Project 2

DETERGENT INDUSTRIES

A PROJECT SUBMITED IN PARTIAL FULFILLMENT FOR AWARD OF DEGREE

OF POST GRADUATE DIPLOMA IN MANAGEMENT

Submitted by :

AWDHESH KUMAR SAWPGDM (2009-11)

ROLL NO. G209018

INSTITUTE OF PRODUCTIVITY & MANAGEMENT, INDIA

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Executive summary of project

A) Title of the project :-

“Fundamental analysis of Indian DETERGENT INDUSTRIES”.

B) Objective of the project

The main objective of this project is to analyze the emerging trends in the

detergent sector in India. This project was also carried out to understand the

future Outlook of the detergent market in India. Another motive includes finding

about the key players in the detergent Market in India, their performance, growth

potential and also the opportunities that exist for the Indian Detergent market.

C) Scope of the project

The scope of this project is limited to study of four companies in Indian detergent

sector.

D) Limitations of the project

Only 4 companies out of a very large Indian Detergent industry could be studied in

this process. Fundamental analysis involves lots of tools, but only selected tools

were studied .The study frame considered is very limited. The data used is

secondary data.

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F) Research Methodology

Research refers to the systemic method consisting of enunciating the problem, a

hypothesis, collecting the facts, analyzing the facts and reaching the certain

conclusion either in form of solution towards the concerned problem or for some

theoretical formulation. The study is based on the facts collected by observation

and internet.

Method of Data collection

Sources of secondary data:-

1. Internet & Websites

2. Business Magazines.

3. Annual report of the company

Secondary data: - It is the data which is already present in the secondary form

like press releases, magazines, newspaper, journals, newsletters which are

derived by any other person or institute.

Here in this project, I have adopted the descriptive research approach. This project

involves mainly secondary data, which has been collected from various websites.

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Contents of project

INTRODUCTION ……..5

RESEARCH METHODOLOGY

(a) SCOPE ………6

(b) LIMITATION ………7

INDUSTRY PROFILE ANALYSIS AND INTERPRETATION

i. INDIAN DETERGENT SECTOR PROFILE ……….8-13

ii. CLASSIFICATION OF MARKET ……….14-17

iii. MICHAEL PORTER’S FIVE FACTOR ANALYSI ………18-21

iv. FUTURE GROWTH PROSPECTS OF DETERGENT POWDER ……..22-25

SWOT ANALTSIS ……….26

CONCLUSION ……….27

RECOMMENDATION ……28-29

BIBLIOGRAPHY …….30

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INTRODUCTION

The size of the detergent market is estimated to be Rs. 12,000 Cr. Householdcare segment is characterized by high degree of competition and high level

ofpenetration. With rapid urbanization, emergence of small pack size andsachets, the demand for the household care products is flourishing.

Thedemand for detergents has been growing but the regional and smallunorganized players account for a major share of the total volume of the

detergent market. In washing powder HUL is the leader with ~38 per cent ofmar-ket share. Other major players are Nirma, Henkel and Proctor & Gamble.

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RESEARCH METHODOLOGY

Scope of the study

In detergent powder sector includes many players, but out of these players I have

selected only four big player service provider companies .The study gave me a

chance to carry fundamental analysis along with its various tools used in

fundamental analysis which helps to understand the basics of financial statements

and provides the tools that help to decide which companies make worthwhile

investments. This type of analysis examines key ratios of a business in order to

determine its financial health and gives an idea of the future value of its stock. The

study was mainly based on the detergent powder service provider companies only

not the whole detergent sector.

Data collection Methodology

Research refers to the systemic method consisting of enunciating the problem, a

hypothesis, collecting the facts, analyzing the facts and reaching the certain

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conclusion either in form of solution towards the concerned problem or for some

theoretical formulation.. The study is based on the facts collected by observation

and internet.

Method of Data collection

Sources of secondary data:-

Websites

Business Magazines

Annual reports of company

Limitations of the study

Only 4 companies out of a very large Indian detergent industry could be

studied in this process.

Availability of data was the main limitation of this study.

Fundamental analysis involves lots of tools, but only selected tools were

studied.

