Comparative Analysis of Two Companies from FMCG Sector

1. Godrej Consumer Products Ltd

2. Marico Industries Ltd.
Index
1. Overview of FMCG Sector

2. FMCG – SWOT Analysis

3. Brief Introduction – GCPL

4. Brief Introduction – Marico

5. Capacities, Production and Products – GCPL

6. Capacities, Production and Products – Marico

7. Profit & Loss Analysis – GCPL

8. Profit & Loss Analysis - Marico

9. Balance Sheet Analysis – GCPL

10. Balance Sheet Analysis – Marico

11. Salient Features – GCPL

12. Salient Features - Marico

13. Comparative Ratio Analysis

14. Conclusion
FMCG Sector Overview

• Fourth largest sector in the Indian economy

 Principal constituents : Household Care, Personal Care and Food &

Beverages.

• Anticipated Growth : Rs1.25 lakh crore in 2008 to Rs 4.5 lakh crore by

2018 ( Source : FICCI )

• 300 million people will move up from rural poor to rural lower middle class
by 2025. ( Source : GCPL Annual Report )

• Well established distribution network, low penetration levels, low operating

cost & per capita consumption.

• Intense competition between the organized and unorganized segments.

• Growth in the FMCG continues inspite of recession

 FMCG – SWOT Analysis
Strengths:
• Low operational costs
• Presence of established distribution
networks in both urban and rural areas
• Presence of well-known brands in
FMCG sector
Opportunities:
• Untapped rural market
• Rising income levels,
• Large domestic market- a population of
over one billion.
• Export potential
• High consumer goods spending
Weaknesses:
• Lower scope of investing in technology
and achieving economies of scale,
especially in small sectors
• Low exports levels
• "Me-too products
• Input costs
• Competition
Threats:
• Removal of import restrictions resulting
in replacing of domestic brands
• Tax and regulatory structure
• Discretionary spending
 Brief Introduction - GCPL

HISTORY

 1897 - Origin of Godrej group

 1930 - Godrej soap

KEY FEATURES INTERNATIONAL PRESENCE &

PERFORMANCE
 Second Largest manufacturer of toilet soaps
in the country , 9.6% market share Keyline Brands Ltd

 Leader in the hair colour category in India  Rapidol Pty Ltd. South Africa

 Contract manufacturing of toilet soaps  Godrej Global Mideast FZE, Sharjah

 Malanpur plant received 25 Awards at the  Kinky Group (Pty) Limited, South
National Convention of Quality circles - 2008 Africa

 Another variant of Godrej No. 1 viz.  Re-launch of ‘Cuticura’ Hand Hygiene

Strawberry & Walnut’ range in UK featuring.

 Re-launch of Godrej Fair-glow, Cinthol.  Significant export income for FY09 - Rs.
19.4 crore
 Brief Introduction - Marico
HISTORY

 1862 - Origin of Marico

KEY FEATURES INTERNATIONAL PRESENCE

 Consumer Products & Services in the Global  Think IBG – Think Big
Beauty
 Presence in Bangladesh & Gulf
 Market’s well known brands such as
Parachute, Saffola, Swikar, Hair & Care,  Hair care brand in Egypt
Nihar,
Madiker, Revive, Kaya  South African journey

 Leadership position in coconut oil, Hair oil  Started operations in October 2007
Anti Lice treatment, Premium Refined Edible
oil  Currently operates 3 leading brands

 Business Today's verdict

 Marico won four awards for excellence in

employer branding and advertising to talent
at the Remmy Awards 2009 ( Source –
Company website )

 IMC Ramakrishna Bajaj National Quality

Award in the manufacturing category
 Capacities, Production and Products - GCPL

Particulars Unit Period Installed Production

Ended Capacity Quantity

Soaps (M.T.) 31.03.2009 137,333 87,335

31.03.2008 137,333 76,648

Hair Colour & Other 31.03.2009 16,080 1,203
Toiletries (M.T.)
31.03.2008 16,080 1,339
Fatty Acids (M.T.) 31.03.2009 97,500 4,791

31.03.2008 52,500 805

Glycerine (M. T.) 31.03.2009 2,300 1,648

31.03.2008 2,300 2,475

Detergents 31.03.2009 12,000 3,699

31.03.2008 12,000 2,869

 Capacities, Production and Products - Marico
Particulars Unit Period Installed Production Purchases Purchases
Ended Capacity Quantity Quantity Amount
(Cr.)
Hair Oils (K.L.) 31.03.2009 24,000 15,033 - -

31.03.2008 24,000 13,443 - -

Edible Oils (M.T.) 31.03.2009 170,000 114,709 - -

31.03.2008 170,000 107,908 185.98 1.20

Oil Seeds (M.T.) 31.03.2009 - - 8,674 38.95

31.03.2008 - - - -

Others (Incl. 31.03.2009 - - - 11.12

processed foods
and by products) 31.03.2008 - - - 9.80
 Profit & Loss Analysis - GCPL
FY 2008-09 FY 2007-08 FY 2006-07
  Rs. crore Rs. Crore Rs. Crore
SALES 1084.34 886.68 758.52
OTHER INCOME 48.80 11.08 5.30
TOTAL INCOME 1133.14 897.76 763.82
       
