Mumbai: World’s largest consumer goods manufacturer Procter and Gamble (P&G) plans to invest about Rs. 244 crore in its unlisted Indian arm P&G Home Products this year.
This investment is a part of its overall commitment to take on competitor and the country’s largest fast-moving consumer goods firm Hindustan Unilever Ltd (HUL) in terms of product portfolio and reach.
While, P&G India’s overall sales are estimated at Rs. 6,000 crore, HUL is almost four times bigger at Rs. 26,000 crore.
But they both compete in several key segments such as detergents, hair and skin care where HUL by far is the market leader.
P&G India, in a board meeting held last month, had decided to issue 31.68 lakh of shares of 10 each at a premium of Rs. 760 to its $32-billion parent company.
The fresh funds earmarked for India takes P&G's total investment in the country to around Rs. 1,000 crore in the fiscal ended March 2014.
While the company declined to comment on the development as it was in a silent period, it is understood that the funds would be used for capital expenditure, increasing the company’s marketing activity, innovation and expanding its distribution network in the country.
Mass offerings
P&G India has reported double-digit growth consistently in the last few years with its brands Whisper, Pantene, Oral B, Vicks, Gillette, Ariel and Tide.
But still, it has not been able to catch up with HUL due to its premium offerings.
Analysts feel P&G is more into the value game unlike HUL, which has products in the mass-end such as Wheel and Lifebuoy.
P&G's increased investments could be to enter the market with more mass offerings and also to raise its advertisement spends. The company also plans to revisit its ‘Project 2-3-4’, which is aimed at doubling the number of Indians who use its products, trebling per capita spending by Indians on its products and quadrupling net sales in India by 2015.
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