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A REPORT ON

~A STUDY OF CORPORATE SOCIAL RESPONSIBILITY IN INDIAN IT INDUSTRY


WITH REFRENCE TO INFOSYS, HCL AND WIPRO




















SUBMITTED BY
PANKA1 KUMAR
ROLL: 0409008
Date: 30th September 2010
A REPORT ON



~A STUDY OF CORPORATE SOCIAL RESPONSIBILITY IN INDIAN IT INDUSTRY
WITH REFRENCE TO INFOSYS, HCL AND WIPRO






PANKA1 KUMAR
ROLL NO - 0409008





BATCH XVII, 2009-2011
Report submitted in partial fulfillment for the award of
Post Graduate Diploma in Management
VIGNANA 1YOTHI INSTITUTE OF MANAGEMENT
(APPROVED BY AICTE, MINISTRY OF HRD, GOVT OF INDIA) BACHUPALLY,
HYDERABAD
ACKNOWLEDGEMENT
I hereby convey my deep acknowledgement to all those who made it possible Ior me to complete
this project, by extending their support and continuous co-operation.
I would like to acknowledge the consistent encouragement extended by Dr. Kamal Ghosh Ray,
Director and Dr. Ch. S. Durga Prasad, Dean-Academic Planning oI Vignana Jyothi Institute oI
Management.
My sincere gratitude to Col (Retd.) Saeed Ahmad, Associate ProIessor whose constant guidance,
eIIorts, heartIelt support, suggestions and consideration helped me in the successIul completion
oI this project.
llnally l would llke Lo Lhank my frlend Mr Shadab AkLhar un[ab College of 1echnlcal
LducaLlon Ludhlana Mr Modassahar khan unlverslLy of Madras Chennal Mr Subhash
kumar nlLLM School of 8uslness uelhl and my v!lM baLch maLes wlLhouL whom Lhls
dlsserLaLlon work would noL have been successfully compleLed

















INTRODUCTION
Fast Moving Consumer Goods (FMCG)
FMCG are products that have a quick shelI turnover, at relatively low cost and don't require a lot
oI thought, time and Iinancial investment to purchase. The margin oI proIit on every individual
FMCG product is less. However the huge number oI goods sold is what makes the diIIerence.
Hence proIit in FMCG goods always translates to number oI goods sold. Fast Moving Consumer
Goods is a classiIication that reIers to a wide range oI Irequently purchased consumer products
including: toiletries, soaps, cosmetics, teeth cleaning products, shaving products, detergents, and
other non-durables such as glassware, bulbs, batteries, paper products and plastic goods, such as
buckets.` Fast Moving` is in opposition to consumer durables such as kitchen appliances that are
generally replaced less than once a year. The category may include pharmaceuticals, consumer
electronics and packaged Iood products and drinks, although these are oIten categorized
separately. The term Consumer Packaged Goods (CPG) is used interchangeably with Fast
Moving Consumer Goods (FMCG).Three oI the largest and best known examples oI Fast
Moving Consumer Goods companies are NESTLE, UNILEVER AND PROCTER & GAMBLE.
Examples oI FMCGs are soIt drinks, tissue paper, and chocolate bars. Examples oI FMCG
brands are Coca-Cola, Kleenex, Pepsi and Believe. The FMCG sector represents consumer
goods required Ior daily or Irequent use. The main segments oI this sector are personal care (oral
care, hair care, soaps, cosmetics, and toiletries), household care (Iabric wash and household
cleaners), branded and packaged Iood, beverages (health beverages, soIt drinks, staples, cereals,
dairy products, chocolates, bakery products) and tobacco.
The Indian FMCG sector is an important contributor to the country's GDP. It is the Iourth largest
sector in the economy and is responsible Ior 5 oI the total Iactory employment in India. The
industry also creates employment Ior 3 m people in downstream activities, much oI which is
disbursed in small towns and rural India. This industry has witnessed strong growth in the past
decade. This has been due to liberalization, urbanization, increase in the disposable incomes and
altered liIestyle. Furthermore, the boom has also been Iuelled by the reduction in excise duties,
de-reservation Irom the small-scale sector and the concerted eIIorts oI personal care companies
to attract the burgeoning aIIluent segment in the middle-class through product and packaging
innovations.
Unlike the perception that the FMCG sector is a producer oI luxury items targeted at the elite, in
reality, the sector meets the every day needs oI the masses. The lower-middle income group
accounts Ior over 60 oI the sector's sales. Rural markets account Ior 56 oI the total domestic
FMCG demand. Many oI the global FMCG majors have been present in the country Ior many
decades. But in the last ten years, many oI the smaller rung Indian FMCG companies have
gained in scale. As a result, the unorganized and regional players have witnessed erosion in
market share.

