The fragrance and flavour industry of the country is likely to grow around 12 per cent each year and touch over USD 5.2 billion in three to four years , an apex body of the industry said. This growth will be driven by factors like rising disposable incomes and changing consumer preferences, Fragrances and Flavours Association of India (FAFAI) president, Risabh Kothari, said. “The fragrance and flavour industry is growing very fast in the country. The present size of the industry is USD 3.7 billion in the country”, Kothari said.
The major user industries of this segment are food and beverages, personal care, homecare, pharmaceuticals and cosmetics, and these include major MNCs, domestic companies and small businesses, the FAFAI president said. Given the growing demand for natural and organic products, consumers are increasingly opting for them which present an opportunity for the fragrances and flavours industry, he stated. Coupled with this, consumers are willing to spend more on premium products with rising disposable incomes, Kothari said.
According to him, the personal care industry is growing at a rapid pace which also presents a good opportunity for this segment. However, Kothari said the biggest threat which this industry is facing is that of cheap imports dumped by overseas players owing to inverted duty structure.
A major ingredient for the industry is natural essential oils which attract higher import duty compared to fragrances, the end product. “We have sent several representations to the government to correct this anomaly by increasing duty on finished fragrance compounds which will protect the domestic industry”, he said. The present duty structure is detrimental to the domestic industry, Kothari claimed.
The first semiconductor fab will be announced in a few weeks, and India is poised for a vibrant chip industry in the next 3-4 years on the back of enabling policies and the government’s firm commitment towards growing the manufacturing ecosystem, Union Minister Ashwini Vaishnaw said on Tuesday.
Today, 99 per cent of mobile phones used here are made in India. This is in stark contrast to the situation 10 years ago when out of 100 phones, as much as 99 per cent were imported, the Minister for Electronics and IT said while a session at CII Partnership Summit 2023. “And now the ecosystem is also shifting to the country. When it comes to mobile phone manufacturing India is number two in manufacturing, and number three in exports,” the minister said.
This year, the mobile phone exports will touch USD 9.5 -10 billion, he added. To spur the supply side, major initiatives have been undertaken by the Centre, including a sharp focus on promoting the ecosystem and ensuring a clearly laid out policy framework that is stable and consistent, according to him.
The government is focused on creating and fostering the semiconductor industry and has been actively engaging with all stakeholders. The government is “committed to do what’s required to succeed”, the minister said.”…that is creating credibility, leading us to an inflection point where the first fab should be declared in coming few weeks and that’s just beginning,” Vaishnaw promised audiences.
Given the progress on all fronts in India’s semiconductor blueprint, “we should see a vibrant semiconductor industry in the coming 3-4 years,” he noted. India’s strategy of pursuing a combination of focused consumption and public investment path has led to sustainable growth and moderate inflation, the minister said.
Hindustan Construction Company (HCC), in a joint venture with Megha Engineering & Infrastructures (MEIL), has won a ₹3,681-crore contract for the construction of the proposed bullet train’s Bandra Kurla Complex station.
The contract for the only underground on the Mumbai-Ahmedabad High-Speed Rail corridor was awarded by the National High-Speed Rail Corporation (NHSRCL).
The Bandra Kurla Complex (BKC) bullet train station is planned at a depth of about 24 metre below the ground level. The station, which will have a total of three floors, will be developed over a cumulative floor area of about 200,000 square metre and will house amenities, including waiting areas, a business-class lounge, a nursery, restrooms, smoking rooms, and information kiosks.
The station will have six platforms, and each platform is about 414 metre, sufficient to accommodate a 16-coach bullet train. The station will have connectivity with the metro and road transport.
HCC’s entry into building a high-speed bullet train station represents a significant opportunity for the company to expand its portfolio and establish a foothold in the high-speed rail construction industry. This new project allows HCC to leverage its expertise in constructing large-scale infrastructure projects and apply it to a cutting-edge transportation system, HCC said in a statement.
The contract also includes building a retrieval shaft on the eastern end for the removal of the tunnel boring machine (TBM), architectural finishing, all mechanical, electrical and plumping works, and testing and commissioning.
In 2017, Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe
initiated India’s first bullet train project, connecting Ahmedabad and Mumbai. The train will cover the 508-km route in under three hours, with a top speed of 350 km per hour. The project is being financed by Japan, which will provide India with a loan of `88,000 crore.
