Mergers and acquisitions may intensify in Indian FMCG sector Essay

New Delhi, folk 19 (IANS) The food, drinks and consumer goods industry is handlely to work through a consolidaton in the coming months, with king-sized size firms looking to improve margins by acquiring smaller peers, according to planetary consulting firm KPMG. The Indian household and personalized c are merchandise is likely to keep back to see deal interest from strategic players in 2010 because it requires significant marketing and publicise spend, as well as diffusion channel investments, to build scale, said a recent global KPMG report on mergers and encyclopaedisms in consumer markets.The report, which calls India a busy market driven by consolidation and stinting growth, said players with limited monetary muscle and brand portfolio are judge to yield to their larger counterparts. Another spring for consolidation is the expanding footprint of large set up retailers such as the Future Group, Shoppers Stop, Reliance Retail and Aditya Birla Retail. The retail d urance are squeezing the margins of food, drink and consumer goods (FDCG) companies.though foreign players are barred from run in the multi-branded retail segment, global retailers such as Wal-Mart, Metro and Tesco have lock up entered India through franchises and partnerships in their cash and ladder wholesale businesses. Add to this the pressure from multi-national behemoths like Hindustan Unilever and Procter & Gamble, which are taking the pricing fight to smaller Indian firms. This has pushed Indian FDCG businesses into consolidation as m both rememberd they had reached the limit of their growth. We believe the pressures behind this provide continue end-to-end 2010 and result in increased deed volumes, said Nandini Chopra, practice head, consumer and retail embodied finance, KPMG in India.However, the lack of large acquisition targets and the number of acquirers looking for opportunities means valuations will continue to be at a premium, said Chopra. The food and drink arena in India is, however, unlikely to see any large deals because the local brands have not scaled up beyond the $20-25- trillion mark and the larger deals have already taken place. Since French food and facilities anxiety frim Sodexo SA acquired Radhakrishna Hospitality Services for $125 gazillion in March 2009, activity in this sector has been relatively slow. Indian Consumer goods are now increasingly looking beyond their shores for the next growth wave. Godrej, Wipro, Dabur and Marico have make several acquistions across Asian and African markets. These companies are all poised to incur global FDCG (food, drink and consumer goods, said Chopra.