The study frame considered is very limited.

The study is limited to fundamental analysis.

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The data used is mostly secondary data.

Only listed companies were considered for the study (on NSE or BSE )

INDIAN DETERGENT SECTOR PROFILE

Hindustan Lever Ltd:

Hindustan Lever Ltd (HLL) is India'largest Moving Consumer Goods (FMCG) company. HLL's brands like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond,

Kissan, Knorr-Annapurna, Kwality Wall's are household names across the country and span a host of categories, such as soaps, detergents, personal products, tea,

coffee, branded staples, ice cream and culinary products. These products are manufactured over 40 factories across India and the associated operations involve

over 2,000 suppliers and associates. Hindustan Lever Limited's distribution network comprises about 4,000 redistribution stockists, covering 6.3 million retail

outlets reaching the entire urban population, and about 250 million rural consumers. HLL is also one of India's largest exporters. It has been recognised as a Golden Super Star Trading House by the Government of India. Presently, HLL has

over 16,000 employees including over 1,200 managers. Its mission is to "add vitality to life." The Anglo-Dutch company Unilever owns a majority stake in

Hindustan Lever Limited.

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Generate revenue in the year 2009-2010 of differert product sector of hul

This diagram show the generate revenue of hul in different sectors.

SALES BEFORE EXCISE DUTY CHARGE OF HUL IN SOAPS & DETERGENT SECTOR

This diagram show the figure of sales force of detergent sector of hul before excise duty form year 2001 till 2010 ending month.this diagram show the

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continuous growth in soaps & detergent industries in india over dynamic time of period.

Nirma Ltd:

In the summer of 1969, a Gujarati entrepreneur, Dr. Karsanbhai Patel, set up his first detergent-making unit in the backyard of his home in Ahmedabad - measuring all of 100 square feet. With bare hands and a bucket, he would prepare the dry mix detergent powder that he had invented, pack them in polythene bags and then set off on his bicycle to sell the packets door to door.

Every packet of Nirma that Karsanbhai Patel sold to his consumers came with a moneyback guarantee. Soon, Nirma had established itself as a brand to be reckoned with. As sales grew, so did Nirma's scale of operations and along with that the brand's competitive edge. The cost-conscious approach of the initial years was to evolve into a strategic perspective. Dr. Karsanbhai Patel put enormous stress on operating efficiencies and marketing practices to ensure that consumers got their money's worth. By the 1980s, Nirma was the toast of marketing gurus.

The launch of Nirma detergent cake came sixteen years after the introduction of the detergent powder. Its success was almost a foregone conclusion. In 1990, Nirma Super Detergent, a spray-dried blue detergent powder, was launched. With

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the launch of the high-TFM content Nirma Beauty Soap, Nirma began to expand its product portfolio. To counter the success of Nirma Beauty Soap, Hindustan Lever Limited launched Breeze. In a flanking operation that would have done military strategists proud, Nirma, launched another brand: Nima. Both the brands from the Nirma stable have been successful in grabbing a huge chunk of all incremental sales growth in the soap category in the past twelve years

P & G:

In 1993, Procter & Gamble Home Products is incorporated as a 100% subsidiary of The Procter & Gamble Company, USA. Procter & Gamble Home Products launches Ariel Super Soaker.In 1993, Procter & Gamble India divests the Detergents business to Procter & Gamble Home Products.In 2000, Procter & Gamble Home Products introduced Tide Detergent Powder - the largest selling detergent in the world.In August 2000, Procter & Gamble Home Products Limited launched New Ariel Power Compact detergent with a new global technology that breathes new life into clothes, by removing dinginess from them and restoring the original colors of the fabric, by detecting and removing deposits which are left behind from successive washes. In January 2001, Procter & Gamble Home Products Limited and Whirlpool India Ltd. launched a special 'Ariel - Whirlpool Superwash' offer, making washing machines more affordable to the people of Hyderabad. On purchase of either a 500gms, 1kg or 1.5kg economy pack of New Ariel Power Compact, consumers are

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automatically eligible to buy a Whirlpool Washing Machine for as low as Rs.238/- in Equal Monthly Installments for 24 months, by filling in the application form that comes with the Ariel pack and contacting any one of the Whirlpool dealers mentioned on the pack. In July 2001, Procter & Gamble Home Products Limited launched New Ariel Total Compact with Magicare a New System of Washing that completely removes stains without scrubbing, significantly reducing time spent on washing clothes.

tThe above diagram show the figures of segmented business of P & G in the different market of the.world.according to this diagram 48 % market segmented by p & g for household care.

