Average inventory dated back 2.5 months as on 30th November, as per a research report
The festive season seems dim for the FMCG (fast moving consumer goods) sector. A report by Emkay Global Financial Services has revealed that inventory in the consumer goods sector is piling up. On an average, the market’s inventory is two-and-half months old, as observed on 20th November.
The report says, “Relatively new/fresh inventory was seen in milk and food-noodles—dated back one-and-half to two months. Relatively old inventory was seen in hair oils and toothpastes. With inventory dating back two-and-half months—sales momentum seems moderating in the modern retail channel for FMCG categories.” The report finds that Dabur and Bajaj have suffered due to their hair oil products; and Nestle, Marico and Britannia have fresher inventory by virtue of their food products.
“Inflation, price rise across product categories and rising uncertainty about employment may have deterred the consumers. We have seen reduced sales in beauty products, domestic pesticides, stationery and other household products. But milk and milk products, chocolates, etc are seeing strong sales thanks to Christmas,” said a spokesperson of a retail chain. He said that the situation may be worse in non-metropolitan cities and rural areas.
If the Diwali season (October 2011) was any indication, Christmas and New Year is going to be a dull sight. Diwali saw average footfalls in malls and retail outlets, and the sales momentum was not so great.
The inventory pile up can be partly attributed to strong volume growth for the second quarter—which was the focus of most FMCG companies. Colgate reported a 13% volume growth during the second quarter while Hindustan Unilever reported 9.8% of volume growth. However, input costs have been high, and most companies raised prices across sectors.
On the other hand, Marico and Nestle, who are placed above HUL, Proctor & Gamble and Colgate—had managed their costs better; though had also focused on volume growth during Q2. Overall, food items have fared better than personal care and home products in inventory movement.
An analyst with a brokering firm said, “Adding to the concerns is the weakening of the rupee. Also, companies have to take into account agricultural productivity. Till at least the next quarter pressures will not ease up.”
Use of social networks is not limited to just young people. People aged 55 or more have emerged as the fastest growing age segment in social networking says comScore
Social networking is the most popular online activity worldwide accounting for nearly 1 in every 5 minutes spent online in October 2011, and reaches 82% percent of the world’s Internet population, representing 1.2 billion users across the globe, says comScore.
“Regardless of the geography, social networks are weaving themselves ever more intricately into the fabric of the digital experience, opening a world of new opportunity for business and technology,” said Linda Boland Abraham, comScore CMO and EVP of global development.
Time spent on social networking sites gained ground during this time by taking share predominantly from web-based email and instant messengers, reflecting its emergence as another primary communication channel for users. Unmistakably, it has evolved over the years to become an integral part of the global online experience, in many ways both mirroring and augmenting the offline social experience, comScore said.
The report of the CAG, presented to Parliament a few months ago said “this (the decision to purchase 68 aircraft at a cost of Rs50,000 crore) was a recipe for disaster and should have raised alarm signals in the ministry of civil aviation, Public Investment Board and the Planning Commission"
It has been seven years since India’s aviation icon was metaphorically shot down in mid-flight. And the Maharaja it still lying crash-landed, his glorious moustache stuck in muck and legs kicking feebly in the air.
The first job that Ajit Singh, the new civil aviation minister, will have to take up is to get Air India flying high again, supported by a sound financial position.
Equally important, Mr Singh will have to identify those responsible, from minister to joint secretary, for sabotage of Air India. He has to make sure cases are filed against these people, charging them with anti-national activity and destruction of national property, amongst other things.
The prime accused stands out: he is Praful Patel, who was civil aviation minister in 2004.
Mr Patel maneuvered himself into post of civil aviation minister using the clout of his mentor Sharad Pawar. The fact that, till he became minister, he was a director of Jet Airways is a clear pointer to why he got himself into this particular ministry. What about the concept of conflict of interest? That’s only for credulously innocent and straight-forward people.
Prime minister Manmohan Singh could, to give him the benefit of doubt, only watch helplessly and get all of Mr Patel’s decisions rubber-stamped by the Cabinet.
Mr Patel set about his task quickly. Four months after taking over, he chaired a meeting to discuss Air India’s expansion plan to buy 28 aircraft to replace the ageing Jumbos. Mr Patel’s diktat at the meeting was that Air India would buy not 28 aircraft but 68—at a stupendous cost of Rs50,000 crore.
The report of the Comptroller and Auditor General of India (CAG), presented to Parliament a few months ago said “this was a recipe for disaster and should have raised alarm signals in the ministry of civil aviation, Public Investment Board and the Planning Commission".
The inflated purchase order was not backed by either a viable revenue plan or expansion of routes. Indian Airlines, too, was asked to revisit its proposal to buy 43 aircraft but it refused.
On 5 August 2004, the minutes of the meeting were sent to V Thulasidas, then CMD Air India by an under-secretary in the ministry called K K Padmanabhan. The minutes ordered that "Air India should revisit the proposal of aircraft purchase and submit a fresh project proposal to the government at the earliest which could include the revised requirements." Mr Thulasidas agreed to revise the proposal despite strong opposition from V Subramaniam, additional secretary and financial adviser of the ministry.
The entire acquisition (for both Air India and Indian Airlines) was to be funded through debt (to be repaid through revenue generation), except for a relatively small equity infusion of Rs325 crore for Indian Airlines.
Mr Patel's controversial decision was rubber-stamped by a committee of secretaries and a group of ministers. Air India is still saddled with debt of more than Rs40,000 crore and an estimated loss of around Rs7,000 crore. Till the 2003-2004 fiscal, AI was making a profit of around Rs105 crore.
The CAG report said the aircraft acquisition through debt "contributed predominantly" to the airline's massive debt liability, which stood at Rs38,423 crore as on 31st March last year. CAG also called the merger of Air India and Indian Airlines "ill-timed" and said that "the financial case for the merger was not adequately validated prior to the merger".
Having done his dirty work, Mr Patel moved on to the industries ministry. Air India was left to sink in the mud till a few months ago when a rescue plan was mooted. Bankers and bureaucrats are running round and around trying to save Air India.
In 1985, when Rajiv Gandhi came to power, he appointed rookie P Chidambaram as deputy minister for textiles. Within a week he was moved to the home ministry in a junior post.
It was reported that Mr Chidambaram had told Rajiv Gandhi that his family owned a few textile mills and there would be conflict of interest if he stayed on in the textiles ministry. Mr Chidambaram was an honest young man then.