Charming Citrus & Mystic Rose.

• Dabur’s Foods business reported a robust over 22% growth.

• Dabur India Ltd has declared interim dividend of 65% (i.e. Re. 0.65 per share having face value of Re. 1/- each) on the equity shares of the Company for the financial year 2012-13.

• Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 16% over 2011 to 2014E respectively.

Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Dabur India Ltd 130.25 227012.73 3.70 35.19 13.22 130.00

Hindustan Unilever Ltd 468.50 1037765.20 16.69 28.07 0.00 750.00

Godrej Cons Ltd 724.25 246481.10 14.54 49.81 9.77 475.00

Colgate Palmolive Ltd 1364.54 185569.00 37.42 36.47 42.62 2500.00

Investment Highlights

Results updates- Q3 FY13,

DABUR INDIA LTD is now a leading nature-

based health and family care Products Company is

among the top producers of FMCG in the world and

the largest in India, reported its financial results for

the quarter ended 31st December, 2012. Dabur India

Ltd has maintained strong growth momentum and

continues to register sales growth ahead of the

market in several key categories.

Months Dec-12 Dec-11 % Change

Net Sales 16359.80 14630.80 11.82%

PAT 2111.10 1728.20 22.16%

EPS 1.21 0.99 22.10%

EBITDA 2965.40 2425.80 22.24%

The company’s net profit leads to Rs.2111.10 million against Rs.1728.20 million in the corresponding quarter

ending of previous year, hikes by 22.16%. Revenue for the quarter rose 11.82% to Rs.16359.80 million from

Rs.14630.80 million, when compared with the prior year period. Reported earnings per share of the company

stood at Rs.1.21 a share during the quarter, registering at 22.10% increase over previous year period. Profit

before interest, depreciation and tax is Rs.2965.40 millions as against Rs.2425.80 millions in the corresponding

period of the previous year.

Expenditure :

During the quarter variable cost rose by 10 per cent

mainly on account of increase in Advertisement

along with consideration of depreciation in the

rupee impact. Total expenditure in Q3 FY13 was at

13863.70 million as against Rs.12654.00 million in

Q3FY12. Advertisement & Publicity cost rose

Rs.2350.50 against Rs.1982.40 millions in the

corresponding period of the previous year. Other

Expenditure was at Rs. 2081.10 million &

Consumption of Raw Materials is Rs. 6124.10

million in Q3 FY13 are the primarily attributable to

growth of expenditure.

Segment Revenue

Latest Updates

• Dabur, the country’s leading packaged fruit juice maker, announced the expansion of India’s first fiber-

enriched fruit beverage range – Réal Activ Fiber+ with the launch of two new exotic fruit-mix variants –

Banana Strawberry & Green Apple Punch.

• Odonil, the leading home and air freshening brand from the House of Dabur, announced the launch of Odonil

Good Living range of refreshing air freshening gels. The new Odonil Gel will be available in four natural

fragrances – Soothing Jasmine, Enamoring Lavender, Charming Citrus and Mystic Rose.

• The Shampoo business for Dabur ended the third quarter of 2012-13 fiscal with a strong 29.6% growth,

while the Perfumed Hair Oils business reported a near 15% growth. Dabur's Home Care category – riding on

sustained demand for Odomos mosquito repellent products – ended the period with a 30.5% gain. Dabur’s

Foods business reported a robust over 22% growth. The Skin Care category reported a 15.7% growth during

the quarter while the Oral Care business reported a 13.6% growth. The Health Supplements category ended

with a 12% growth.

• Dabur India Ltd has declared interim dividend of 65% (i.e. Re. 0.65 per share having face value of Re. 1/-

each) on the equity shares of the Company for the financial year 2012-13.

• Dabur’s International Business continues to report good growth, led by strong performance in GCC, Egypt

and Levant markets. “The Levant business, which comprises Jordan, Lebanon & other neighboring markets,

reported a 36% growth, while sales in GCC markets grew by 22%. Egypt too reported a 15% growth.

Company Profile

Dabur India Limited is one of India’s leading FMCG Companies. Building on a legacy of quality and experience for

over 125 years, Dabur is India’s most trusted name and the world’s largest Ayurvedic and Natural Health Care

Company. Dabur India's FMCG portfolio includes five flagship brands with distinct brand identities -- Dabur as

the master brand for natural healthcare products, Vatika for premium hair care, Hajmola for digestives Real for

fruit-based beverages and Fem for fairness bleaches.