HISTORY OF FMCG COMPANIES IN INDIA
In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have been a dominant Iorce in
the FMCG sector well supported by relatively less competition and high entry barriers (import
duty was high). These companies were, thereIore, able to charge a premium Ior their products. In
this context, the margins were also on the higher side. With the gradual opening up oI the
economy over the last decade, FMCG companies have been Iorced to Iight Ior a market share. In
the process, margins have been compromised, more so in the last six years (FMCG sector
witnessed decline in demand).

CURRENT SITUATION
The growth potential Ior FMCG companies looks promising over the long-term horizon, as the
per-capita consumption oI almost all products in the country is amongst the lowest in the world.
As per the Consumer Survey by KSA-Technopak, oI the total consumption expenditure, almost
40 and 8 was accounted by groceries and personal care products respectively. Rapid
urbanization, increased literacy and rising per capita income are the key growth drivers Ior the
sector. Around 45 oI the population in India is below 20 years oI age and the proportion oI the
young population is expected to increase in the next Iive years. Aspiration levels in this age
group have been Iuelled by greater media exposure, unleashing a latent demand with more
money and a new mindset. In this backdrop, industry estimates suggest that the industry could
triple in value by 2015 (by some estimates, the industry could double in size by 2010).
In our view, testing times Ior the FMCG sector are over and driving rural penetration will be the
key going Iorward. Due to inIrastructure constraints (this inIluences the cost-eIIectiveness oI the
supply chain), companies were unable to grow Iaster. Although companies like HLL and ITC
have dedicated initiatives targeted at the rural market, these are still at a relatively nascent stage.
The bottlenecks oI the conventional distribution system are likely to be removed once organized
retailing gains in scale. Currently, organized retailing accounts Ior just 3 oI total retail sales
and is likely to touch 10 over the next 3-5 years. In our view, organized retailing results in
discounted prices, Iorced-buying by oIIering many choices and also opens up new avenues Ior
growth Ior the FMCG sector. Given the aggressive expansion plans oI players like Pantaloon,
Trent, Shopper`s Stop and Shoprite, we are conIident that the FMCG sector has a bright Iuture.
CVLk VILW CI INDIAN IMCG MAkkL1
lndla offers a large and growlng markeL of 1 bllllon people of whlch 300 mllllon are mlddle class
consumers lndla offers a vlbranL markeL of youLh and vlgor wlLh 34 of populaLlon below Lhe
age of 23 years 1hese young people work harder earn more spend more and demand more
from Lhe markeL maklng lndla a dynamlc and lnsplraLlonal socleLy uomesLlc demand ls
expecLed Lo double over Lhe Lenyear perlod from 1998 Lo 2007 1he number of households
wlLh hlgh lncome ls expecLed Lo lncrease by 60 ln Lhe nexL four years Lo 44 mllllon
households lndla ls raLed as Lhe flfLh mosL aLLracLlve emerglng reLall markeL lL has been
ranked second ln a Clobal 8eLall uevelopmenL lndex of 30 developlng counLrles drawn up by A
1 kearney A1 kearney has esLlmaLed lndlas LoLal reLall markeL aL $2026 bllllon ls expecLed Lo
grow aL a compounded 30 per cenL over Lhe nexL flve years 1he share of modern reLall ls llkely
Lo grow from lLs currenL 2 per cenL Lo 1320 percenL over Lhe nexL decade analysLs feel
1he lndlan lMCC secLor ls Lhe fourLh largesL secLor ln Lhe economy wlLh a LoLal markeL slze ln
excess of uS$ 131 bllllon 1he lMCC markeL ls seL Lo Lreble from uS$ 116 bllllon ln 2003 Lo
uS$ 334 bllllon ln 2013 eneLraLlon level as well as per caplLa consumpLlon ln mosL producL
caLegorles llke [ams LooLhpasLe skln care halr wash eLc ln lndla ls low lndlcaLlng Lhe unLapped
markeL poLenLlal 8urgeonlng lndlan populaLlon parLlcularly Lhe mlddle class and Lhe rural
segmenLs presenLs an opporLunlLy Lo makers of branded producLs Lo converL consumers Lo
branded producLs lndla ls one of Lhe world's largesL producers for a number of lMCC producLs
buL lLs lMCC exporLs are langulshlng aL around 8s 1000 crore only 1here ls slgnlflcanL
poLenLlal for lncreaslng exporLs buL Lhere are cerLaln facLors lnhlblLlng Lhls Smallscale secLor
