>INDIAN COSMETICS INDUSTRY

As per latest ASSOCHAM study, the domestic cosmetics industry is set to double to INR200bn by 2014. This spurt can be credited to specialized products, increasing working women’s population, high advertising, rising fashion consciousness and rising disposable incomes. Also, the largely untapped Indian male consumer segment is likely to post explosive growth in cosmetic use. With India’s per capita cosmetic and toiletries consumption 40x lower than that of Hong Kong, and half of China, and aggressive rural expansion by companies, this segment is set for tremendous growth. We expect Hindustan Unilever (HUL), Dabur, Emami,

ITC and Marico to be key beneficiaries.

The makeover: Domestic cosmetics industry set to surge 2x by 2014 In a country‐wide survey by ASSOCHAM, of the ~6,000 consumers, 65% teenagers said their branded cosmetic consumption has jumped ~75% in the past 10 years. Improved purchasing power, rising fashion consciousness, increasing influence of fashion & film industry and huge ads will catapult Indian consumer goods from an INR100bn (in 2011) to INR200bn industry by 2014.

Power girls: Working women have higher purchasing power

As per the survey, working women in the age group of 30 and above have more cash, are more conscious of their appearance and look for lifestyle‐oriented products. Hence, they are more open to buying higher priced products.

The metrosexual: Male grooming largely an untapped opportunity

According to the survey, male teenagers have increased their average expenditure on cosmetics by over 300% in the past 10 years, which can be attributed to growing awareness and Western influence. 75% male teenagers have increased expenditure on cosmetics to INR3,000‐4,000 per month against an average of INR1,000 in 2000.

Refreshing change: Spa segment set for an invigorating surge

The spa segment in India is finding favour with urban population. Not only has the number of spas surged over the past five years, but also services and products on offer have grown. Also, rising health consciousness is likely to boost the herbal cosmetic industry’s growth to 12%. This is likely to be positive for Kaya, which is expected to break even by FY13.

Outlook: Robust

We expect the cosmetics segment to be one of the key drivers apart from foods segment of consumer demand. Favourable macroeconomic drivers such as GDP and population growth, coupled with rising income levels and lifestyle changes will further boost growth.

RISH TRADER