Dabur is today India’s most trusted name and the world’s largest Ayurvedic and Natural Health Care Company.

Dabur India is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic products. Dabur's

FMCG portfolio today 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.

Dabur operates in key consumer products categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care

and Foods. The company has a wide distribution network, covering over 2.8 million retail outlets with a high

penetration in both urban and rural markets.

Dabur's products is also had a huge presence in the overseas markets and are available in over 60 countries

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

Russia.

Dabur India Limited has marked its presence with significant achievements and commands a market leadership

status. The company’s story of success is based on dedication to nature, corporate and process hygiene, dynamic

leadership and commitment to partners and stakeholders. The results of the company’s policies and initiatives

speak for themselves.

� 3 major strategic business units (SBU) - Consumer Care Division (CCD), Consumer Health Division (CHD) and

International Business Division (IBD)

� 3 Subsidiary Group companies - Dabur International, Fem Care Pharma and new and 8 step down

subsidiaries: Dabur Nepal Pvt Ltd (Nepal), Dabur Egypt Ltd (Egypt), Asian Consumer Care (Bangladesh),

Asian Consumer Care (Pakistan), African Consumer Care (Nigeria), Naturelle LLC (Ras Al Khaimah-UAE),

Weikfield International (UAE) and Jacqueline Inc. (USA).

� 17 ultra-modern manufacturing units spread around the globe.

� Products marketed in over 60 countries.

� Wide and deep market penetration with 50 C&F agents, more than 5000 distributors and over 2.8 million

retail outlets all over India.

Products

� Health Care: - Dabur's Health Care range brings for you a wide selection of Ayurvedic and natural products

that offer complete care for varying individual needs. Our products are derived from the time-tested heritage

of Ayurveda, and backed by the most modern scientific test & trials that ensure unfailing quality and safety in

anything you pick.

� Personal Care: - Dabur presents a range of Herbal & Ayurvedic Personal Care products, created to make you

look and feel good. Bringing together the gentle touch of nature and Ayurveda's wisdom, the range covers

categories like Hair Care, Skin Care and Baby Care, and is backed by the unfailing quality stamp of Dabur.

� Foods: - Dabur Foods set up a separate food services network in 1998 to cater the institutional segment. This

network partners institution in developing customized products for them. In turn with the help and facilities

of this network, institution like, hotels, airlines, restaurants, caterers and hospitals benefits by offering better

services to consumers. With the market understanding and research Dabur Foods developed a new brand

called "Nature's Best", which became the first brand of Dabur Food Services Network. In continuation to

developing new products for the FS segment, Nature's Best Corn flour was test marketed in Delhi and

Mumbai and is slated for a national launch this year. The company is now focusing on developing and

introducing more products to strengthen its foray in the Food Services segment.

� Home Care: - Dabur India Ltd has a portfolio of superior products that help take care of our home. The range

of Home Care products have been carefully developed to ensure that our living space not only looks good, but

also smells good, all day long. And more importantly, the company helps to keep our family healthy. Odonil

keeps our home fresh and smelling great. Odomos protects our family from disease causing mosquitoes while

Odopic leaves our dishes clean and smelling fresh. Sanifresh Shine keeps our toilet sparkling clean and free

and Ayurvedic Over-The-Counter products, has redefined the Ayurvedic market and healthcare promotion

activities involving leading Ayurvedic practitioners across the globe. The company has more than 350

Shastriya (Classical) Ayurvedic preparations, which form an important part of every Ayurvedic practitioner’s

daily practice.

� Professional range: - Dabur India is the largest natural beauty products company. Leveraging its expertise

in Ayurveda and its over 127 years of natural heritage, Dabur has now From germs while our latest

innovation Dazzle gives a mirror like shine to our floors, kitchen and glass surfaces, while keeping them

germ-free.

� Consumer Health-Ethical: - Over 125 years, Dabur has mastered the art of producing Ayurvedic

preparations, blending traditional knowledge of drug manufacturing with scientific update. Today, Dabur's

Consumer Health Division -- which looks after marketing of Ayurvedic medicines, developed a range of highly

differentiated and efficacious products especially for the professional grooming market. The company has

always recognized and strived to meet the ever-evolving needs of the consumers. Today’s women are

exposed to a hectic, stressful and urban lifestyle which takes a toll on their skin. With these specialised

Professional Grooming products developed after extensive scientific research company moving forward in

endeavor to offer consumers superior result through a differentiated offering. These products would be

available exclusively to the parlors and salons across India through 180-member strong & dedicated parlour

professional team.