reservaLlons llmlL ablllLy Lo lnvesL ln Lechnology and quallLy up gradaLlon Lo achleve economles
of scale Moreover lower volume of hlgher value added producLs reduce scope for exporL Lo
developlng counLrles
1he lMCC secLor has LradlLlonally grown aL a very fasL raLe and has generally ouL performed
Lhe resL of Lhe lndusLry Cver Lhe lasL one year however Lhe raLe of growLh has slowed down
and Lhe secLor has recorded sales growLh of [usL flve per cenL ln Lhe lasL four quarLers 1he
ouLlook ln Lhe shorL Lerm does noL appear Lo be very poslLlve for Lhe secLor 8ural demand ls on
Lhe decllne and Lhe CenLre for MonlLorlng lndlan Lconomy (CMlL) has already downs called lLs
pro[ecLlon for agrlculLure growLh ln Lhe currenL flscal oor monsoon ln some sLaLes Loo ls
unllkely Lo help maLLers Moreover Lhe general slowdown ln Lhe economy ls also llkely Lo have
an adverse lmpacL on dlsposable lncome and purchaslng power as a whole 1he growLh of
lmporLs consLlLuLes anoLher problem area and whlle so far lmporLs ln Lhls secLor have been
conflned Lo Lhe premlum segmenL lMCC companles esLlmaLe Lhey have already cornered a
four Lo slx per cenL markeL share 1he hlgh burden of local Laxes ls anoLher reason aLLrlbuLed
for Lhe slowdown ln Lhe lndusLry AL Lhe same Llme Lhe long Lerm ouLlook for revenue growLh ls
poslLlve Clve Lhe large markeL and Lhe requlremenL for conLlnuous repurchase of Lhese
producLs lMCC companles should conLlnue Lo do well ln Lhe long run Moreover mosL of Lhe
companles are concenLraLlng on cosL reducLlon and supply chaln managemenL 1hls should
yleld poslLlve resulLs for Lhem 1he proflle of ma[or leadlng lMCC MarkeL layers ls as follows
kC8LLM CI IMCG CCMANILS
The Iast-moving consumer goods (FMCG) companies are Iaced with a peculiar challenge oI
maintaining proIitable growths in the backdrop oI a low inIlation rate. As against the high
inIlation oI the early 90s the peak growth season Ior all FMCG companies the ensuing
period oI a lower inIlation rate dares companies to now play the volume game. As against a
growth in proIitability, which came with price increase in line with the rising inIlation, the
FMCG industry will now have to do without this critical Iactor which has been contributing to
almost halI oI the industry`s growth. 'Volumes will play a critical role now. The number oI units
sold will be an important metric, as there is very little avenue to drive price growth, said MS
Banga, chairman, Hindustan Lever Ltd (HLL), in his keynote address at the 2nd National FMCG
Conclave organized by the ConIederation oI Indian Industry (CII). Since volume will be the key
determinant oI growth, the industry will be Iorced to push volume growth. Hence, Ior those
companies which hitherto relied on price increase as an easy way to enhance proIitability, there
could be a pressure on margins. To tackle the problem there needs to be a relentless Iocus on
cost-cutting. 'Many companies, which have understood that volumes will be critical, will
beneIit, added Mr. Banga. According to Mahesh Vyas, executive director, the Centre Ior
Monitoring Indian Economy (CMIE), the year holds a lot oI promise, iI growth is good and
inIlation is lower. 'Volume growth and no price reduction is good Ior FMCG, said Mr. Vyas.
He, however, said Iresh investments were critical Ior sustained growth in the economy. Another
serious challenge which the industry is Iaced with, said Mr. Banga, is consumer promotions
where Ireebies are threatening to lead to the commoditization oI the industry. 'I believe that the
industry must take a serious note oI it. It is threatening the very premise on which the FMCG
industry stands today (i.e. branding), Mr. Banga added. As to how HLL, which is a leading
FMCG company, would boost its volumes and maintain its margins, Mr. Banga said the only
way out was branding. He denied that HLL was cutting down upon its advertising spends, which
he said, was only on a quarter-on-quarter basis. The total advertising expenditure Ior HLL
declined to Rs 182.74 crore during the third quarter ended September 30, 2003, Irom Rs 217.80
crore.
Cne of Lhe reasons ls Lhe facL LhaL Lhe CondlLlonal Cash 1ransfer scheme (CC1) ls gaLherlng
supporL as a replacemenL for myrlad welfare schemes Along wlLh Lhe rural employmenL
guaranLee scheme loan walvers and lncrease ln prlces aL whlch agrlculLural producLs are