By geographic region:

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According to this diagram show the business segmented market of P & G in the world.here in aisa 42 % market of p&g expanded.the reason behind it here there are two largest population’s country of the world are india and china.

FENA:

FENA is a first generation entrepreneurial venture, which was started in 1976 by Dalip Jolly with very modest resources, soon joined by his brother Pradeep Jolly, in the name & style of "M/s Syndet & Chemical Industries". The name of the enterprise was later changed to M/s Fena Private Limited - FENA being the first & flagship brand of the company.

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Over the years it has grown steadily to its present position and is recognized as one of the leading players in the field of Fabric care & Home care products in India and has a growing export business with diversified product range. The flagship brands of the Company, namely FENA, NIP, PARA & IMPACT enjoy strong brand equity in their respective segments due to excellent value for money proposition and strong media advertising.

CLASSIFICATION OF MARKET:

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The population of India is growing as well as Indian economy is also growing.

To capture the market of rural India as well as urban India the major detergent

big player in India have some classification of marketing strategy to fight with

others compititors.These classification of market and there products are given

below.

ACCORDING TO INCOME LEVEL:

According to income level market is divideg into two category:

:high buying capacity power

:Middle & low buying capacity power

:high buying capacity power

According to high buying capacity customer there are two major detergent

player in the Indian market:

HUL:hul have premium product of detergent to segment high buying

capacity power.

Surf excel detergent powder

Rin detergent powder & bar

P&G: P&G have its brand of detergent product for high buying capacity

power consumer’s

Tide

Ariel

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Tide bar

: Middle & low buying capacity power

According to middle buying capacity customer there are four major detergent

player in the Indian market:

HUL:

Wheel

Surf excel(sachet)

Rin powder & bar

P&G:

Tide(sachet)

Ariel(sachet)

Tide bar

NIRMA:

Super nirma detergent powder

Super nirma bar

Nirma detergent cake

FENA:

Fena detergent powder

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ACCORDING TO DEMOGRAPHY:

Urban

Rural

Urban:

HUL:

Surf excel detergent powder

Rin detergent powder & bar

P&G:

Ariel

Tide

Rural:

Hul:

Wheel

Surf excel(sachet)

Rin detergent bar

P&G:

Tide(sachet)

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Ariel(sachet)

NIRMA:

Super nirma detergent powder

Super nirma cake

Super nirma bar

FENA:

Fena detergent powder

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The Detergent Industry in India in Michael Porter’sFive Forces Analysis

It uses concepts developed in Industrial Organization economic to derive five forces that determine the competitive intensity and therefore attractivenesss of a market. Porter reffred to these forces as the micro-environment, to contrast it with the more general term macro-environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.

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1. RIVALRY AMONG EXISTING COMPETITORS

Competition in Detergent Industry

Major Players

There are four players in detergent industries: Hindustan unilever ltd P& G Nirma fena

2. BARGAINING POWER OF CONSUMERS

Indian Detergent Industry is one of the continuous growing markets in the world. In detergent industry, service providers are the main drivers; whereas equipment manufacturers are witnessing growth and decline in successive quarters as sales in dependent on order undertaken by the companies.HUL,P&G,NIRMA & FENA are some of the companies that are expected to spur the growth overs the upcoming years.In india the urban market is already targetd by some of the big player of Indian market like hul,p&g, fena, nirma,ghadi.they have there own market share already capture in india,inspite of these rural market is also growing and there is wider scope to survive and target the rural customer towards the company for future prospective. Due to some of the big players in the rural & urban market the capacity of the bargaining powe is growing,that is beneficial for rural as well as urban consumers.

