Page 82 - IACC Newsletter March-April 2014 Issue 03

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P&G to invest Rs. 244 crore in Indian arm
World’s largest consumer goods manufacturer Procter and Gamble (P&G) plans to invest about Rs. 244 crore in its unlisted
Indian arm P&G Home Products this year. This investment is a part of its overall commitment to take on competitor and
the country’s largest fast-moving consumer goods firm Hindustan Unilever Ltd (HUL) in terms of product portfolio and
reach.
While, P&G India’s overall sales are estimated at Rs. 6,000 crore, HUL is almost four times bigger at Rs. 26,000 crore. But
they both compete in several key segments such as detergents, hair and skin care where HUL by far is the market leader.
P&G India, in a board meeting held last month, had decided to issue 31.68 lakh of shares of 10 each at a premium of Rs.
760 to its $32-billion parent company. The fresh funds earmarked for India takes P&G's total investment in the country to
around Rs. 1,000 crore in the fiscal ended March 2014.
While the company declined to comment on the development as it was in a silent period, it is understood that the funds
would be used for capital expenditure, increasing the company’s marketing activity, innovation and expanding its
distribution network in the country.
Mass offerings
P&G India has reported double-digit growth consistently in the last few years with its brands Whisper, Pantene, Oral B,
Vicks, Gillette, Ariel and Tide. But still, it has not been able to catch up with HUL due to its premium offerings. Analysts feel
P&G is more into the value game unlike HUL, which has products in the mass-end such as Wheel and Lifebuoy.
P&G's increased investments could be to enter the market with more mass offerings and also to raise its advertisement
spends. The company also plans to revisit its ‘Project 2-3-4’, which is aimed at doubling the number of Indians who use its
products, trebling per capita spending by Indians on its products and quadrupling net sales in India by 2015.
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Michigan based Amway to invest Rs. 150 crore more in Tamil Nadu plant
Direct marketing consumer goods major Amway India has decided to increase its proposed investment in its Tamil Nadu
facility, with more production lines to manufacture its complete range of nutrition and beauty products.
According to Anshu Budhraja, Chief Operating Officer, the company will invest Rs. 150 crore over and above the originally
proposed Rs. 400 crore in the manufacturing facility that is coming up at Nilakottai near Madurai. It is expected to start
commercial production by the end of 2014, and scale up to full capacity by October next year.
The company was allotted a 50-acre plot by the State Industries Promotion Corporation of Tamil Nadu, and it initially
submitted a proposal to set up nine production lines for nutrition, cosmetic and oral-care products. It now proposes to
add three more lines. With the proposed addition, the plant will produce 34 nutrition and 77 beauty products with an
annual installed capacity for over 2 billion tablets and soft-gel capsules; 7 million canisters of drink mixes, 25 million tubes,
jars and bottles of personal care products, and 60 million tubes of Glister toothpaste.
Foreign facility
The facility, constructed by Shapoorji Pallonji Construction, will be Amway’s first owned facility in the country and second
outside the US, the first being in China. The Rs. 2,200-crore FMCG player has more than 140 stock keeping units under five
product categories — personal care, home care, nutrition and wellness, cosmetics and ‘great value’ products. It currently
sources all of them from seven contract manufacturers.