Accrelades for 2012 & 13: -

� Dabur India Ltd ranked amongst the Top 3 Green Business Leaders in the FMCG industry.

� Dabur Uveda range of Ayurvedic skin care products listed amongst the '30 New Beauty by Woman India

Today

� Dabur India Ltd Director Mohit Burman ranked in the India Hot 100 & 53 in the list.

� Dabur India Ltd Chairman Dr. Anand Burman ranked amongst the Most Powerful CEOs in India.

International Product Range: - The formulation of packaging, labeling and usage of Products are varies from

country to country.

During the year Zeki Plastik Imalat Sanayi Ve Ticaret Limited has ceased to be step down subsidiary of the

Company due to its amalgamation with another step down subsidiary of the Company – Hobi Kozmetik Imalat

Sanayi Ve Ticaret Anonim Sirketi.

Further Dabur Lanka (Pvt) Ltd. has been newly incorporated as a step down subsidiary of the Company in

SriLanka to cater to the increased market demand of beverages. A new manufacturing plant is being set up in

SriLanka. The Company has built robust brand architecture with brands like Dabur and Vatika in these

geographies. Our key categories in International Business are hair oils, hair creams, shampoos and toothpastes.

As per Nielsen Retail Audit, Dabur Amla Hair Oil is the largest brand in the hair oils category in Saudi Arabia.

Dabur Amla brand has been extended into hair creams and other hair conditioning products such as serums etc.

Vatika brand now has a large portfolio including a wide variety of hair oils, shampoos, hair creams & Hamam

Zaith.

Exports from India

The Company is also exports guar gum and private label oral care products from India. During fiscal 2011-12 the

Company recorded Guar gum exports to the tune of Rs. 105.3 crores as compared to Rs. 52.7 crore in fiscal 2010-

11. Exports of Guar gum reported high growth as the demand for Guar gum saw extraordinary increase

worldwide particularly for the value added hydrating guar variants.

Sales in USA (Dabur Branded and Private label) grew from Rs. 45.1crores to Rs. 47.6crores. The Company caters

to the ethnic Indian channels in the USA supplying the range of Dabur brands which are popular among the South

Asian / Indian community. Retail penetration was extended by launching the range in retailers such as USA (Stop

n Shop) and in Canada (Loblaws network). Dabur is also exports some private label oral care products to USA

which includes toothpastes, Mouthwash and Denture Adhesives.

Financial Highlight

Balance sheet as on 31st March 2012

(A*- Actual, E* -Estimations & Rs. In Millions)

FY12 FY13E FY14E

EQUITY AND LIABILITIES:

Shareholders’ Funds:

Share Capital 1742.10 1742.90 1742.90

Reserves and Surplus 15427.00 23178.65 32049.28

Net worth (a) 17169.10 24921.55 33792.18

Minority Interest 33.00 34.65 36.04

Non-Current Liabilities:

Long-term borrowings 7271.80 7344.52 8078.97

Deferred Tax Liabilities [Net] 274.00 367.16 469.96

Long Term Provisions 6575.70 7364.78 8101.26

Long term liabilities (b) 14121.50 15076.46 16650.20

Current Liabilities:

Short-term borrowings 3471.40 3887.97 4276.76

Trade Payables 8591.60 10395.84 12163.13

Other Current Liabilities 1198.00 1317.80 1449.58

Short Term Provisions 1638.50 1884.28 2223.44

Current Liabilities © 14899.50 17485.88 20112.92

Total (a+b+c) 46223.10 57518.55 70591.33

ASSETS:

Non-Current Assets:

Fixed Assets:

Tangible Assets 8422.50 10443.90 12428.24

Intangible Assets 7989.80 8149.60 8231.09

Capital work-in-progress 267.60 280.98 295.03

(d) 16679.90 18874.48 20954.36

other non-current assets 719.10 755.06 792.81

Non Current Investments 892.80 1767.74 3164.26

Long Term Loans and Advances 4326.60 5538.05 7144.08

(e) 5938.50 8060.85 11101.15

Current Assets:

Current Investments 3932.40 4129.02 4335.47

Inventories 8239.20 9722.26 11277.82

Trade Receivables 4616.80 5955.67 7444.59

Cash and Bank Balances 4484.30 7883.15 12046.64

Short Term Loans and Advances 1542.60 1851.12 2128.79

Other Current Assets 789.40 1042.01 1302.51

(f) 23604.70 30583.23 38535.82

Total (d+e+f) 46223.10 57518.55 70591.33

Annual Profit & Loss Statement for the period of 2011 to 2014E

Value(Rs.in.mn) FY11 FY12 FY13E FY14E

Description 12m 12m 12m 12m

Net Sales 41104.50 53054.20 63039.00 71864.46

Other Income 321.40 574.00 937.24 1180.92

Total Income 41425.90 53628.20 63976.23 73045.37

Expenditure -33419.70 -44152.50 -52688.74 -60222.41

Operating Profit 8006.20 9475.70 11287.49 12822.96

Interest -303.40 -538.40 -520.89 -536.52

Gross profit 7702.80 8937.30 10766.60 12286.44

Depreciation -624.10 -1032.40 -1156.76 -1272.43

Profit Before Tax 7078.70 7904.90 9609.84 11014.01

Tax -1389.70 -1463.80 -1808.96 -2092.66

Profit After Tax 5689.00 6441.10 7800.88 8921.35

Extraordinary Items 0.00 0.00 -48.50 -49.96

Minority Interest -3.20 7.80 -0.73 -0.77

Net Profit 5685.80 6448.90 7751.65 8870.63

Equity capital 1740.70 1742.10 1742.90 1742.90

Reserves 12170.40 15427.00 23178.65 32049.28

Face value 1.00 1.00 1.00 1.00

EPS 3.27 3.70 4.45 5.09

Quarterly Profit & Loss Statement for the period of 30 June, 2012 to 31 Mar, 2013E

Value(Rs.in.mn) 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13E

Description 3m 3m 3m 3m

Net sales 14717.00 15275.20 16359.80 16687.00

Other income 244.60 225.60 220.30 246.74

Total Income 14961.60 15500.80 16580.10 16933.73

Expenditure -12558.60 -12581.80 -13614.70 -13933.64

Operating profit 2403.00 2919.00 2965.40 3000.09

Interest -212.60 -148.80 -77.80 -81.69

Gross profit 2190.40 2770.20 2887.60 2918.40

Depreciation -267.00 -270.20 -305.20 -314.36

Profit Before Tax 1923.40 2500.00 2582.40 2604.04

Tax -377.70 -464.20 -477.50 -489.56

Profit After Tax 1545.70 2035.80 2104.90 2114.48

Extraordinary Items -49.30 0.80 0.00 0.00

Minority Interest -2.40 -12.90 6.20 8.37

Net Profit 1494.00 2023.70 2111.10 2122.85

Equity capital 1742.80 1742.90 1742.90 1742.90

Face value 1.00 1.00 1.00 1.00

EPS 0.86 1.16 1.21 1.22

Ratio Analysis

Particulars FY11 FY12 FY13E FY14E

EPS (Rs.) 3.27 3.70 4.45 5.09

EBITDA Margin (%) 19.48% 17.86% 17.91% 17.84%

PBT Margin (%) 17.22% 14.90% 15.24% 15.33%

PAT Margin (%) 13.84% 12.14% 12.37% 12.41%

P/E Ratio (x) 39.88 35.19 29.29 25.59

ROE (%) 40.90% 37.52% 31.30% 26.40%

ROCE (%) 52.48% 52.80% 44.78% 38.30%

Debt Equity Ratio 0.18 0.16 0.12 0.09

EV/EBITDA (x) 28.32 23.95 20.11 17.70

Book Value (Rs.) 7.99 9.86 14.30 19.39

P/BV 16.30 13.22 9.11 6.72

Charts

Outlook and Conclusion

� At the current market price of Rs.130.25, the stock P/E ratio is at 29.29 x FY13E and 25.59 x FY14E

respectively.

� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.4.45 and Rs.5.09

respectively.

� Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 16% over 2011 to 2014E

respectively.

� On the basis of EV/EBITDA, the stock trades at 20.11 x for FY13E and 17.70 x for FY14E.

