Indian subsidiaries of FMCG giants outperforming their parent cos: Report

Covid-19 might have set the growth back by a few quarters but the FMCG sector has bounced back

Indian subsidiaries of global FMCG giants have over the last decade done better than their parents in terms of profit growth and revenue, said a report on Monday.

The report, as quoted by the Times of India (TOI), said that some Indian subsidiaries could become the largest units of their parent firms, in terms of valuation. 

Hindustan Unilever (HUL), owned by Britain’s Unilever, and Maruti, a unit of Japan’s Maruti Suzuki, are providing significant support to their parent companies in terms of valuations, data from the report released by I-Sec Research said. HUL's valuation of $72 billion is 62 per cent of the market cap of its parent, Unilever. 

The growth of the Indian subsidiaries of US-based Colgate-Palmolive and Japan's  Kansai Paints have also outshined the growth of their parent firms in the last five years. Kansai Paints owns Kansai Nerolac and Colgate toothpaste is the Indian subsidiary of Colgate-Palmolive.

The Covid-19 pandemic, as per the report, might have set the growth back by a few quarters but the sector has bounced back to double-digit growth fueled by the festive season.

India has also emerged as a case study for several FMCG companies for innovation, especially to tap rural India. Companies have been employing several tech-driven-low-cost interventions to boost their penetration and these are being used in other countries, TOI added. 

"Over the last few years, we have also witnessed the emergence of aspirational India. This combined with the potential of penetration-led volume growth makes India a promising market for any company," a spokesperson of Nestle India told TOI. 

An expert quoted in the report added that global companies may also consider listing their Indian subsidiaries on the bourses keeping in mind their growth and returns to the shareholders.