Page |1

PROCTOR & GAMBLE

!. INTRODUCTION:
Procter & Gamble (P&G) is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods. In 2011, P&G recorded $82.6 billion dollars in sales. Fortune magazine ranked P&G at fifth place of the "World's Most Admired Companies" list, which was up from sixth place in 2010.Procter & Gamble is the only Fortune 500 company to issue C Share common stock.

2. COMPANY PROFILE:
Type :PUBLIC (NYSE:PG) FOUNDED: 1837 HEADQUATERS: Procter & Gamble Plaza Cincinnati, Ohio, USA,45202 INDUSTRY: CONSUMER GOODS REVENUE: $ 82559 m NET INCOME: $15818 m (2011) EMPLOYEES:138,000 WEBSITE: www.pg.com

Page |2

3. History:
William procter, a candlemaker, and James Gamble, a soapmaker, emmigrated from England and Ireland respectively. They settled in Cincinnati initially and met when they married sisters, Olivia and Elizabeth Norris. Alexander Norris, their father-in-law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was born. In 18581859, sales reached $1 million. By this point, approximately 80 employees worked for Procter & Gamble. During the American Civil War, the company won contracts to supply the Union Army with soap and candles. In addition to the increased profits experienced during the war, the military contracts introduced soldiers from all over the country to Procter & Gamble's products. In the 1880s, Procter & Gamble began to market a new product, an inexpensive soap that floats in water. The company called the soap Ivory. William Arnett Procter, William Procter's grandson, began a profitsharing program for the company's workforce in 1887. By giving the workers a stake in the company, he correctly assumed that they would be less likely to go on strike. The company began to build factories in other locations in the United States because the demand for products had outgrown the capacity of the Cincinnati facilities. The company's leaders began to diversify its products as well and, in 1911, began producing Crisco, a shortening made of vegetable oils rather than animal fats. As radio became more popular in the 1920s and 1930s, the company sponsored a number of radio programs. As a result, these shows often became commonly known as "soap operas." The company moved into other countries, both in terms of manufacturing and product sales, becoming an international corporation. . Numerous new products and brand names were introduced over time, and Procter & Gamble began branching out into new areas. The company introduced "Tide" laundry detergent in 1946 and "Prell" shampoo in 1947. In 1955, Procter & Gamble began selling the first toothpaste to contain fluoride, known as "Crest". Branching out once again in 1957, the company purchased Charmin Paper Mills and began manufacturing toilet paper and other paper products. Once again focusing on laundry, Procter & Gamble began making "Downy" fabric softener in 1960 and "Bounce" fabric softener sheets

Page |3

in 1972. One of the most revolutionary products to come out on the market was the company's "Pampers", first test-marketed in 1961. Prior to this point disposable diapers were not popular, although Johnson & Johnson had developed a product called "Chux." Babies always wore cloth diapers, which were leaky and labor intensive to wash. Pampers provided a convenient alternative, albeit at the environmental cost of more waste requiring landfilling. Procter & Gamble acquired a number of other companies that diversified its product line and significantl y increased profits. These acquisition s included Folgers Coffee, Norwich Eaton Pharmaceu ticals (the makers of PeptoBismol), Richardson -Vicks, Noxell (Noxzema), Shulton's Old Spice, Max Factor, and the Iams Company, among others. In 1994, the company made headlines for big losses resulting from leveraged positions in interest rate derivatives, and subsequently sued Bankers Trust for fraud; this placed their management in the unusual condition.

Page |4

Procter & Gamble has dramatically expanded throughout its history, but its headquarters still remains in Cincinnati.

4.MANAGEMENT AND STAFF :

The board of directors of Procter & Gamble currently has eleven members: Robert A. McDonald, Angela Braly, Meg Whitman, Johnathan A. Rodgers, Ernesto Zedillo, Scott Cook, Patricia A. Woertz, Susan D. Desmond-Hellmann, Maggie Wilderotter, W. James McNerney, Jr. and Kenneth Chenault. In March 2011 Rajat Gupta resigned from the board after an SEC accusation of Galleon Group insider trading. In October 2008, P&G was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc., and was featured in Maclean's newsmagazine. Later that month, P&G was also named one of Greater Toronto's Top Employers, which was announced by the Toronto Star newspaper. In May 2011 Fortune editor-at-large Patricia Sellers praised P&G's board diversity, as five of the company's eleven current directors are female and have all been on Fortune's annual Most Powerful Women list. Procter & Gamble is a member of the U.S. Global Leadership Coalition, a Washington, D.C.based coalition of over 400 major companies and NGOs that advocates for a larger International Affairs Budget, which funds American diplomatic and development efforts abroad. On November 19, 2011, the Associated Press and USA Today reported that a company spokesman confirmed Dr. John Smale, former CEO, has died at age 84. Online memorial page for Dr. John Smale .