Detergent industries Market Share

HUL 23%P&G 15%

FENA 25%

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NIRMA 31%

OTHERS 6%

3. BARGAINING POWER OF SUPPLIERS

As far as detergent industry is concerned, it is product based industry which is tangible, so in this case there are large no of suppliers or we can say the role of suppliers are almost important in the case of telecom industry. We are trying to analyze the major roleDetergent suppliers:- There can be many suppliers for products like hul, fena ,nirma,ghadi,p&g etc.

This is a tangible product, due to this cause the probability of bargaining power of supplier will increase.

There are many big player is already available in rural as well as urban, they have opportunity to switch one company to others that increase the possibility of the bargaining power of suppliers.

This is a totally fmcg products industries .the services or supply of these product is totally depends on suppliers they use their power in bargaining with profit motive.

4. THREAT TO NEW ENTRANTS

The Indian detergent sector offers unprecedented opportunities for foreign companies in rural areas as well as urban areas, these are describe by following diagram.

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Less competition in rural areas

Changing life styleRural

population

Increasing buying power

5. SUBSTITUTE TO PRODUCT

Detergent sectors offers a wide range of product & services in India, such as washing power, washing bar, washing bar with fragrance due to many reason for capture the huge market share of urban as well as rural.

Availability of land Low labor cost Change in technology Change in market situation Change in preferences of customer Competitors provides better services with same or low cost Gap in marketing communication.

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Infrastructure Sharing

Changing mindsetLow labor cost

Availability of land

FUTURE GROWTH PROSPECTS OF DETERGENT POWDER:

Growth Prospect:

Labor cost comparison:-

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The population of china in the world is highest but now china had control over increased population in spite of this china is number in population in the world and second in india.In these two country availibity of labor is more than requirement due two this cause labor cost per worker is low in compare of others country, that is beneficial to grow organization in dynamic market.

Large Market:

India has a population of more than 1.150 Billions which is just behind China.

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According to the estimates, by 2030 India population will be around 1.450Billion and will surpass China to become the World largest in terms ofpopulation. Detergent Industry which is directly related to the population isexpected to maintain a robust growth rate.

Spending Pattern:

An increase is spending pattern has been witnessed in Indian FMCG market.There is an upward trend in urban as well as rural market and also an increase

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in spending in organ-ized retail sector. An increase in disposable income, ofhousehold mainly because of in-crease in nuclear family where both thehusband and wife are earning, has leads to growth rate in detergent sector.

Changing Profile and Mind Set of Consumer:

People are becoming conscious about health and hygienic. There is a change inthe mind set of the Consumer and now looking at “Money for Value” ratherthan “Value for Money”. We have seen willingness in consumers to move toevolved products/ brands, because of changing lifestyles, rising disposableincome etc. Consumers are switching from economy to premium product evenwe have witnessed a sharp increase in the sales of premium detergents

Market Opportunities:

Vast Rural Market:

Rural India accounts for more than 700 Million consumers, or ~70 per cent ofthe Indian population and accounts for ~50 per cent of the total FMCG market.The working rural population is approximately 400 Millions and an averagecitizen in rural India has less then half of the purchasing power as compare tohis urban counterpart. Still there is an untapped market and most of theFMCG Companies are taking different steps to capture rural market share.The market for FMCG products in rural India is esti-mated ~ 52 per cent and isprojected to touch ~ 60 per cent within a year. Hindustan Unilever Ltd is thelargest player in the industry and has the widest market coverage.

Export - “Leveraging the Cost Advantage”:

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Cheap labor and quality product & services have helped India to represent asa cost ad-vantage over other Countries. Even the Government has offered zeroimport duty on capital goods and raw material for 100% export oriented units.Multi National Companies out-source its product requirements from itsIndian company to have a cost advantage.India is the largest producer of livestock, milk, sugarcane, coconut, spices andcashew apart from being the second largest producer of rice, wheat, fruits &vegetables. It adds a cost advantage as well as easily available raw materials.