The Indian soft drink market is expected to see “significant growth” as consumption is anticipated to increase steadily, which will deliver sustainable and healthy volume growth across all product categories, said Varun Beverages Ltd (VBL), PepsiCo’s largest franchise bottler. This would be driven by factors such as shifting population demographics, the rising spending power of young consumers, accelerated urbanisation, and growing rural consumption.
The company is in the process of further expanding its capacities to meet the higher demand expectations, said VBL in its latest annual report. Its distribution model and on-the-ground end-to-end infrastructure facilities continue to be the key growth drivers and VBL remains committed to extending it to newer areas and under-penetrated regions to further boost its market presence,” it added. While from an operational standpoint, VBL continues to focus on new product categories and evolving customer preferences.
Launch of new products such as energy drink ‘Sting’ performed well across various geographical regions and recent launches in the value-added dairy segment have received positive consumer response. “Overall, VBL is confident in its ability to deliver strong and sustained growth moving forward, owing to the exceptional performance during the year, normalisation of the environment, and the expanded capacities to meet the high demand expectations,” it said.
VBL is PepsiCo’s second largest franchisee (outside the US), possessing rights to manufacture, distribute and sell carbonated soft drinks, fruit juice-based drinks, packaged drinking water, sports drinks and energy drinks spanning across 6 countries.
In India, VBL has a presence in 27 states and 7 Union Territories and accounts for 90 per cent of PepsiCo India’s beverage sales volume in the country. VBL in the domestic market is consolidating existing distributors and increasing distribution in underpenetrated regions.
It is diversifying its portfolio by “periodically launch of innovative products in select markets in line with changing consumer preferences”, said VBL.It will focus on non-cola carbonated beverages and non-carbonated beverages. In the bottled water segment, the company is looking at a “significant growth” opportunity.
VBL manufactures, markets and distributes PepsiCo-owned products like carbonated soft drinks, carbonated juice-based beverages, juice-based beverages, energy drinks, sports drinks and packaged drinking water. The company, which follows the calendar year as its financial year, recorded a revenue of Rs 13,173.1 crore in 2022.
Hindustan Petroleum Corporation Ltd (HPCL) has entered into an agreement to manufacture, distribute and market lubricants of global supermajor Chevron in India, the two companies said on Tuesday. “Chevron Brands International LLC (Chevron), a subsidiary of Chevron Corporation, has entered into a long-term trademark licensing agreement with HPCL. This collaboration encompasses the licensing, production, distribution, and marketing of Chevron’s lubricant products under the Caltex brand, including Chevron’s proprietary Havoline and Delo branded lubricant product,” they said in a statement.
The agreement provides for “Caltex-branded lubricants to be manufactured, distributed, and marketed in India by HPCL”.
HPCL already has its own brand of lubricants and this would be in addition to the existing ones.
Commenting on the agreement, Brant Fish, President of Chevron International Products, stated, “We are extremely pleased to partner with HPCL to bring quality Caltex lubricants technology and performance to India. HPCL is a market leader in India, and together we plan to build on the strength of the Caltex brand and our premium product portfolio.”
Amit Garg, Director Marketing of HPCL, said, “This exciting partnership paves the way to leverage HPCL’s market leadership to add value via a broader, premium products offering to Indian consumers through synergies between HPCL and Chevron.”
“The long-term comprehensive cooperation we have with Chevron is built on HPCL’s success in the field of lubricants production, distribution, and marketing. We look forward to a fruitful and long-lasting journey with the Caltex brand in the Indian market,” Garg added.
India’s retail inflation declined marginally to 6.44 per cent year-on-year in February as against 6.52 per cent in January, data released by the Ministry of Statistics and Programme Implementation showed on Monday.
The sequential inflation declined by 0.17 per cent. The inflation rate has remained above the Reserve Bank of India’s (RBI) tolerance band of 2-6 per cent for the second straight month.
The high inflation level can be attributed to rising food prices, which account for nearly 40 per cent of the Consumer Price Index (CPI) basket. Food inflation came in at 5.95 per cent in February.
Inflation rate for vegetables contracted marginally by 11.6 per cent against a contraction of 11.7 per cent in the previous month. Meanwhile, inflation rate for fuel and light declined to 9.90 per cent from 10.84 per cent in the month of January.
