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US investments in India
P&G to build largest Indian plant in Hyderabad
Procter & Gamble, the world's largest consumer goods company, will build its largest manufacturing
plant in the Indian sub-continent in Hyderabad by investing 345 crore. The plant, to be spread across
170 acres at Mahbubnagar district, will make products across categories such as laundry, personal and
baby care, a person, who is the know said on condition of anonymity.
P&G India's associate director, product supply, Madhav Rao confirmed that the maker of Tide detergent
and Head & Shoulder shampoo will build a manufacturing facility in Hyderabad. The plant will start
commercial production in two years. Andhra Pradesh industries Secretary TS Appa Rao said P&G has
awarded the construction contract to L&T. "They have asked for a tailor made package of tax breaks and
the state investment promotion board is considering it," Rao said.
The $82.6-billion (sales in FY11) US giant had considered Chennai too as a possible site for its plant.
Building the plant in Hyderabad will make it eligible for a 100% stamp duty reimbursement and fixed
power allocation as per Andhra Pradesh's newly-revised industrial policy. The company has also asked
for a 75% reimbursement on VAT for five years. The move is in line with the Cincinatti-based firm's
global mandate to set up over 20 production centres and acquire one billion new consumers in
emerging markets by 2015. P&G is looking to catch up with archrival Unilever in India and most
emerging markets. Making more products locally and reducing imports will help it speed up product
launches and cut costs.
It currently has five plants and over nine contract manufacturing sites in India. Last year, P&G approved
an investment plan of over 900 crore in its unlisted arm Procter & Gamble Home Products. Most of this
money will go into powering P&G's '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
of its India operations by 2015. Anand Mour, senior analyst at brokerage firm Ambit Capital, said P&G
will need to spruce up production to quadruple its sales. "Making products locally will help P&G in
economies of scale to localise and price their products aggressively," he said.
P&G is also expanding its existing multi-product manufacturing facility in Bhopal. It has doubled its
distribution reach over the past couple of years and now has a direct reach of 1.3 million outlets, against
HUL's direct reach of 2 million outlets. At present, India is one of the smallest markets for P&G with just
$1-billion sales across three subsidiaries -Procter & Gamble Health & Hygiene, Gillette India and Procter
& Gamble Home Products.
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