Advantages To The Sector:

Governmental Policy:

Indian Government has enacted policies aimed at attaining internationalcompetitiveness through lifting of the quantitative restrictions, reducing exciseduties, automatic foreign in-vestment and food laws resulting in anenvironment that fosters growth. 100 per cent ex-port oriented units can be setup by government approval and use of foreign brand names is now freelypermitted.India is second largestCountry in terms ofJan, 28

FMCG SECTORCentral & State Initiatives:

Recently Government has announced a cut of 4 per cent in excise duty to fightwith the slowdown of the Economy. This announcement has a positive impacton the industry.But the benefit from the 4 per cent reduction in excise duty is not likely to beuniform across FMCG categories or players. The changes in excise duty do notimpact cigarettes (ITC, Godfrey Phillips), biscuits (Britannia Industries, ITC) orready-to-eat foods, as these prod-ucts are either subject to specific duty or areexempt from excise. Even players with manu-facturing facilities locatedmainly in tax-free zones will also not see material excise duty savings. Onlylarge FMCG-makers may be the key ones to bet and gain on excise cut.

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SWOT ANALYSIS

STRENGTHS:-

Big players already have potential customer and loyal customers.

Substitutes products are also available in market for retained customers.

Big players already had brand image in the mind of the customers

Less competitors in the rural market.

WEAKNESS:-

Gap of marketing promotional communication in rural areas.

Innovative products are requires for rural people

Lack of customer relationship management in rural’ peoples.

No direct schemes provided by company to rural consumers.

OPPURTUNITIES

Large rural population

Less competitors in rural areas

Low labor cost after the china, Indonesia.

Changing life style of rural areas as well as urban areas.

THREATS

Entry of new player due to wider scope

Lose market share due to better services provides by competitors

Lose market share due to change in market situation

Lose of market share due to substitutes products.

Probability to lose potential ,loyal customer lack of marketing communication

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FINDINGS AND CONCLUSION

HUL launch active wheel for give the competiton to nirma in the rural area.

HUL product’s surf excel and P&G product’s tide are competitors to each others in

urban market.

In rural market there is huge competiton with fena detergent powder, supur nirma

powder,and some of the others local brands like ghadi detergent powder etc.

In indian market the price war is huge seen like the price of actrive wheel

detergent with super nirma,surrf excel with tide and ariel,fena detergent with

super nirma and ghadi detergent powder.

Two urban major players HUL and P&G are giving competitons two each others

inurban as well as rural like hul product’s surf excel for urban where as in case of

p&g’s products are tide and ariel.

In the case of HUL’s 48% generated revenue are comes from soap & detergent

sector approximatly from last decade.

There are less market command in rurl area of p&g due to no cheapest detergent

for rural’s people.

In the case of p& g 15 % business segmented in the asian market.

Only there are two major player in the urban market are HUL and P&G.

In case of nirma approximatly 30 % market share in rural market where as

fena ,hul are 25,23 % respectivily.

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Big player should control in market

Indian market is dynamic in nature,there are increasing and decresing is

genrally seens,these big players should control market activities like regural

communication with existence customers,potential

customers,loyalcustomers and accessing new customers,retaining customer

in professional and ethics manners. Big player should focus on competitors

activities and accordingly take rational decision for servive in dynaimic

market.

Technology development and innovation

In urban areas is already covered by some of the big player like HUL,P&G.

But in case of rural areas is also growing over’s up comings years ,these big

players should implement in technology and innovations in products

features for capture the large volume of Indian rural market.

Introduction of local products:

Inspite of these four players, the local detergent producers company have

golden opportunity to developed market share in rural areas by introducing

local detergent in local market but in the case of these four big player may

be losemrket share.

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Changing the life style of the people

In rural market is growing due change in the life style in rural’s peoples

because they getting more employments opportunities in rural areas.

According to change in living style major players should introduced or

develop products and services according there’s buying power

Increase the production and labor cost

Due to growing rural market these big four players should increase in

production capacity in existing manufacturing unit and establishing new

unit,this activity increase the employment in india and these manufacture

increase the labor cost for increasing buying capacity pf labors.

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BIBLIOGRAPHY

www.goggle.com Business Magazines. Annual report of the company

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