boughL Lhe CC1 could solve Lhe lMCC's problem of unpredlcLablllLy of agrlculLural lncome and
Lhe assoclaLed fall ln markeL demand 1he malnsLay of Lhe rural LhrusL of lMCC companles ls
based on Lhe hope LhaL Lhere are 'dlsposable lncomes' lylng unLapped ln Lhe hlnLerland lf Lhe
rural populaLlon spends some of Lhls lL wlll cerLalnly boosL demand ln Lhe currenL recesslon
WlLh urban consumpLlon ln decllne or sLagnaLlng because of Lhe economlc slowdown lMCC
companles have been hlL hard 1he ldea ls Lo glve a 'cholce' Lo Lhe rural cusLomer Lo shlfL Lo
branded producLs from LradlLlonal unbranded merchandlse from Lhe nonorganlsed secLor
1he growLh ls ln rural" says lndla's Lop markeLlng head 8ama 8l[apurkar 8ural lndla
consLlLuLes over 60 percenL of Lhe counLry's LoLal consumer base lL's esLlmaLed LhaL rural
markeLs hold 33 percenL of LoLal LlC pollcles 30 percenL of Lhe markeL for Lelevlslons fans
blcycles and wrlsLwaLches and a masslve 70 percenL of Lhe markeL for LolleL soap
consumpLlon 1he 8s 63000 crore debL walvers announced lasL year helped 36 mllllon farmers
and made Lhem ellglble Lo fund Lhe nexL crop 1he CenLre conLlnued Lo provlde shorLLerm crop
loans aL 7 percenL lnLeresL up Lo 8s 3 lakh An upLurn ln agrlculLure was seen ln Lhe uA's
lnLerlm budgeL of 200910 where Lhe annual growLh raLe of agrlculLure was posLed aL 37
percenL Added Lo Lhls was Lhe elecLlonlnsplred lncrease ln mlnlmum supporL prlces (MS) ln
200809 Announced ln Lhe season ahead of Lhe general elecLlon Lhe MS for paddy (8s 330
per qulnLal ln 200304) rose Lo 8s 900 for wheaL Lhe MS whlch was 8s 630 per qulnLal rose
Lo 8s 1080 lL also led Lo masslve procuremenL of food gralns Lhls year
lacLors llke Lhls accordlng Lo analysLs have creaLed 'dlsposable lncomes' whlch Lhe rural
consumers should be ldeally keen on spendlng on consumer goods 1PL LCCnCMlC Su8vL?
200708 says rural lndla spends on average 33 percenL on food and 43 percenL on nonfood
lLems llke cloLhlng consumer durables educaLlon and healLh And lLs spend on urban cosLs of
llvlng such as elecLrlclLy commuLlng fuel and renL ls negllglble 1haL level of spendlng on
regular consumables ls good news for lMCC manufacLurers Add Lo LhaL Lhe facL LhaL unllke
Lhelr urban counLerparLs rural clLlzens' lncomes are relaLlvely beLLer preserved from markeL
flucLuaLlons and real esLaLe shocks lor corporaLe Lhe rural hlnLerland had earller meanL hlgh
lnvesLmenL because of poor lnfrasLrucLure absence of sLorage servlces no elecLrlclLy waLer or
flnance faclllLles ln Llmes of recesslon Lhe problems appear surmounLable lL's expecLed LhaL
caLchlng Lhe vlllages' fancy should be far easler Lhan LhaL of Lhe lnfofaLlgued urban buyer 1he
rural markeL already accounLs for 30 percenL of lMCC producLs llke pressure cookers Lea
branded salL and LooLh powder Companles expecL Lo lncrease markeL share and Lo add
producLs Lo Lhe rural porLfollo Accordlng Lo ASSCCPAM whlch announced early Lhls year LhaL
Lhe lMCC secLor ls pegged Lo grow aL 40 percenL ln Lhe rural markeL rlslng rural lncomes
healLhy agrlculLural growLh boosL ln demand rlslng consumerlsm and beLLer peneLraLlon of
lMCC producLs'' are Lhe reasons for Lhls pro[ecLlon Agrees ueepak !olly a dlrecLor wlLh Coca
Cola lndla 1he rural LhrusL ln lndla Loday ls huge ln many ways l would say lL ls Lhe maln
drlver for Lhe markeLs" Among Lhe few Lhlngs LhaL Lhe lMCC companles are seeklng from Lhls
budgeL ls LhaL Lhe Laxes and duLles LhaL have been reduced by Lhe governmenL Lo promoLe Lhe
secLor should noL be revoked lf only Lhey could have Lhe same lmpacL on Lhe monsoon any
weakenlng or fallure Lhere wlll conslderably affecL Lhe purchaslng power of vlllagers and
volumes of lMCC producLs lL's ln Lhls conLexL LhaL Lhe gaLherlng supporL for Lhe condlLlonal
cash Lransfers (CC1) scheme should be seen lL proposes LhaL Lhe governmenL deposlL an
amounL ln Lhe accounL of beneflclarles ldenLlfled accordlng Lo poverLy crlLerla 1he amounL ls
deposlLed ln Lhe name of Lhe woman member of Lhe household and accessed only lf chlldren go
Lo school or aLLend Lhe healLh cenLre larmers are spendlng more Lhan ever Lo culLlvaLe
vlllagers are spendlng more Lhan ever Lo buy food 1he governmenL hopes Lo brlng Lhe naLlonal
lood SecurlLy 8lll LhaL provldes monLhly 23kg Lo 8L famllles aL 8s 3 per kg lL would be
lnLeresLlng Lo waLch lf Lhe 'dlsposable lncome' lefL afLer such subsldles wlll be used for
consumpLlon

