Mumbai: Procter & Gamble, one of the top two FMCG firms in the world, has topped Nestle and ITC to become India’s third-largest consumer products maker after nearly doubling its sales in the country in the last three years. P&G’s three entities in the country, selling a wide variety of products ranging from detergents and shampoo to razors to sanitary napkins, posted combined revenues of Rs 9,274 crore for the year ended March 2014, slightly ahead of Nestle India’s Rs 9,197 crore and the FMCG business of ITC that had sales of Rs 8,099 crore.
“In fiscal 2014, we generated robust sales growth across all entities through a strong innovation programmes across product categories and pricing for added consumer benefits,” a P&G spokesperson said. Market leader Hindustan Unilever (HUL) is, however, three times P&G’s size in India and competes with it in most household and personal care categories. Number two, Amul, is twice as big with over Rs 18,000 crore in sales but doesn’t compete with the US consumer giant in any segment.
The company spokesperson said India, one of the fastest growing markets globally for P&G, remains a priority for the Ohio-headquartered giant. Earlier this year, Procter & Gamble merged India, the Middle East and Africa into one IMEA region as part of a significant reorganisation to remove management layers and improve the execution of strategy.
P&G still has a long way to challenge Unilever in India where it trails its smaller global rival in every category in which they compete. “While P&G has significantly narrowed the gap with competition last decade, HUL has made a comeback in the last three years by grabbing back lost market share,” said Abneesh Roy, associate director at Edelweiss Securities.
“It’s a tough task for P&G now as HUL is getting more competitive as is evident from their marketing campaigns, product innovation as well as reach,” he said.Roy said P&G’s latest launch in India, Oral B toothpaste, has met with limited success despite years of planning.
P&G has three subsidiaries in the country Procter & Gamble Health & Hygiene, which markets feminine hygiene brand Whisper and Vicks anti-cold balm; Gillette India, maker of razors and other shaving products; and Procter & Gamble Home Products, best known as the maker of Ariel and Tide detergents. P&G has been clocking compound annual growth rate, or CAGR, of about 25% in the country since the last decade.
In the past two years, it has invested over Rs 2,000 crore in the country. Big investments have taken a toll on its local profitability though. The unlisted P&G Home Products posted a loss of Rs 100 core for FY14, down from a loss of Rs 481.5 crore in FY13. The company is unperturbed.
“We continued to drive profitability in a competitive market environment with strong sales growth and productivity driven cost savings,” the P&G spokesperson said. “In addition, our focus on end to end efficiencies resulted in positive cash flows from operations.” P&G completed setting up a new multi-product plant in Hyderabad last month, as part of a strategy to ramp up local production and distribution to match up HUL in terms of product prices and reach.