Whisper has Become Most Intimate Possession for Women

Procter & Gamble share price in Indian stock markets
Procter & Gamble share price in Indian stock markets | Source
Procter & Gamble headquarters in Downtown Cincinnati, Ohio
Procter & Gamble headquarters in Downtown Cincinnati, Ohio

Will Procter & Gamble penetrate Indian market?


Q1 not satisfactory

Procter & Gamble Hygiene Healthcare has not produced a satisfactory Q1 results for the quarter ended 30.06.11 as compared to the previous quarter ended 31.03.11. Revenue has marginally increased from Rs.234 crore to Rs.245 crore. Revenue for the year 2010-11 was at Rs.1001 crore. Net profit declined from Rs.38.94 crore to Rs.35.63 crore. Net profit for the entire year was at Rs.150.88 crore. Operating profit margin declined steeply from 23.29% to 14.55%. Net profit margin declined from 16.58% to 14.54%. The shares of Procter & Gamble are traded in the Indian stock exchanges at Rs.2043. The yearly lowest price was Rs.1460 on 11.02.11. The present share price is close to the company’s yearly highest price.

Middle level management programme

Procter & Gamble has launched a middle management training programme and has named it as BOF (Build Our Future). The programme trains middle managers to shoulder responsibility at the next higher level. The company’s HRD head Sonali Roychowdhury takes care of the programme to groom future executives of the company. Most companies take care of developing the leadership pipeline at the senior level. But Procter & Gamble takes care of it at the middle level also. This is the vital difference between Procter & Gamble and other companies in managerial strength. Procter & Gamble has nearly 150 middle level managers. Case studies and business simulations are part of the course.

Feminine hygiene is company’s strength

The company’s product strength lies in its feminine hygiene and healthcare sectors. Procter & Gamble invested Rs.345 crore in another Indian company belonging to its group P&G Home Products. It is one of the largest investments ever made by P&G in India for the last decade. Procter & Gamble Home Products is a 100% subsidiary of Procter & Gamble that makes Tide, Ariel and Pantene soaps and shampoos. Procter & Gamble may enter into new categories like surface cleaners, toothpaste and hair oils. It may manufacture more products locally and may concentrate on producing more mass consumption products.

100% subsidiary in India

Procter & Gamble is a US company. Procter & Gamble Home Products decided in May to allot 4.6 million shares to its parent company at Rs.750 each aggregating Rs.345 crore. This will increase the company’s total number of shares to 19.4 million estimated at Rs.1455 crore. As Procter & Gamble Home Products is not a listed company, one cannot comment about the valuation. Procter & Gamble has many ambitions in its India operations. First, it wants to double the number of Indians who use its products. Second, it wants to treble pre capital spending by Indian consumers on its products. Third, it wants to quadruple net sales of its Indian subsidiary by 2015. Procter & Gamble is competing with the UK-based Unilever in emerging markets. Emerging markets account for 30% of sales turnover of Procter & Gamble. But this share is more than 50% for Unilever. Procter & Gamble is a Cincinnati-based company. Robert McDonald is its Global CEO and Chairman.

Can P&G tame the British lion in Indian den?

Procter & Gamble wants to overtake Unilever in India in about five years. But it will be a very difficult task for Procter & Gamble to shake the base of the firmly entrenched Hindustan Lever, the Indian arm of Unilever. In fact, in several small segments, Procter & Gamble is already a market leader and in some other segments it is number two position. In diapers, feminine hygiene, cough & cold lozenges and balm, blades and razors and air fresheners, Procter & Gamble is the market leader with a market share of more than 50% in each of the respective categories. In batteries, toothbrushes and hair colour, it is number two. But in two of the vital segments, Procter & Gamble lags Hindustan Levers. These are laundry soaps and shampoos. Procter & Gamble’s skin care products like anti-ageing creams and premium fairness are becoming increasingly popular. In these segments, the company has bright chances to emerge market leader in future. Of the eleven categories Procter & Gamble is involved in India, it is the market leader in six of them. This shows that the company’s ambition of overtaking Hindustan Lever may not be a wild dream, after all.

High royalty

Procter & Gamble’s move to raise the royalty payments by its Indian subsidiary Procter & Gamble Health & Hygiene has attracted criticism from the investors. Procter & Gamble markets feminine hygiene brand Whisper, which is extremely popular among women undergoing their monthly periods. It is also marketing Vicks, an anti-cold balm and lozenges. Whisper and Vicks are household names in India and even people in rural areas are aware of these brands. Procter & Gamble has increased its royalty payment from the Indian subsidiary from 2.18/% in 2005 to 5.6% in 2010. Procter & Gamble’s arch rival Hindustan Lever paid a royalty of 0.67% in 2010 on a sales turnover of Rs.17700 crore. Colgate paid a royalty of 4.46%\ and GlaxoSmithKline Consumer Healthcare paid a royalty of 2.05%. For GlaxoSmithKline Consumer Healthcare, the royalty has fallen from 4.19% in 2006 to 2.05% in 2010. This indicates the willingness of GlaxoSmithKline Consumer Healthcare to invest more in India. Among the high profile companies operating in India, Procter & Gamble pays the highest royalty to its overseas parents.