ANALSIS CI IMCG SLC1Ck
S1kLNG1nS
1 Low operaLlonal cosLs
2 resence of esLabllshed dlsLrlbuLlon neLworks ln boLh urban and rural areas
3 resence of wellknown brands ln lMCC secLor
WLAkNLSSLS
1 Lower scope of lnvesLlng ln Lechnology and achlevlng economles of scale especlally ln small
secLors
2 Low exporLs levels
3 MeLoo producLs whlch lllegally mlmlc Lhe labels of Lhe esLabllshed brands narrow Lhe
scope of lMCC producLs ln rural and semlurban markeL
CCk1UNI1ILS
1 unLapped rural markeL
2 8lslng lncome levels le lncrease ln purchaslng power of consumers
3 Large domesLlc markeL a populaLlon of over one bllllon
4 LxporL poLenLlal 3 Plgh consumer goods spendlng
1nkLA1S
1 8emoval of lmporL resLrlcLlons resulLlng ln replaclng of domesLlc brands
2 Slowdown ln rural demand
3 1ax and regulaLory sLrucLure

S1kUC1UkAL ANALSIS CI IMCG INDUS1k

1yplcally a consumer buys Lhese goods aL leasL once a monLh 1he secLor covers a wlde gamuL
of producLs such as deLergenLs LolleL soaps LooLhpasLe shampoos creams powders food
producLs confecLlonerles beverages and clgareLLes 1yplcal characLerlsLlcs of lMCC producLs
are
1. The products oIten cater to 3 very distinct but usually wanted Ior aspects - necessity,
comIort, luxury. They meet the demands oI the entire cross section oI population. Price
and income elasticity oI demand varies across products and consumers.
2. Individual items are oI small value (small SKU's) although all FMCG products put
together account Ior a signiIicant part oI the consumer's budget.
3. The consumer spends little time on the purchase decision. He seldom ever looks at the
technical speciIications. Brand loyalties or recommendations oI reliable retailer/ dealer
drive purchase decisions.
4. Limited inventory oI these products (many oI which are perishable) are kept by consumer
and preIers to purchase them Irequently, as and when required.
5. Brand switching is oIten induced by heavy advertisement, recommendation oI the retailer
or word oI mouth.
DESIGN AND MANUFACTURING
1. Low Capital Intensity - Most product categories in FMCG require relatively minor
investment in plan and machinery and other Iixed assets. Also, the business has low
working capital intensity as bulk oI sales Irom manuIacturing take place on a cash basis.
2. Technology - Basic technology Ior manuIacturing is easily available. Also, technology
Ior most products has been Iairly stable. ModiIications and improvements rarely change
the basic process.
3. Third-party Manufacturing - ManuIacturing oI products by third party vendors is quite
common. BeneIits associated with third party manuIacturing include (1) Ilexibility in
production and inventory planning; (2) Ilexibility in controlling labor costs; and (3)
logistics - sometimes it`s essential to get certain products manuIactured near the market.
MARKETING AND DISTRIBUTION
Marketing Iunction is sacrosanct in case oI FMCG companies. Major Ieatures oI the
marketing Iunction include the Iollowing: -
1. High Initial Launch Cost - New products require a large Iront-ended investment in
product development, market research, test marketing and launch. Creating awareness
and develop Iranchise Ior a new brand requires enormous initial expenditure on launch
advertisements, Iree samples and product promotions. Launch costs are as high as 50-
100 oI revenue in the Iirst year. For established brands, advertisement expenditure
varies Irom 5 - 12 depending on the categories.
2. Limited Mass Media Options - The challenge associated with the launch and/or brand-
building initiatives is that Iew no mass media options. TV reaches 67 oI urban
consumers and 35 oI rural consumers. Alternatives like wall paintings, theatres, video
vehicles, special packaging and consumer promotions become an expensive but required