MATERIAL 601.18 432.00 392.42
OTHER EXPENSES 322.85 270.46 218.66
TOTAL EXPENDITURE 924.03 702.46 611.08
       
PBDIT 209.11 195.30 152.74
       
DEPRECIATION 14.37 15.70 12.49
INTEREST AND FINANCIAL CHGS 8.82 10.37 5.84
PBT 185.92 169.23 134.41
       
PROVISION FOR TAX 25.01 21.12 17.18
TAX ADJUSTMENT (0.64)   (4.80)
PAT 161.55 148.11 122.03
 Profit & Loss Analysis - Marico
FY 2007-
FY 2008-09 08 Rs. FY 2006-07
  Rs. crore Crore Rs. Crore
SALES 1917.46 1568.79 1371.67
OTHER INCOME 14.53 14.53 4.22
TOTAL INCOME 1931.99 1583.32 1375.89
       

MATERIAL 1157.03 892.89 749.58

OTHER EXPENSES 510.14 479.72 428.74
TOTAL EXPENDITURE 1667.17 1372.61 1178.32
       

PBDIT 264.82 210.71 197.57

       

DEPRECIATION 17.03 19.75 35.19

INTEREST AND FINANCIAL CHGS 28.92 18.93 11.60
PBT 218.87 172.03 150.78
       

PROVISION FOR TAX 28.91 29.86 34.62

       

PAT 189.96 142.17 116.16

 Balance Sheet Analysis - GCPL
FY 2008-09 FY 2007-08 FY 2006-07
LIABILITIES Rs. In Crores Rs. In Crores Rs. In Crores
Share Capital 25.70 22.58 22.58
Reserves & Surplus 511.22 127.91 88.32
536.92 150.50 110.90
Loan Funds
Secured Loans 14.89 40.59 47.86
Unsecured Loans 48.00 94.00 65.00
62.89 134.59 112.86
Current Liabilities & Provisions
Current Liabilities 238.21 243.85 214.17
Provisions 32.94 30.53 8.21
271.15 274.38 222.38
Deferred Tax Liability (net) 4.16 9.07 7.97
TOTAL 875.12 568.54 454.12
ASSETS
Fixed Assets 169.7909 154.5794 148.1281
Capital work-in-progress 2.50 71.58 39.81
172.29 226.16 187.94
Investments 97.89 77.61 71.79
Current Assets, Loans and Advances
Inventories 126.67 164.91 117.23
Sundry Debtors 9.86 12.20 9.80
Cash and Bank balances 344.57 19.85 21.73
Other current assets 9.01 - -
Loans and advances 114.84 64.95 45.64
604.95 261.91 194.39
Miscellaneous Expenditure - 2.87 -
TOTAL 875.12 568.54 454.12
 Balance Sheet Analysis – Marico
FY 2008-09 FY 2007-08 FY 2006-07
LIABILITIES Rs. In Crores Rs. In Crores Rs. In Crores
Share Capital 60.90 60.90 60.90
Reserves & Surplus 306.78 219.33 122.59
367.68 280.23 183.49
Loan Funds
Secured Loans 107.51 121.23 50.48
Unsecured Loans 201.02 184.36 116.77
308.53 305.59 167.25
Current Liabilities & Provisions
Current Liabilities 196.36 203.66 311.64
Provisions 30.87 42.63 12.77
227.23 246.29 324.41

TOTAL 903.44 832.11 675.15

ASSETS
Fixed Assets 115.91 96.99 95.06
Capital work-in-progress 45.61 49.10 12.80
161.52 146.09 107.86
Investments 112.58 106.52 80.91
Current Assets, Loans and Advances
Inventories 273.69 218.59 196.21
Sundry Debtors 61.05 41.68 41.29
Cash and Bank balances 24.96 29.93 24.80
Loans and advances 206.23 193.77 109.06
565.93 483.97 371.36
Deferred Tax Asset (net) 63.41 95.53 115.02
TOTAL 903.44 832.11 675.15
 Salient Features - GCPL
 Agreement with HP to outsource its entire IT infrastructure

 Enhanced Rural Presence

 Acquisition of Kinky Group Proprietary Ltd., South Africa

 Corporate Governance Rating - CGR2+

 Stakeholder Value Creation and Governance Rating - SVG2+ (ICRA)

 Expansion of distribution and supply chain

 (Total 30L outlets; 2L added during the current year)

 Exports to 33 countries ; Export income for FY09 - Rs. 19.4 Cr.

 Promoters and Foreign Institutional Investors hold 69.73% & 17.37%

respectively.
 Salient Features - Marico

 ROCE - above 25% over the last 10 years.

 Parachute - world's largest packaged coconut oil brand.

 Kaya - over 80 clinics in India and The Middle East.

 Retail outlets – 20L

 Consumer packs per month – 70 L.

Comparative Ratio Analysis
Profitability Ratios

Leverage Ratios

GCPL

Marico
Comparative Ratio Analysis
Turnover Ratios

Liquidity Ratios

GCPL

Marico
Conclusion
VIABLE TO INVEST IN FMCG SECTOR

 4th Largest Sector in Indian Economy

 Anticipated Growth : Rs1.25 lakh crore in 2008 to Rs 4.5 lakh crore by
2018
 Capacity of surviving even in recession time

Stronger in terms of Financials compared to

Parameter GCPL Marico

Promoters Shareholding 69.79% 63.51%
Net Profit Margin : 08-09 16.70% 9.17%
07-08 14.89% 7.41%
Liquidity High Low
Reserves & Surplus 383.31 Crs 87.45 Crs