According to the report, hygiene awareness, health, personal grooming and convenience seems to be the driving force behind increased consumption in middle India
‘Middle India’, a region made of about 400 towns with a population of one to 10 lakh each, has outperformed all-India fast-moving consumer goods (FMCG) growth story, says Nielsen’s report titled ‘Managing the Middle India Gold Rush’. Terming this region as ‘vastly underrated’, the report states that middle India would emerge as a key growth engine in a decade.
‘Middle India is are home to 100 million Indians and today constitute up to 20% of the country’s FMCG consumption. In fact, only the metros and Middle India have outpaced the all-India growth story in the last eight years. Even today, Middle India leads the pack across urban and rural segments for FMCG value growth rates,” says the report.
It states out of the Rs1.4 trillion ($280 billion) in FMCG sales in 2010, goods worth about Rs287 billion ($5.74 billion) were consumed by the Middle India population. This number makes up more than 20% of the overall FMCG sales, and 30% of the urban FMCG sales.
Interestingly, focus on hygiene, health, personal grooming and convenience seems to be driving the rapid growth in these towns. The top five fastest growing categories like diapers, scourers, liquid toilet soaps, acne preparations and air fresheners, which fared strongly in the past year, performed even better in 2011, indicating continued possibility of robust growth in the near future.
Middle India is also home to 30% of all urban stores, comprising over 900,000 million stores today. From 2002 to 2010, the region has seen a vast increase in sales values, going to Rs287 billion from Rs83 billion. Only metros have registered more growth, from Rs110 billion to Rs412 billion during the same period. This is a significant achievement for these smaller towns, considering the fact that the metros breached the Rs280 billion mark as recently as in 2009.
“Although some companies have partially penetrated the Middle India market, many tend to overlook smaller towns, ignoring the fact that these markets are perhaps easier to penetrate due to relatively sparse competition,” says the report.
However, a few major players with adequate capital and wide distribution networks are already cashing in on the opportunity.
The report from Nielsen says, “The annual turnover of the top ten FMCG players from the Middle India segment rose more than 42% or by Rs35.8 billion ($716 million) in just two years between 2009 and 2011.”
The fields can produce 10 million metric standard cubic metres a day (mmscmd) by 2016 and will help shore up output from the block, which has seen a 35% drop in output in the past 15 months.
After months of delay, the government may approve Reliance Industries’ (RIL) $1.529-billion investment plan for developing four satellite fields in the flagging KG-D6 block.
The KG-D6 oversight committee, which includes officials from the oil ministry and its technical arm—the Directorate General of Hydrocarbons (DGH)—is slated to meet tomorrow to consider the approval for the field development plan (FDP) for the D-2, D-6, D-19 and D-22 fields surrounding the currently producing Dhirubhai-1 and -3 fields.
Sources privy to the development said the fields can produce 10 million metric standard cubic metres a day (mmscmd) by 2016 and will help shore up output from the block, which has seen a 35% drop in output in the past 15 months.
The oversight panel, called the Management Committee, had in its last meeting on 2nd December refused to approve the investment plan saying that the proposal made in December 2009 was based on the prices of that year, and new rates need to be worked out at the current prices.
Sources said RIL and its partners, UK’s BP Plc and Niko Resources of Canada, felt reworking rates would require several months and would lead to loss of the four-month weather window in the Bay of Bengal that began this month.
As a compromise, RIL agreed to cap spending on the four satellite fields at $1.529 billion, give or take 15%. It includes $30 million pre-development activity cost that RIL and BP have been insisting on taking up during the next quarter for pre-engineering and other studies.
RIL has so far made 18 gas discoveries in the KG-D6 block. Of these, D-1 and D-3—the largest among the lot—were brought into production from April 2009 but output has fallen to 32.94 mmscmd this month from 54 mmcmd, reached in March 2010. Together with 6.86 mmscmd of associated gas produced from MA oilfield in the same area, total production from the block is 39.8 mmscmd.
The company had in July 2008 submitted an FDP for nine satellite gas discoveries (D-2, D-4, D-6, D-7, D-8, D-16, D-19, D-22 and D-23) with an estimated capex of $5.6 billion and reserves of 1,708 billion cubic ft (bcf). It later submitted an optimised development plan for the four satellite gas fields at the end of 2009. RIL estimated 1,733 bcf of in-place gas reserves in the four finds, of which 626 bcf can be produced. However, the DGH trimmed down the estimates to 1,342 bcf and 617 bcf, respectively.
Its proposal to invest up to $2.338 billion to produce about 15 mmscmd of gas from D-24 or the R-Series gas field has been pending in its eastern offshore KG-D6 block. The field has gross in-place gas reserves of 1.64 trillion cubic ft.
In the forenoon, Reliance Industries was trading at around Rs766.55 per share on the Bombay Stock Exchange, 0.74% up from the previous close.
"Majority of our orders come from the European markets, which is currently facing challenging times. However, we are in the process of delivering five vessels in the next six months," managing director PC Kapoor said.
Bharati Shipyard said its board has approved a Rs2,854-crore corporate debt restructuring (CDR) programme as part of efforts to optimise costs.
“The debt restructuring will help us to optimise costs and resources in the time to come,” company’s managing director PC Kapoor said in a statement.
Bharati Shipyard’s total debt currently stands at Rs3,250 crore. The restructuring pertains to “term/working capital debt”. The company, which is in advanced stages of completion of its two greenfield shipyards at Dabhol and Mangalore, said it has Rs6,800 crore order book which would be executed by 2014.
“Majority of our orders come from the European markets, which is currently facing challenging times. However, we are in the process of delivering five vessels in the next six months,” Mr Kapoor said. He said the company would undertake various initiatives to optimise the current resources in view of the overall sectoral slowdown and the challenging economic scenario. “The overall shipping industry in India is under tremendous pressures. However, Bharati Shipyard is confident of its business model and successfully weathering the current business challenges,” he said.
In the forenoon, Bharati Shipyard was trading at around Rs72.15 per share on the Bombay Stock Exchange, 5.41% up from the previous close.