At a time when the economy and industry sectors such as automobiles, aviation and financial services are reeling from the global slowdown, the consumer goods sector in India has managed to buck the trend with most companies posting double-digit growth in net profits in the first half of fiscal 2009 backed by healthy sales. Led by consumer goods company Hindustan Unilever Ltd, or HUL, which reported net sales of Rs8,243.54 crore in April-September, the sector averaged a revenue growth of 17-20% in the first half of 2008-09, although the volume growth was a bit slower.
Listen to audio abstract of Campaign inside
According to research firm
AC Nielsen, the total consumer goods market in India during the June quarter was estimated at Rs22,354.25 crore, a growth of 15.8% over the same period last year. In the second quarter ended September, the market was estimated at Rs23,891.75 crore, registering a growth of 19.6% over the same period a year ago. The industry is expected to grow to Rs95,150 crore by the end of fiscal 2009, up from Rs85,470 crore in the last fiscal, a growth of 16%, says the Federation of Indian Chambers of Commerce and Industry, or Ficci.
![Driving growth: (clockwise from top left) Neeraj Chandra, VP, sales, marketing and innovation, Britannia [Madhu Kapparath / Mint]; Milind Sarwate, chief, HR and strategy, Marico; and Amit Burman, vice-chairman, Dabur.](/images/66B731AE-51B1-4CB7-A272-577B02150784ArtVPF.gif "Driving growth: (clockwise from top left) Neeraj Chandra, VP, sales, marketing and innovation, Britannia [Madhu Kapparath / Mint]; Milind Sarwate, chief, HR and strategy, Marico; and Amit Burman, vice-chairman, Dabur.")
Driving growth: (clockwise from top left) Neeraj Chandra, VP, sales, marketing and innovation, Britannia [Madhu Kapparath / Mint]; Milind Sarwate, chief, HR and strategy, Marico; and Amit Burman, vice-chairman, Dabur.
These growth figures were, however, not easy to achieve. The sector faced the heat of rising prices of essential commodities and crude oil during the first quarter of 2008-09. Price hikes were the first line of defence in the battle to protect margins. Most consumer goods companies hiked prices by 5-15% during the first half of the fiscal.
Soap and detergent brands saw a considerable increase in prices as the cost of raw materials went up substantially. HUL, which markets a range of personal and home care products that straddle various price points, increased prices by at least 10% on certain brands. “Consumer spending remains robust in FMCG (fast moving consumer goods) and we continue to improve our turnover ahead of aggregated market growth. We have sustained volume growth in a high inflationary environment and offset the cost impact through aggressive cost management and judicious pricing,” Harish Manwani, chairman, HUL, said after the company announced its September quarter results.
HUL clocked a 34% increase in net profit for that quarter at Rs546.61 crore against Rs408.06 crore in the same quarter a year ago. The company’s net sales increased by 19.71% at Rs4,027.87 crore, up from Rs3,364.63 crore.