ITC, Ruchi Soya in top 50 fastest growing FMCG list
Despite a fragile global economic recover, FMCG majors, ITC and edible oil manufacturer, Ruchi Soya Industries are among the top 250 consumer product companies in the world. The two brands are also amongst the 50 fastest growing consumer products companies globally. This is according to the seventh annual Global Powers of Consumer Products report issued by Deloitte Touche Tohmatsu (DTTL).
Financial Chronicle - 16 Apr 2014
Gaurav Gupta, senior director of Deloitte in India said, "The volume growth and revenues of both the companies are very high. "While economic growth in developing markets like India along with few other countries has slowed, their absolute growth rate remains attractive relative to the sluggish economic growth in more mature markets," added Gupta.
ITC has improved its ranking to 134 from 150 last year in the Top 250 Consumer Products Companies. It is on the 29th position in the list of 50 fastest growing consumer companies. ITC's net sales are $5,770million at a growth rate of 19.6 per cent, according to Deloitte report.
Ruchi Soya is on 146th position a fall from its earlier ranking of 121. It has been ranked 21st in the list of 50 fastest growing consumers companies. Ruchi Soya's net sales growth rate slowed down to -1.6 per cent, according to Deloitte report.
Harish Bijoor, chief executive officer (CEO) of Harish Bijoor Consults told Financial Chronicle that rankings were always dependent on the countries the survey firm was focusing on and the parameters they valued. Harminder Sahni, managing director of Wazir Advisors, said, "Today ITC's market share is as much as Reliance. It's also as valuable as Reliance. They are the biggest market share holder in tobacco. Hence, they could easily leverage on their brand strength to make an impact globally."
According to the report, the world's 250 largest consumer products companies generated sales in excess of $3.1 trillion in 2012. This resulted in an average company size of $12.5 billion. Between 2007 and 2012, composite net sales increased at a compound annual rate of 22.1 percent for the fastest 50, nearly four times the pace of the Top 250 as a whole.
Abneesh Roy, associate director of Edelweiss Capital said India has got the second largest consumer population. "ITC is doing very well in cigarettes and food categories. The company has also invested adequately in brand building," said Roy.
Electronic product companies Samsung Electronics, Apple Inc and Food company Nestle S.A were the top three in the list of Top 250 consumer product companies globally.
Well-funded investors have also continued to seek merger and acquisition (M&A) opportunities that strengthen their strategic positions. In 2012, there were 1,298 deals completed by consumer products companies, up from 1,274 in 2011 and 1,117 in 2010. For 2013, 1,182 deals had been reported as of February 22, 2014, according to Deloitte report. "Consumer products companies continue to pursue acquisitions and joint ventures to establish or expand these higher growth geographies," said Gupta.
Gaining presence in new and emerging markets is driving further consolidation in the global drinks market. There has also been an increase in activity among manufacturers of personal care products as they look to tap into the increasingly affluent populations of emerging market.
Deal activity improved on the back of credit availability, low interest rates, rejuvenated capital markets, and, in some cases, companies' sizable cash reserves. Private equity has shown a renewed interest in consumer products. "As concerns over economic uncertainty begin to recede, 2014 is already shaping up to be a big year for M&A activity in the consumer products industry as companies look for growth either by expansion in to new markets or by rationalizing their corporate portfolio," added Gupta.
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