“February CPI inflation at 6.44 per cent while elevated is broadly in line with expectations. Cereals and milk inflation continues to be high while fruits inflation spiked up too in February. Core inflation at 6.1 per cent remains elevated and sticky with relatively high inflation across clothing and footwear, health, personal care and effects, and household goods/services. The RBI will remain hawkish in the April policy as inflation prints have spiked back over 6 per cent in January-February along with core inflation remaining sticky above 6 per cent. We continue to expect a 25 bps repo rate hike in the April policy,” said Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities.
Higher inflation has been a concern for central banks across the world, including India, as the uncertain nature of the Russia-Ukraine war compounded supply-side disruptions in the post-pandemic world that was barely going through a nascent recovery from economic shocks.
The RBI is expected to keep inflation within a band of 2-6 per cent. It has been raising lending rates to control inflation. Earlier, in February, the RBI had delivered a quarter-percentage-point hike in the policy repo rate.
The RBI had cut India’s inflation forecast for this fiscal year as the worst of price pressures were seen to be behind, but Governor Shaktikanta Das had flagged stickiness of the core inflation to be a matter of concern during its Monetary Policy Committee meeting on February 8.
The rising inflation levels are signaling a rate hike by the central bank. Another rate hike by the RBI may result in borrowing costs reaching a seven-year high, stated a Bloomberg report.
In an online session on ‘Growth resilience and sticky inflation’, DBS Group Research Executive Director & Senior Economist Radhika Rao said the RBI may hike interest rates by 25 basis points in April and maintain a hawkish bias as retail inflation is still high.
The RBI had forecast retail inflation for FY23 at 6.5 per cent and for Q4 at 5.7 per cent. Retail inflation for FY24 has been forecast at 5.3 per cent with Q1 at 5 per cent, Q2 at 5.4 per cent, Q3 at 5.4 per cent and Q4 at 5.6 per cent
Since May last year, the RBI has increased the short-term lending rate by 225 basis points to contain inflation.
India’s wholesale price index (WPI)-based inflation eased to 3.85 per cent in February on an annual basis from 4.73 per cent in January, stated provisional data from the Commerce Ministry on Tuesday.
The month-on-month change in WPI index for February witnessed an increase of 0.20 per cent as against 0.13 per cent in the preceding month.
“Decline in the rate of inflation in February, 2023 is primarily contributed by fall in prices of crude petroleum & natural gas, non-food articles, food products, minerals, computer, electronic & optical products, chemicals & chemical products, electrical equipment and motor vehicles, trailers & semitrailers,” stated a press release.
The latest WPI number could be favourable for corporates as a dip in wholesale prices might ease pressure on corporate earnings. Lower input costs might also bode well for retail prices.
The WPI inflation had eased to a 24-month low of 4.73 per cent in January, due to fall in prices of food articles, mineral oils, crude petroleum & natural gas, food products, textiles and chemicals & chemical products. The WPI inflation has been decreasing for the past several months.
The WPI is one of the two indices that measure inflation in India. The other is Consumer Price Inflation (CPI). The WPI captures prices at the level of production or manufacturing, taking into account goods traded between companies, as against the CPI that measures prices at the retail consumer level. Food items, which constitute a major part of the CPI, drive retail inflation, while for the WPI, it’s manufactured goods.
Yesterday, the data showed an unexpected uptick in the CPI inflation for January. It surged to a three-month high of 5.6 per cent. The spurt in retail inflation in January indicated the RBI might continue with rate hikes while the downtrend in retail inflation in previous months had raised hopes the RBI would go soft on rate hikes. Rising inflation has posed a challenge for central banks around the world which have been tightening lending rates to control it.
The FMCG industry is optimistic about at least 20 per cent growth in 2023 after an ‘exponential growth’ in 2022. “We saw a high demand and a growth of more than 30 per cent from the last fiscal year. We have already crossed Rs 4500 crores turnover, which was projected till the end of March 2023,” said Ashish Khandelwal, Managing Director, BL Agro.
With the ongoing wedding season leading up to Holi, FMCG companies traditionally witness a strong Q4 in terms of consumption. “The Q4 and Q1 of next FY will be good as the market is under control. Unlike last year it went up due to the Russia-Ukraine war, this year it is stable,” said Angshu Mallick, MD & CEO, Adani Wilmar Ltd. The staples categories like besan, dal, atta and rice have shown huge improvement and brands which are good in quality are surely going to grow and can expect better results, he added.