� Price to Book Value of the stock is expected to be at 9.11 x and 6.72 x respectively for FY13E and FY14E.

� We recommend ‘BUY’ in this particular scrip with a target price of Rs.147.00 for Medium to Long term

investment.

Industry Overview

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this

category include all consumables (other than groceries/pulses) people buy at regular intervals. The most

common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged

foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of

frequent consumption and have a high return.

A major portion of the monthly budget of each household is reserved for FMCG products. The volume of money

circulated in the economy against FMCG products is very high, as the number of products the consumer use is

very high. Competition in the FMCG sector is very high resulting in high pressure on margins

FMCG companies maintain intense distribution network. Companies spend a large portion of their budget on

maintaining distribution networks. New entrants who wish to bring their products in the national level need to

invest huge sums of money on promoting brands. Manufacturing can be outsourced. A recent phenomenon in the

sector was entry of multinationals and cheaper imports. Also the market is more pressurized with presence of

local players in rural areas and state brands

The Fast Moving Consumer Goods (FMCG) industry primarily deals with the production, distribution and

marketing of consumer packaged goods, i.e. those categories of products that are consumed at regular intervals.

Examples include food & beverage, personal care, pharmaceuticals, plastic goods, paper & stationery and

household products etc. The industry is vast and offers a wide range of job opportunities in functions such as

sales, supply chain, finance, marketing, operations, purchasing, human resources, product development and

general management. Global leaders in the FMCG segment are Sara Lee, Nestle, Reckitt Benckiser, Unilever,

Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi and Mars etc.

Scope of the Sector

The Indian FMCG sector with a market size of Rs.1,35,000 crore is the fourth largest sector in the economy. A

well-established distribution network, intense competition between the organized and unorganized segments

characterizes the sector.

The Rs.1,35,000 crore FMCG market in India is growing at a fast pace despite of the economic downtrend. The

increasing disposable income and improved standard of living in most tier II and tire III cities are spearheading

the FMCG growth across the nation. The changing profile and mind set of the consumers has shifted the thought

to “Value for Money” from “Money for Value”.

According to a FICCI-Technopak report, India's FMCG sector is poised to reach US$ 43 billion by 2013 and US$ 74

billion by 2018. The report states that implementation of the proposed goods and services tax (GST) and the

opening of foreign direct investment (FDI) are expected to fuel growth further and raise the industry's size to

US$ 47 billion by 2013 and US$ 95 billion by 2018.

According to a study by research firm The Nielson Company, the fast moving consumer goods market (FMCG) in

rural India is tipped to touch US$100 billion by 2025 on the back of "unrelenting" demand driven by rising

income levels. According to the study, rural India accounts for more than half of sales in some of the largest FMCG

categories.

At present, rural consumers spend about US$ 9 billion per annum on FMCG items and product categories such as

instant noodles, deodorant and fabric, with the pace of consumption growing much faster than urban areas, as

per the findings.

“The industry will witness a spate of acquisitions & mergers in the 2010. There will be a renewed focus on rural

consumers too,” by an analyst based in Mumbai. The fast moving consumer goods (FMCG) sector is expected to

grow 13 per cent during FY 2010-11 on the back of strong economic growth, a good monsoon and subsequent

rise in rural income, according to an industry body. Over the years companies like HUL, ITC and Dabur have

improved performance with innovation and strong distribution channels. Their key categories have

strengthened their presence and outperformed peers in the FMCG sector. On the contrary, Colgate Palmolive and

Britannia Industries are strong in single product category i.e. tooth pastes and Biscuits. In addition companies

have been successful in reviving their presence in the semi-urban and rural markets.

Performance

In India, the FMCG industry is the fourth largest sector with a total (organized) market size of over US$15 billion

in 2007, as per ASSOCHAM, and can be classified under the premium and popular segments. The premium

segment (~25%) caters mostly to the

Higher/upper middle income consumers while the price sensitive popular or mass segment (~75%) consists of

consumers belonging mainly to the semi-urban or rural areas that are not, and cannot afford to be, brand

conscious. The market growth over the past 5 years has been phenomenal, primarily due to consumers’ growing

disposable income which is directly linked to an increased demand for FMCG goods and services. Indeed, it is

widely acknowledged that the large young population in the rural and semi-urban regions is driving demand

growth, with the continuous rise in their disposable income, life style, food habits etc. On the supply side, the

wide availability of raw materials, vast agricultural produce, low cost of labor and increased organized retail

have helped the competitiveness of players.

