Sneha Sharma* Ravi Kumar Bakshi** ABSTRACT

Transcription

1 GROWTH OF FMCG SECTOR CONSUMER GOODS WITH SPECIAL REFRENCE TO HUL AND ITS CORRELATION WITH FMCG INDEX AND SENSEX Sneha Sharma* Ravi Kumar Bakshi** ABSTRACT Purpose: The major focus of this paper is to find out the correlation between HUL and Sensex and moreover the correlation between FMCG index and HUL. This correlation is having some implications over investment decision of potential investor who is seeking HUL as their investment destination. Moreover the emphasis is on the growth aspect of FMCG industry. Design/Methodology: The study is simple descriptive in nature and secondary data has been used by researcher. For these purpose two tools, coefficient of correlation(r) and to calculate risk factor BETA has been used. Practicle Implication: This paper is helpful to all those potential investor who want to invest in HUL and they may also be able to know about risk factor involve in HUL. Keywords: FMCG, Cofficient of correlation, Beta. *Lecturer, Hec, Jagadhri **Assistant Professor, Ggsitms, Yamunanagar 471

2 INTRODUCTION TO FMCG 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 Indian fast-moving consumer goods (FMCG) sector is expected to grow 13 percent during 2010/11 on the back of strong economic growth, a good monsoon and subsequent rise in rural income, an industry body said. Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. Indias FMCG sector is the fourth largest sector in the economy andcreate eployment for 3 million people in downstream activities. 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. The total FMCG market is in excess of crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. The top ten companies deal in FMCG goods: RANKS OF COMPANIES 1. HUL 2. ITC 3. NESTLE 4. DABUR 5. PIDILITE 6. COLGATE PALMOLIVE 7. GCPL 8. BRITANIA 472

3 9. MARICO 10. P&G GROWTH IN FMCG SECTOR IN VARIOUS YEARS: FMCG sector is currently going through a drastic change in its approach and the market it is cattering, the demand of consumer is changing and so the need of change in product or the way it is marketed. The fast moving consumer goods ( FMCG) industry which accounts for 2.2% of India s GDP, is expected to attain a size of INR 1300 billion by FY Over the last few years the industry has shown a huge growth trends by favourable economic growth, increased rural incomes and especially consumer awareness campaigns. The passed last five years are well for the growth of this sector in which the industry Annual growth rate increases to 17% approximately since 2005, even in 2008,2009,it meltsdown for 14% & 11%. FMCG basically gets more growth in food products like Edible oils, fruit juices and also in skin care creams and these are all happen just due to awareness of customers & packaged beverages. HISTORICAL GROWTH OF FMCG INDUSTRY: FINANCIAL ANNUAL GROWTH RATE YEAR (INR BILLION) FY FY FY FY FY FY FY FY FY FY

4 FMCG GROWTH RATE IN FY'S GDP 5% ANNUAL GROWTH RATE (approx.) GROWTH RATE Column3 Column2 GDP (IRP BILLION) 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 UNILEVER THE LARGEST FMCG IN INDIA MARKET SHARES OF FMCG COMPANIES IN INDIA INTRODUCTION TO HUL: With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, the Company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall s and Pureit. The Company has over 16,000 employees and has an annual turnover of around Rs.19, 401 crores (financial year ). HUL is a subsidiary of Unilever, one of the world s leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of about 44 billion in Unilever has about 52% shareholding in HUL. HUL is one of the topmost business deals in FMCG sector with huge investment, with the gross sales of crores in, & share capital of crores. There are various innovations done by HUL in ,say Ponds Dream flower talc with new fragrance & Brooke Bond which delivers Vitamin in tea. In this study the growth of FMCG sector is analysed from last many years and research is based on 474

5 IJRFM Volume 2, Issue 2 ( February 2012) (ISSN ) secondary data whichh is being collected from various journals & sites & study is descriptive in nature. SSS MARKET SHARE HUL ITC BRITANIA DABUR NESTLE OTHERS CATEGORY GROWTH IN VARIOUS CATEGORIES OF FMCG PRODUCT WISE FROM (FY ) CATEGORY GROWTH RATE IN % OILS 8% BISCUITS 24% FRUIT DRINKS 35% SKINCARE 16% TOOTHPASTE 11% SHAMPOOS 26% HAIROIL 21% 475

6 IJRFM 40% Volume 2, Issue 2 ( February 2012) (ISSN ) 35% 30% 25% 20% 15% 10% GROWTH RATE IN % Column2 Column3 5% 0% CORRELATION BETWEEN SENSEX, FMCG & HUL This section of study presents the results of inter-correlation analysis with respect to the relationship between the sensex, HUL, FMCG. With the help of this analysis we can come to know the type of correlation between all these factors & understands how much the HUL contributes in FMCG sector in terms of profits and also their closing prices affects the sensex. YEAR FMCG( Indices) HUL(Prices) SENSEX(Prices)

7 SOURCE : BSE India.com r= [ NΣXY - (ΣX)(ΣY)] ([NΣX 2 - (ΣX) 2 ][NΣY 2 - (ΣY) 2 ])] r in HUL & FMCG is r in HUL & SENSEX is INTERPRETATION : FMCG & HUL : The result shows that the value of r is It shows there is positive correlation between Index of FMCG & HUL which implies that if Index of FMCG moves upward then prices of HUL moves on upward & viceversa. From investment point of view it is situation because if Index of FMCG moves upward & investor has invested in HUL, he will be in benefit because prices of HUL will move in the same direction with Index of FMCG. On the contrary, if prices of FMCG Index moves downward than investor will be in losses because of the same reason. So there must be an inverse relationship between these two, in today s scenario where so much fluctuations are prevailing in market. HUL & SENSEX : The value of r in between HUL & SENSEX is Again there is positive correlation between these two. The prices of HUL will be moving in the same direction with SENSEX. Now it s a dilemma for an investor that to which correlation he should seek before making an investment. As we have seen that HUL is having positive relationship with Index of FMCG & SENSEX. In case of FMCG, HUL is having highly positive situation, where as in case if SENSEX it is positive only. Now it is up to an investor, which value he will take into consideration before making an investment. One more factor is also important that is risk factor. 477

8 CALCULATION OF BETA FACTOR YEAR HUL(Prices)y SENSEX(Prices)x SOURCE : BSE India.com Calculation of Beta: n* XY-( x)( y) n* X 2_ ( X) 2 =.059 INTERPRETATION Beta: Beta describes the relationship between the stock s return and index returns. The value of Beta here is.059 which indicates that one percent change in index return cause.059 percent change in Hindustan unilever s return. Implications of this paper: This paper is having a strong implication over investment decision. As investor has to keep a regular vigil on stock market. The correlation factor and Beta factor are very useful values to take their investment decision. Moreover the growth of FMCG industry can also be seen and market share of HUL is also very useful towards society from performance point of view. 478

9 CONCLUSION The FMCG industry is growing at a rapid pace in today s scenario. India has become a hub for all the multinationals because of large consumption of goods. In this aspect the competition is so intense between companies that they want to provide more and more facilities to their consumers. We can easily see whatever different companies are doing (massive advertisement, product differentiation, variety etc.) 479