Brand sttength

There are other popular brands held by Procter & Gamble marketed by its wholly owned subsidiary Procter & Gamble Home Products. These brands are Ariel, Tide, Pantene, Head & Shoulders, Olay and Pampers. Olay soap comes in many variations and is very popular. Pampers is a bay care product. Laundry soaps, hair care and skin care products are worth Rs.18000 crore in India. They form 50% of the entire home and personal care products market in India.

First plant in USA in 40 years

In the month of March, Procter & Gamble opened Box Elder, its plant in Utah, USA. This was the company’s first plant in USA in about forty years. The company will be manufacturing Charmin toilet paper, Bounty paper towels, Puffs facial tissues and quite a number of other products. The plant will serve the needs of the western region of USA, which is one of the fast-growing areas. The plant is spread over 750 acres of land and is just 75 minutes drive from Salt Lake City. The plant has more than six lakh square feet of manufacturing space. Added to this, the company also has four lakh square feet for its onsite Distribution Centre. Procter & Gamble also has five other production facilities in USA. But this is the first in the north western area of USA.

Playing the health card to the mothers

Procter & Gamble reduced the price of Pampers diapers for babies and Whisper napkins in India. The reason was the reduction of excise duty from 10% to 1% in the Union Budget for 2011-12. Earlier to this, the company announced its intention to raise the price of its products due to high commodity prices. Procter & Gamble has created a senior leadership that contains nearly half of women. Initially, when Procter & Gamble introduced its Pampers diaper brand in India, it met with stiff resistance from the mothers. Mothers thought that using disposable diapers was against the culture of India and also bred laziness among mothers. Realising that it was difficult to change the mindsets of the mothers, Procter & Gamble marketed the product as a baby healthcare item. The company spread word through advertising that the diaper kept baby dry by completely absorbing the wet. This keeps the baby dry for several hours and prevented any disease attacking it. The ploy worked. Mothers’ hearts melted and today Procter & Gamble’s Pampers diaper is the largest selling diaper in India.

Encouraging women

Nearly three fourths of the consumers of Procter & Gamble’s products are women. Therefore, there is reason to appoint more women in senior management position in the company. Five out of the company’s twelve global board members are women. Procter & Gamble is a $80 billion company worldwide. In India, it is a Rs.5000 crore company with Procter & Gamble Hygiene contributing Rs.1000 crore turnover. Procter & Gamble Hygiene is headquartered in Mumbai, the financial capital of India. Procter & Gamble markets products like Pampers baby diapers and Whisper feminine hygiene exclusively for women. However, it markets razors which are used exclusively by men. Procter & Gamble offers flexible working hours, work from home option and work from any location to its women workers. In fact, Procter & Gamble’s CEO Roychowdhury herself worked from Vietnam for two years when her husband was transferred there. Of course, this is not a new concept in India. Infosys, the IT giant, has put up a satellite office where carrying women can work from anywhere. But will a woman become a CEO of Procter & Gamble and occupy its Cincinnati office at any time in future? Only time can answer this question.

Do not invest now

For the stock market investors, it is better not to invest in the company’s shares at this high price. Let the prices cool and then one can contemplate investment at a price of below Rs.1000 for medium term holding.

Procter & Gamble share price movement in Indian stock market

Weekly H/L
2,068.00
1,970.00
Monthly H/L
2,068.00
1,851.00
52 Weeks H/L
2,125.00
1,460.00
 
( 8 Apr 11 )
( 11 Feb 11 )
Delivery / Var+ELM %
63.35
12.5

Procter & Gamble Hygiene Healthcare quarterly results

(in Cr.)
Jun-11
Mar-11
FY10-11
Revenue
245.06
234.8
1,001.90
Net Profit
35.63
38.94
150.88
EPS
--
--
--
Cash EPS
12.89
13.76
53.31
OPM %
14.55
23.29
19.86
NPM %
14.54
16.58
15.06

Vote Frankly

Will Procter & Gamble overtake Hindustan Lever in India in five years?

See results without voting

Buy from Amazon quality products for your baby

Comments 2 comments

Madurai profile image

Madurai 4 years ago from Online

I thought that the page is about Whisper, but not much coverage about it...


ramkimeena profile image

ramkimeena 4 years ago from India Author

Dear Madurai,

Thank you for your valuable comments. I agree with you fully that I have not cnvered much about the product Whisper in my article. I wanted to write an article from an investment angle about the company P&G and chose the most symbolic name representing P&G.

Best wishes to you.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working