At a time when the economy and other large industrial sectors such as automobiles, aviation and financial

services are reeling from the global slowdown, the consumer goods sector in India has managed to defy the

trend. According to the recent reports by Zeus Consulting, India's FMCG industry has so far been resilient to the

slowdown in the economy and a dip in consumer sentiment, with most companies posting double-digit growth in

net profits in the first half of fiscal 2009, backed by healthy sales. As very categorically said by the Amway India

Enterprises managing director and chief executive, Mr. William Pinckney, “I am not saying that our company

[sector] is recession-proof but it is recession-resilient.” This statement on the whole stands strong for most the

leading players in the FMCG sector.

While a price hike and cost-cutting were the first lines of defense in a bid to protect margins, Indian

manufacturers were able to let logic rather than bottom lines dictate measures, with increased marketing efforts,

a well-thought product mix and new launches helping them emerge unscathed from the turmoil. The prospects

going forward also remain promising. Adi Godrej, Chairman and MD of Godrej Consumer Products Limited

(GCPL) and Chairman of Godrej Industries feels that the best policy would be to provide tremendous fiscal and

monetary stimuli to the economy, “[stimuli is needed] especially in industries connected with consumer finance.

Once that is done, the economic growth will come through and that will generally create multiplier Actors. FMCG

already seems to be doing quite well and FMCG sector will have its best year ever in 2009-10,”

Future Prospects

The only threats to this strong growth trajectory remain the high portion of unorganized trade, the limited

distribution network of new entrants and the pressure on profit margins due to increasing competition. But

these are likely to be of diminished importance as proportion of organized trade increases and players invest in

improving distribution. Going forward, the industry prospects remain attractive, and new graduates can hope to

leverage the training and on-the-job learning at the leading players in various functional roles, across the Metros

as well as the interior heartlands on India.

Major investments

Some of the major investments in the industry are:

� Chennai-based FMCG company CavinKare is planning to invest around US$ 109.50 million over the next two

years in various expansion plans, including a greenfield facility for namkeen at Thane, cool drinks in the

North and others.

� Nestle, the fast moving consumer goods major, plans to invest US$ 50.49 million to set up its first research

and development (R&D) centre in India at Manesar in adjoining Gurgaon district. The facility will be made

operational by July 2012.

� Packaged consumer goods company GlaxoSmithKline Consumer Healthcare (GSKCH) plans to invest over US$

64.87 million on repositioning milk food drink Horlicks as the company’s umbrella brand.

� FieldFresh Foods, joint venture of the Bharti Enterprises and Del Monte Pacific Ltd, has inaugurated their

Research and Development and manufacturing facility in Hosur, Tamil Nadu at an investment of US$ 25.93

million.

� Agri solutions provider Buhler India plans to invest US$ 22.55 million in an integrated manufacturing unit

and other expansion projects in the next four years, in line with its plans to achieve US$ 225.49 million

turnover by 2014.

� Soft drinks and snacks major Pepsico is planning to invest US$ 500 million in India in the next two years.

� Atlanta-based Coca Cola Company plans to invest up to US$ 120.75 million to set up a new bottling plant in

Karnataka, India

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

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Abdul Khabeer Diversified

Anil Kumar Diversified

A.Ravi Diversified

Firstcall India also provides

Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover

Offers, Offer for Sale and Buy Back Offerings.

Corporate Finance Offerings include Foreign Currency Loan Syndications,

Placement of Equity / Debt with multilateral organizations, Short Term Funds

Management Debt & Equity, Working Capital Limits, Equity & Debt

Syndications and Structured Deals.

Corporate Advisory Offerings include Mergers & Acquisitions(domestic and

cross-border), divestitures, spin-offs, valuation of business, corporate

restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &

Execution, Project Financing, Venture capital, Private Equity and Financial

Joint Ventures

Firstcall India also provides Financial Advisory services with respect to raising

of capital through FCCBs, GDRs, ADRs and listing of the same on International

Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and

other international stock exchanges.

For Further Details Contact:

3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071

Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089

E-mail: info@firstcallindiaequity.com

www.firstcallindiaequity.com