activity associated with a successIul FMCG.
3. Huge Distribution Network - India is home to six million retail outlets, including 2
million in 5,160 towns and Iour million in 627,000 villages. Super markets virtually do
not exist in India. This makes logistics particularly Ior new players extremely diIIicult.
FORCOSTING OF FMCG COMPANIES
Markets all over the world have been on a roll in 2003 and the Indian bourses are no exception
having gained almost 60 in 2003. During this period, while there are sectors that have
outperIormed this benchmark index, there are also sectors that have under perIormed. FMCG
registered gains oI just 33 on the BSE FMCG Index last year. At the macro level, Indian
economy is poised to remained buoyant and grow at more than 7. The economic growth would
impact large proportions oI the population thus leading to more money in the hands oI the
consumer. Changes in demographic composition oI the population and thus the market would
also continue to impact the FMCG industry. Recent survey conducted by a leading business
weekly, approximately 47 per cent oI India's 1 billion people were under the age oI 20, and
teenagers among them numbered about 160 million. Together, they wielded INR 14000 Cr worth
oI discretionary income, and their Iamilies spent an additional INR 18500 Cr on them every year.
By 2015, Indians under 20 are estimated to make up 55 oI the population - and wield
proportionately higher spending power. Means, companies that are able to inIluence and excite
such consumers would be those that win in the market place. The Indian FMCG market has been
divided Ior a long time between the organized sector and the unorganized sector. While the latter
has been crowded by a large number oI local players, competing on margins, the Iormer has
varied between a two-player-scenario to a multi-player one.
unllke Lhe uS markeL for fasL movlng consumer goods (lMCC) whlch ls domlnaLed by a
handful of global players lndlas 8s460 bllllon lMCC markeL remalns hlghly fragmenLed wlLh
roughly half Lhe markeL golng Lo unbranded unpackaged home made producLs 1hls presenLs a
Lremendous opporLunlLy for makers of branded producLs who can converL consumers Lo
branded producLs Powever successfully launchlng and growlng markeL share around a
branded producL ln lndla presenLs Lremendous challenges 1ake dlsLrlbuLlon as an example
lndla ls home Lo slx mllllon reLall ouLleLs and super markeLs vlrLually do noL exlsL 1hls makes
loglsLlcs parLlcularly for new players exLremely dlfflculL CLher challenges of slmllar magnlLude
exlsL across Lhe lMCC supply chaln 1he facL ls LhaL lMCC ls a sLrucLurally unaLLracLlve lndusLry
ln whlch Lo parLlclpaLe Lven so Lhe opporLunlLy keeps lMCC makers Lrylng
S1kA1LG CI IMCG CCMANILS
CCML1I1IVL S1kA1LGILS ICLLCWLD 8 IMCG CCMANILS IN INDIA
CompeLlLlve SLraLegy conslsLs of move of companles ln order Lo aLLracL cusLomers WlLh sLand
compeLlLlve pressures and sLrengLhen an organlzaLlon's markeL poslLlon 1he maln ob[ecLlve of
CompeLlLlve SLraLegy ls Lo generaLe a compeLlLlve advanLage lncrease Lhe loyalLy of cusLomers
and Lo beaL compeLlLors
I|ve ma|n compet|t|ve strateg|es are
O Overall low cost leadership strategy
O Best cost provider`s strategy
O Broad diIIerentiation strategy
O Focused low cost strategy
O Focused diIIerentiation strategy
Pere compeLlLlve sLraLegy varles from secLor Lo secLor and company Lo company 1hus lL ls
noL easy Lo predlcL a slngle or Lo flnd a slngle sLraLegy for Lhe whole secLor When we come
on Lo lMCC SecLor maln sLraLegles lay behlnd markeL sLraLegles cosL and quallLy
sLraLegles Pere ln Lhls reporL you are golng Lo geL lnformaLlon abouL such Lype of sLraLegles
of lMCC glanLs