BL Agro is expecting to witness an increase of 100 per cent in sales and has also set up a new manufacturing unit to double its production and fulfill the demand, he added. “2023 will see an upward graph for the FMCG market. FMCG is one of the segments where the demand can never go down, the growth percentages may definitely vary,” said Ashish Khandelwal.
“FMCG industry grew by 7-8 per cent in 2022 in terms of sales and is likely to grow at the same pace in 2023 if the growth trajectory remains the same. I expect the Food & Beverages sector may grow around 10-12 per cent whereas the Home and personal care segments are likely to grow 8-9 per cent in 2023,’ said Azaz Motiwala, Founder at IKON Marketing Consultants.
Further, the FMCG companies reiterated that there had been a transition from unorganised to organised segment in 2022 which will continue in 2023 and the FMCG sector is poised to outgrow traditional growth rates. “Additionally, digitalization is likely to be a significant driving force in the growth and development of the FMCG sector in 2023,” said Manish Bandlish, Managing Director, Mother Dairy Fruit & Vegetable Pvt Ltd.
For NextG Apex India Pvt Ltd which sells brands like Mamafeast and Naturefest, the sales revenue for its service model is expected to grow by 30 per cent CAGR as compared to last year, and for its own labels, sales is expected to grow by more than two times in 2023. “ It is expected that around six to seven crores of revenue will be attained during this period,” said Amarnath Halember, Executive Director and CEO, NextG Apex India Pvt Ltd.
Rural or Urban driving the growth?
While the demand for the FMCG companies are coming from both – urban and rural markets, the segment, after a demand slump since the last few quarters, is witnessing green shoots of recovery in the rural markets. In the third quarter ended December 31, 2022, the companies reported growth in the urban markets. Rural markets, which contribute around 35 per cent of FMCG industry sales, are showcasing signs of improvement on the back of encouraging winter crop sowing, indications of higher farm income and continued government stimulus.
“It has been evident that the increase in sales is maximised more in rural areas or tier-II & tier-III towns as compared to the metropolitan cities. The growth in metros will be stagnant in 2023,and the major growth is anticipated to come from tier-II & -III towns,” said Amarnath Halember.
PepsiCo India too is witnessing strong demand from rural India for its foods and beverage products. “This is largely due to labour migration, increased digital penetration and enhanced distribution of our portfolio and rural India switching from unbranded loose products to branded ones,” said Ahmed ElSheikh, President, PepsiCo India.
On the price front, FMCG players believe that the present prices will remain stable and there will be no price change right now. “I think the present prices are stable. It has come down from the top and the consumers are accepting it. We see good demand at these prices. So, I don’t think prices are likely to go down because it is more technical in nature. We feel that these are comfortable prices,” added Angshu Mallick. In terms of products, packaged goods, ready-to-eat segments, and health and wellness products are expected to bring in most sales.
The power ministry on Tuesday said that the government has accepted a report of a task force or expert panel, which paves the way for modern and smart electricity transmission system in India.
The country will soon have a modern and smart power transmission system with features such as real-time monitoring and automated operation of grid, better situational assessment, capability to have increased share of renewable capacity in the power-mix, enhanced utilisation of transmission capacity, greater resilience against cyber attacks as well as natural disasters, centralised and data-driven decision-making, reduction in forced outages through self-correcting systems etc., a power ministry statement said.
These and other recommendations are part of a report of a task force set up by the power ministry in September 2021 under the chairmanship of POWERGRID chairman and managing director to suggest ways for modernisation of transmission sector and making it smart and future-ready, it stated. The other members of the task force included representatives from state transmission utilities, Central Electricity Authority (CEA), central transmission utilities, MeiTY (Ministry of Electronics and Information Technology), IIT Kanpur, NSGPMU and EPTA.
The report of the committee was accepted by the government after deliberations with Union power minister R K Singh last week, it stated. During the meeting, the minister emphasised that a modern transmission grid is vital to achieve the government’s vision to provide 24×7 reliable and affordable power to the people and also meet sustainability goals.
