Top Story

e4m_logo.png

Home >> Marketing >> Article

Indian FMCG margins hit by downturn, price war

18-November-2005
Font Size   16
Indian FMCG margins hit by downturn, price war

MNCs with listed Indian subsidiaries are doing better than their units in India when it comes to opearting margins.

In the case of GlaxoSmithKline, while the margin of its Indian FMCG subsidiary has gone down from 23% in the September '01 quarter to 21% in the September '05 quarter, the operating margin of its global FMCG business has grown from 18% to 30%. And though Colgate-Palmolive India's operating margin has grown, it still lags behind that of the parent company.

While India has traditionally been a high margin market for FMCG companies, the situation has changed in the last few years. A prolonged downturn in the sector (now over), the introduction of 'two-for-one' schemes, the onset of price wars in some key segments, and the rising input costs have all combined to put pressure on the margins.

At the same time, analysts also point to some company-specific reasons. For instance, according to an analyst, PGHH's margins were suffering because of a large, low-margin contract manufacturing business, which has now been hived off. In the case of GSKCH, analysts say that its operating margin in '01-02 was high because the company was “under-invested”. They point out that the company's operating margin has actually improved from the '03 levels.

Tags

Vijay Mansukhani, speaks to exchange4media about the resurgence of Onida, the scope of growth of consumer electronics market in India and the reasons why Indian consumer electronics brands don’t compete on a global scale

Projjol Banerjea opens up about hiring Anne Macdonald and GroupM's Rob Norman, and the brand's new identity

Meera Iyer tells exchange4media that in FY 2016/17, bigbasket clocked a revenue of Rs 1,400 crore. The online supermarket currently stands at 70,000 orders a day, with operations in 25 cities.

CMO, Kashyap Vadapalli on the start-up’s marketing play, why it has decided to stay away from IPL and response to its furniture rental apps

Projjol Banerjea opens up about hiring Anne Macdonald and GroupM's Rob Norman, and the brand's new identity

CMO, Kashyap Vadapalli on the start-up’s marketing play, why it has decided to stay away from IPL and response to its furniture rental apps

The aim is to advance the company’s goal of simplifying its business and drive deeper service connectivity to its clients