kLLA1LD 1C 1WC CCMANILS nUL I1C
nUL (n|ndustan Un||ever Ltd)
1hls Company ls earller known as PlndusLan Lever LLd 1hls ls lndla's
largesL lMCC secLor company wlLh all Lype of household producLs avallable wlLh lL lL has Pome
ersonal Care producLs and also food and WaLer urlfler avallable wlLh lL Accordlng Lo 8rand
LqulLy PuL has largesL no of brands ln mosL LrusLed brands llsL 16 of PuL's brands feaLured ln
ACnlelson 8rand LqulLy llsL of 100 mosL LrusLed brands ln 2008 ln an annual survey lor Lhe
enLlre year endlng March 2009 neL Lurnover of company ls 8s 20'23933 Crore whlch ls
4799 hlgher Lhan 31sL uecember 2007's 8s 1367343 Crore drlven malnly by dom esLlc
lMCC's wlLh neL proflL sLood aL 8s 2'49643 Crore
roducts of nUL are Annapurna Ayush Axe 8reeze 8ru 8rooke bond Cllnlc uove lalr
Lovely Pamam Llrll Lux ears onds epsodenL urelL 8exona 8ln SunllghL Surfexcel
vasellne Wheel

I1C L|m|ted
This Company was earlier known as Imperial Tobacco Company oI India Ltd. It is
Currently headed by Yogesh Chander Deveshwar. Company mainly operates in
the industry like Tobacco, Foods, Hotels, Stationary and Greeting Cards with the
major products constitutes Cigarettes, packed Ioods, hotels, and apparels. For the
entire year ending Mar-2009 the turnover oI company is at Rs. 15388 Crore which is 10.3
higher than previous year`s Rs. 13947.53 Crore, driven mainly by robust 20 growth in non
cigarette FMCG business with net proIit stood at Rs. 3324 Crore.
VI SI CN MI SSI CN

Innovating Enjoyment With 1hat Extra Flavour.
Enduring value. Enhancing appeal. Enriching liIe. By adding that extra Ilavour.
We are constantly innovating to oIIer products & services, which are distinctive,
diIIerentiating and not the ordinary.
O To sustain global leadership in the Chewing Tobacco Business.
O To become a household name Ior quality products in Foods &
Beverages.
To set new benchmarks in the sectors we operate. THE ITC PROFILE
TC is one of ndia's foremost private sector companies with a marketCapitalisation of
nearly US$ 15 billion and a turnover of over US $ 4.75 billion.
Rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most
Reputable Companies by Forbes magazine,among ndia's Most Respected Companies
by BusinessWorld and among ndia's Most Valuable Companies by Business Today,
TC ranks third in pre-tax profit among ndia's private sector corporations.
TC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, nformation Technology,
Branded Apparel, Greeting Cards, Safety Matches and other FMCG products. While
TC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels,
Paperboards, Packaging andAgri-Exports, it is rapidly gaining market share even in its
nascent businesses of Packaged Foods & Confectionery, Branded Apparel and
Greeting Cards.
As one of ndia's most valuable and respected corporations, TC is widely perceived to
bededicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration
"a commitment beyond the market". n his own words: "TC believes that its aspiration to
create enduring value for the nation provides the motive force to sustain growing
shareholder value. TCpractises this philosophy by not only driving each of its
businesses towards international competitiveness but by also consciously contributing
to enhancing the competitiveness of the larger value chain of which it is a part



