FMCG sector to grow in current fiscal: CII

NEW DELHI - The fast moving consumer goods (FMCG) industry is likely to record higher levels of growth in the current fiscal owing to focussed initiatives and strategic mergers and acquisitions as well as new product innovations, a study by the Confederation of Indian Industry (CII) said Wednesday.

The industry has made highly recognisable product innovations, including smaller packs (sachets) to tap the vast niche segment and aggressive rural market penetration to cater to rising rural demand, the study said.

“FMCG is the sector which has helped the Indian economy to emerge speedily from the impact of the global recession. Though rising food inflation and high input costs have hurt the FMCG sector in the first half of the financial year 2010-11, the industry is optimistic about its performance during the full year,” said Chandrajit Banerjee, director general, CII.

According to the survey, India’s FMCG sector has registered a growth of 11.4 percent in the first quarter of 2010-11 compared to 12 percent in the like period of last fiscal.

But the industry, according to the survey, is optimistic about maintaining higher growth at 13 percent in the fiscal year 2010-11, as commodity prices are expected to cool down in view of a good monsoon.

The sectors projected to achieve growth of above 20 percent during April-March 2010-11 over April-March 2009-10 include deodorants, anti-ageing creams, toothpastes, skin and fairness creams and men’s fairness products.

Categories expected to witness growth rates of 10 to 20 percent are detergent powders, washing cakes and toilet soaps.

Segments like toothpowder, liquid soaps, shaving products and coconut oil are expected to register a moderate growth of up to 10 percent.

The survey, which covered 30 fast moving consumer goods, including personal care products, cosmetics and toilettries and household care products, also identified major constraints such as revenue loss due to fake and counterfeit products.

“Fake or counterfeit products are a serious challenge before the industry. According to estimates, they amount to a loss of around Rs.27 billion to the exchequer,” said the study.

Rising input costs - for raw material, packaging and the like - as well as higher logistics costs due to fuel price increase are affecting the profit margins of FMCG companies, it added.

It urged proactive government action in the form of early implementation of goods and services tax, strict monitoring and controlling of prices.