The near-term outlook, too, seems good as there seems no immediate threat to these factors.

Also, firms are not losing sight of the basics, using the advantage of lower input costs to cut or maintain prices and drive volume growth. Some are also spending more on advertising and promotions (A&P). The effect in both cases is higher and sustainable sales growth.

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Hindustan Unilever Ltd was an exception, as its volume growth in a few large categories such as soaps and detergents was hit in the mass products segment. Its volume growth during the quarter was just 1%. But its premium products and categories such as beverages saved the day, as overall revenues grew by around 5%. Still, the firm is lagging behind its peers in sales growth and will perhaps do so for a few more quarters.

Other multinationals in the home and personal care space did quite well, with Colgate-Palmolive (India) Ltd reporting an 18% growth in oral care and a 16% growth in toothpaste sales. Colgate held on to prices with profits growing from lower growth in A&P and raw material costs.

Nestle India Ltd, too, grew sales by 18%, attributing it to both volume and price. Margins improved due to lower raw material costs, except in the case of milk and sugar.

But it is companies that include Dabur India Ltd, Marico Ltd and Godrej Consumer Products Ltd that are stealing the show. Their focus has been on volume growth, aided by higher A&P spends, while lower material costs protected margin growth.

These companies are consolidating their expanding share in the domestic market. Moreover, their acquisitions in domestic and overseas markets are contributing to growth.

Fem Care, for example, contributed 4% to Dabur’s 22.4% growth. Godrej’s domestic sales grew by 27% and its international operations grew by 22% despite the slowdown. With domestic business in fine form and a growing cash pile, some are mulling more acquisitions.

The outlook for the next few quarters seems positive, with the main concerns being the lagged effect of the bad monsoon or a sharp spike in raw material prices. However, a high base effect from the previous fiscal year will provide a cushion to input costs.

Economic growth prospects are improving and, as a corollary, consumers should have more cash to spend. Urban markets are likely to be growth drivers. Stock markets, of course, have recognized this.

The FMCG index of the Bombay Stock Exchange has risen around 8% from a month ago, while the benchmark Sensex index has declined by around 7%.

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