The Fast Moving Consumer Goods (FMCG) Industry:

The Fast Moving Consumer Goods (FMCG) industry primarily deals with the production, distribution and marketing of consumer packaged goods, i.e. those categories of products that are consumed at regular intervals. Examples include food & beverages, personal care, pharmaceuticals, plastic goods, paper & stationery and household products etc. The industry is vast and offers a wide range of job opportunities in functions such as sales, supply chain, finance, marketing, operations, purchasing, human resources, product development and general management. Global leaders in the FMCG segment are Sara Lee, Nestl, Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi and Mars etc.

The FMCG sector in India:

The Indian FMCG sector is estimated at US$ 25 billion (Rs. 120,000 crores), including tobacco. It has grown consistently over the last 4-5 years, including the phase of economic slowdown. Unlike developed markets, which are dominated by a handful of large players, Indias FMCG sector is fragmented and a substantial part of the market comprises of unbranded and unpackaged products. In the last 3-4 years, it has overcome a slow growth slump to grow at between 12% - 15%, and is expected to grow at a CAGR of around 12% over the next few years to reach a size of US$ 43 billion (Rs. 206,000 crores) by 2013 and US$ 74 billion (Rs. 355,000 crores) by 2018. It is a sector with a relatively less discretionary demand and therefore tends to be relatively stable in the long term, though consumers do up or down trade with economic fluctuations. At times of economic slowdown consumers may be cutting down on durable and other capital expenditure but cannot avoid spends on daily necessities and sometimes even be more willing to splurge in the form of little indulgences on the FMCG products. Having stated that, a large number of FMCG products, especially those for mid and mass markets, are price elastic i.e. for a given price reduction, consumption increases by more than the percentage of price.

The Structure:
The Indian FMCG sector is the fourth largest sector in the economy and creates employment for three million people in downstream activities. Within the FMCG sector, the Indian food processing industry represented 6.3 per cent of GDP and accounted for 13 per cent of the country's exports in 2003-04. A distinct feature of the FMCG industry is the presence of most global players through their subsidiaries (HLL, P&G, Nestle), which ensures new product launches in the Indian market from the parent's portfolio.

Critical operating rules in Indian FMCG sector:

Heavy launch costs on new products on launch advertisements, free samples and product promotions. Majority of the product classes require very low investment in fixed assets. Existence of contract manufacturing. Marketing assumes a significant place in the brand building process. Extensive distribution networks and logistics are key to achieving a high level of penetration in both the urban and rural markets. Factors like low entry barriers in terms of low capital investment, fiscal incentives from government and low brand awareness in rural areas have led to the mushrooming of the unorganized sector. Providing good price points is the key to success.

Opportunities:
1) With fast-evolving lifestyles and the increasing disposable income of urban consumers, there exists a definite opportunity for lifestyle and high-end products. 2) With more than 33 per cent of the Indian consumer base present in rural areas, the rural market is a key growth driver for FMCG majors planning to expand their domestic business. FMCG companies are devising exclusive rural marketing strategies to tap the rural consumer base. Launched in June 2000, ITCs e-Choupal, has already become the largest initiative among all Internet-based interventions in rural India.

3) Indian consumers are highly adaptable to new and innovative products. For instance, the market acceptance of mens fairness creams clearly demonstrates an opportunity for companies to offer new products targeting specific customer segments. Procter and Gamble (P&G) launched its Olay range. The company also has plans to expand its existing Indian product portfolio categories from 8 to 25. 4) Indian and multinational FMCG players can leverage India as a strategic sourcing hub for costcompetitive product development and manufacturing for their international markets. 5) Rising income levels have resulted in increasing the affordability for premium category products, including cosmetics and toiletries for lower-income groups as well as for the people upgrading from unbranded to branded products. Mid-and high-income consumers in urban areas have started to buy value-added mass brands and premium products. To tap this opportunity, firms have started augmenting their premium product portfolio

Your Challenge:
1) Consider yourself as CEO of Emami Limited. (Indian FMCG Public Limited Company). Assume that company

is looking for inorganic growth opportunities through merger / acquisition of another company from Indian FMCG sector. Therefore you need to analyze and identify a target company to be consolidated with yours. 2) You have to come up with an idea of a new and innovative product targeting either the common or specific customer segments and considering the product portfolios of both the companies. 3) You have to devise an idea of a new & innovative service/strategy which will help the company to attract the rural population and expand in rural markets. General Instructions: 1) In case some data is not readily available, you can make valid assumptions to make your point. 2) You need to fully justify the proposal by giving proper explanations and reasoning to your Merger & Acquisition strategy. 3) The information of all the companies i.e. their products portfolio, income statements, balance sheets etc. must be available on companys website. 4) The term Indian FMCG sector refers to all the foreign & Indian companies operating in Indian markets.

Rules and Regulations

General: 1. This event will be held in two stages. 2. Maximum team size: 4

Prelims:
The participants need to submit the following in a single zipped folder. 1. A single PDF file of the detailed M/A report which should explain the following points: a. Introduction and need for consolidation b. Objectives of proposed merger/acquisition

c. Basis of selecting Target Company considering the below factors: Technology Overview Revenue Entry to new market Other factors (optional) d. Impact and Benefits of the M/A deal. e. Conclusion. The first page of the PDF should clearly mention the unique team ID given during registration. In no page of the submission should the participants mention the team name, the names of the members, the college name or any other information which reveals their identity. 2. Income statements of both companies and combined entity projected over a period of 2 years needs to be submitted in separate files. 3. Consolidated balance sheet of the combined entity. 4. Short Report on idea of new product which should explain the following points: Type of product Target Customer Segment Difference from existing products/innovation Benefits of the company Other suitable points (optional) 5. Report on new service/strategy to expand in rural markets.

10 teams will qualify for the Final round.

Finals:
1. The Final round which is a presentation round will take place at IIT Kharagpur during Kshitij 2012. 2. The teams have to give 15 minutes presentation before the jury which should include the following points: M/A strategy New Product Launch Strategy for rural markets 3. Teams will get exactly 1 extra minute to wind up. 15% marks will be deducted for every minute exceeded after 16 minutes. 4. At the end of presentation there will be a 5 min question answer round by the judges. 5. Each team will be provided with a computer equipped with Microsoft office and Microsoft windows; microphones, projectors and a screen .

Judging parameters:
Prelims: Objectives-10% Financial Statements 20% Explanation for selecting Target Company 20% Impact and Benefits- 15% Product Launch - 20% Strategy for rural markets 15%

Finals: Question/Answer round 30% Data, explanation and statistics- 50% Overall content 20%

PRIZE MONEY:
1st Prize: Rs. 20,000 2nd Prize: Rs. 12,000 3rd Prize: Rs. 8,000

Contact: Achal Bansal +91-9735554082 achal.bansal@ktj.in