Consumption story lives on, MNCs line up investments

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SummaryMultinationals like HUL, Coca-Cola, PepsiCo & GSK Consumer are investing more in India as they remain bullish on a growing and prosperous middle class.

THE year 2013 may go down as probably one of the worst in terms of performance of the macro-economy, corporate profitability and spending slowdown in the infrastructure sector. However, multinational companies, mostly in the FMCG sector, continue to remain bullish on India and have not shied from committing fresh investments. Bigwigs like Hindustan Unilever, Coca-Cola and PepsiCo were the prominent players who committed big investments in the country. Towards the end, pharma major GlaxoSmithKline Pharmaceuticals announced a R6,400-crore buyback programme (GSK’s healthcare arm had earlier in the year come out with a buyback and spent R4,804.64 crore), thus, providing strength to the story that though the economy may have slowed down with the growth rate falling to around 5%, the consumption story in the country remained alive.

It was not only by way of fresh investments committed by Coke and Pepsi who have been in the country now for over two decades; or big buyback programmes by HUL and Glaxo that made headlines during the year. The retail sector, where the multi-brand segment was thrown open a year ago to foreign investments and in single-brand where the foreign investment limit was hiked to 100%, also drew investments. While Swedish furniture maker Ikea firmed up its plans for an India entry with around R10,500 crore of investments in the single-brand segment, the last days saw UK retail major Tesco committing investments of $110 million in the multi-brand segment by tying up with Tata Group’s Trent.

In June, HUL announced its second buyback programme in less than three years. The FMCG major had announced a buyback programme in July 2007, eventually buying 30.2 million shares for R626.27 crore. This time, the company pumped in R19,182.14 crore to raise its stake in the company to 67.25% from the earlier 62.48%.

Move to PepsiCo. The company announced plans to invest R33,000 crore in Indian operations along with partners. As a part of the plan, the company would set up its biggest beverage plant in Andhra Pradesh at an estimated cost of R1,200 crore, it said. Underlying the significance of the market, PepsiCo chairperson and CEO Indra Nooyi said the company was making investments to double the capacity of business in the country by 2020.

Rival Coca-Cola had said in 2012 that along with partners, it would invest $5 billion in India by 2020. Its global executives visiting the country during

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