Singh said that a fully automated, digitally controlled, fast responsive grid which is resilient to cyber attacks and natural disasters is the need of the hour. The minister said that such a system should ensure isolation of specific areas in case of any contingency, so as to protect the grid and prevent larger outages.
Appreciating the efforts of the task force, Singh directed the CEA to formulate necessary standards and regulations for adoption of identified technological solutions and set benchmark performance levels so as to build a robust and modern transmission network in the country. The task force in its report has recommended a bouquet of technological and digital solutions, which can be adopted to make the state transmission grids future-ready.
These recommendations have been clubbed under categories of modernisation of existing transmission system; use of advanced technology in construction and supervision, operations and management; smart and future-ready transmission system; and up-skilling of workforce.
The task force has recommended centralised remote monitoring, operation of substations including SCADA, flexible AC transmission devices (FACTs), Dynamic Line Loading system (DLL), Wide Area Measurement System (WAMS) using PMUs and data analytics, Hybrid AC/HVDC system, predictive maintenance technique using AI/ML algorithms, HTLS conductors, process bus based protection automation and control GIS/Hybrid substation, cyber security, energy storage system, and drones & robots in construction/inspection of transmission assets.
The use of robots is expected to not only minimise human intervention and life risks/hazards but also save time while ensuring accuracy during construction and maintenance. The task force also recommended benchmarks for transmission network availability and voltage control based on the performance of global transmission utilities. While the short-term to medium-term recommendations will be implemented over 1-3 years, the long-term interventions are proposed to be implemented over a period of 3-5 years, it stated.
PepsiCo India is witnessing strong demand from rural India for both its foods and beverages products. “This is largely due to labour migration, increased digital penetration and enhanced distribution of our portfolio and rural India switching from unbranded loose products to branded ones,” Ahmed ElSheikh, President, PepsiCo India, told FinancialExpress.com. The FMCG brand is also looking forward to a strong summer season this year. George Kovoor, Senior Vice President – Beverages, PepsiCo India, said, “We’re excited about what an early onset of summer could signify for the beverage sector in 2023. We are optimistic that our portfolio of well-known brands, such as Pepsi, 7UP, Mirinda, Slice, Sting, and Mountain Dew, will be able to meet consumer demand for refreshing, high-quality beverages to help them beat the heat.”
In its results for the fourth quarter and full-year 2022 ending December 31, 2022, PepsiCo said that its India unit delivered a ‘double-digit organic revenue growth’ in 2022 and has gained market share in the segment in markets, including India. With the inflationary pressures expected to persist in 2023, PepsiCo expects the business to “build on the momentum and strength delivered in 2022”.
In-home consumption remained strong while out-of-home and on-the-go consumption steadily rose in the post covid era. Our product portfolio in foods and beverages are in high demand and the digital consumer category continues to expand with brands building value propositions in a socially networked world thereby significantly driving growth for PepsiCo India. PepsiCo India’s core focus continued to cater to the evolving consumer needs and provide them positive choices by introducing new flavors and launching new products like Pepsi Black, Quaker Oats Muesli and Lays Gourmet among others.
Which regions will bring more sales (urban or rural; metros or tier-II & beyond towns; etc.)?
We continue to witness strong demand from rural India for some time now, for both our foods and beverage products. This is largely due to labour migration, increased digital penetration and enhanced distribution of our portfolio and rural India switching from unbranded loose products to branded ones.
What is your business outlook for the year 2023?
In 2022, we witnessed a seismic shift in omnichannel channel growth with sales significantly outpacing in-store growth across metro cities. As we move forward, the strategy will be to focus on product and consumer experience innovation, prioritizing profitable channels, diligently managing SKUs, and driving execution & productivity across the system. This decade is a decade of India and we are focused on building capabilities, availability and expanding penetration while driving category innovation. With consumers making conscious choices, they are looking for brands that are contributing to the environment at large along with providing affordable products.
What are your thoughts on the Union Budget 2023 for the FMCG segment?
The Union Budget 2023 maintains the country’s robust growth engine with healthy growth predicted on all key metrics. It’s a positive and favorable budget, with the Government’s emphasis on infrastructure, technology, and entrepreneurship boosting economic growth. On the other hand, farmer-centric programs, last-mile connectivity, and digitization will further contribute to the FMCG sector’s multiplier effect.
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