TC's diversified status originates from its corporate strategy aimed at creating multiple
drivers of growth anchored on its time-tested core competencies: unmatched
distribution reach, superior brand-building capabilities, effective supply chain
management and acknowledged service skills in hoteliering. Over time, the strategic
forays into new businesses are expected to garner a significant share of these emerging
high-growth markets in ndia.
TC's Agri-Business is one of ndia's largest exporters of agricultural products. TC is
one of the country's biggest foreign exchange earners (US $ 2.8 billion in the last
decade). The Company's 'e-Choupal' initiative is enabling ndian agriculture significantly
enhance its competitiveness by empowering ndian farmers through the power of the
nternet. This transformational strategy, which has already become the subject matter of
a case study at Harvard Business School, is expected to progressively create for TC a
huge rural distribution infrastructure, significantly enhancing the Company's marketing
reach.

TC's wholly owned nformation Technology subsidiary, TC nfotech ndia Limited, is
aggressively pursuing emerging opportunities in providing end-to-end T solutions,
including e-enabled services and business process outsourcing.

TC's production facilities and hotels have won numerous national and international
awards for quality, productivity, safety and environment management systems. TC was
the first company in ndia to voluntarily seek a corporate governance rating.
TC employs over 21,000 people at more than 60 locations across ndia. The
Company continuously endeavors to enhance its wealth generating capabilities
in a globalizing environment to consistently reward more than 4,88,000 shareholders, fulfill the
aspirations of its stakeholders and meet societal expectations. This over-arching vision of the
company is expressively captured in its corporate positioning statement: "Enduring Value. For
the nation and for the shareholder.








ANALYSIS OF BOTH COMPANIES
PuL l1C are ma[or companles ln lMCC markeL ln lndla When we compare boLh companles
on Lhe basls of Lhelr sLraLegles le Lhelr compeLlLlve sLraLegles ln Lhe presenL markeL When
we look aL Lhe presenL segmenL breakup for boLh of Lhe companles Lhen we came Lo know LhaL
Lhelr dlfferenL producLs vary Loo much ln Lhe markeL
nUL I1C
PlndusLan unllever (PuL) ls Lhe largesL pure
play lMCC company ln Lhe counLry and has
one of Lhe wldesL porLfollos of producLs sold
vla a sLrong dlsLrlbuLlon channel lL owns and
markeLs some of Lhe mosL popular brands ln
Lhe counLry across varlous caLegorles
lncludlng soaps deLergenLs shampoos Lea
and face creams
l1C ls noL a pureplay lMCC company slnce
clgareLLes ls lLs prlmary buslness lL ls
dlverslfylng lnLo nonLobacco lMCC
segmenLs llke foods personal care paper
producLs hoLels and agrlbuslness Lo reduce
lLs exposure Lo clgareLLes
erformance erformance
AfLer sLagnaLlng beLween 1999 and '04 Lhe
company ls back on Lhe growLh Lrack ln Lhe
pasL Lhree years Llll 2008 PuL's neL sales
have wlLnessed a CAC8 of 11 whlle neL
proflL has posLed a CAC8 of 17
uesplLe dlverslflcaLlon l1C's rellance on
clgareLLes ls sLlll huge 1he Lobacco buslness
conLrlbuLes 40 Lo lLs revenues and
accounLs for over 80 of lLs proflL 1hls cash
generaLlng buslness has enabled lL Lo Lake
amblLlous buL expenslve beLs ln new
segmenLs and dellver modesL proflL growLh
TOP 10 FMCG COMPANIES IN INDIA
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestl India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care

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