BOARD OF DIRECTORS:
Angela F. Braly

Chair of the Board, President and Chief Executive Officer of WellPoint, Inc. (healthcare insurance). Appointed to the Board on December 8, 2009. Age 49. Member of the Audit and Governance & Public Responsibility Committees.
Kenneth I. Chenault

Chairman and Chief Executive Officer of the American Express Company (financial services). Director since 2008. Also a Director of International Business Machines Corporation. Age 59. Member of the Audit and Compensation & Leadership Development Committees.

Page |5 Scott D. Cook

Chairman of the Executive Committee of the Board of Intuit Inc. (software and web services). Director since 2000. Also a Director of eBay Inc. Age 58. Chair of the Innovation & Technology Committee and member of the Compensation & Leadership Development Committee.
Rajat K. Gupta

Senior Partner Emeritus at McKinsey & Company (international consulting). Director since 2007. Also a Director of American Airlines, Genpact, Ltd., and Harman International Industries, Inc. Age 61. Member of the Audit and Innovation & Technology Committees.
Robert A. McDonald

Chairman of the Board, President and Chief Executive Officer of the Company. Named Chairman of the Board effective January 1, 2010. Director since 2009. Also a Director of Xerox Corporation. Age 57.
W. James McNerney, Jr.

Chairman of the Board, President and Chief Executive Officer of The Boeing Company (aerospace, commercial jetliners and military defense systems company). Director since 2003. Also a Director of International Business Machines Corporation. Age 61. Presiding Director, Chair of the Compensation & Leadership Development Committee and member of the Governance & Public Responsibility Committee.
Johnathan A. Rodgers

President and Chief Executive Officer of TV One, LLC (media and communications company). Director since 2001. Also a Director of Nike, Inc. Age 64. Member of the Innovation & Technology Committee.
Mary Agnes Wilderotter

Chairman, President and Chief Executive Officer of Frontier Communications Corporation (communications company specializing in providing services to rural areas and small and medium-sized towns and cities). Director since 2009. Also a Director of Xerox Corporation. Age 55. Member of the Compensation & Leadership Development and Governance & Public Responsibility Committees.
Patricia A. Woertz

Chairman, Chief Executive Officer and President of Archer Daniels Midland Company (agricultural processors of oilseeds, corn, wheat and cocoa, etc.). Director since 2008. Age 57. Chair of the Audit Committee and member of the Governance & Public Responsibility Committee.

Page |6 Ernesto Zedillo

Former President of Mexico, Director of the Center for the Study of Globalization and Professor in the field of International Economics and Politics at Yale University. Director since 2001. Also a Director of Alcoa Inc. and Citigroup, Inc. Age 58. Chair of the Governance & Public Responsibility Committee and member of the Innovation & Technology Committee. The Board of Directors has four committees:

Audit Committee Compensation & Leadership Development Committee Governance & Public Responsibility Committee Innovation & Technology Committee

5.COMPANY AND SHARE HOLDER INFORMATION:

P&Gs PURPOsE: We will provide branded products and services of superior quality and value that improve the lives of the worlds consumers, now and for generations to come. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.

BRANDS:
For information on our portfolio of leadership brands and our latest innovations, please visit www.pg.com/brands and www.pginnovation.com.

SUSTAINABILITY:
At P&G, we are focusing our efforts where we can make the most meaningful difference in both environmental and social sustainability. To learn more, please visit www.pg.com/sustainability. CORPORATE HEADQUARTERS: The Procter & Gamble Company P.O. Box 599, Cincinnati, OH 45201-0599

Page |7

P&G SHAREHOLDER INVESTMENT PROGRAM:

The Procter & Gamble Shareholder Investment Program (SIP) is a direct stock purchase and dividend reinvestment plan. The SIP is open to current P&G shareholders as well as new investors and is designed to encourage long-term investment in P&G by providing a convenient and economical way to purchase P&G stock and reinvest dividends. Highlights of the plan include:

Minimum initial investment $250 Nominal administrative fees, including no enrollment fee, and no dividend reinvestment fee Optional Cash Investment minimum $50 Administered by P&G Shareholder Services Department

For complete information on the SIP, please read the Program Prospectus. The Prospectus and New Account Application Form are available at www.pg.com/en_US/investors/investing_in_pg or by contacting P&G Shareholder Services. GIVING THE GIFT OF P&G STOCK Did you know you can give P&G stock to your children, grandchildren, nieces, nephews and friends? Many of our long-time shareholders know what a great gift P&G stock makes for a special person on a special occasion. You can make the gift by transferring shares from your account or by purchasing shares for the recipient through the SIP. Please visit www.pg.com/investors or contact P&G Shareholder Services for details. SHAREHOLDER SERVICES The Procter & Gamble Shareholder Services Department serves as transfer and dividend paying agent for P&G Common Stock and Administrator of the Procter & Gamble Shareholder Investment Program. Registered shareholders and Program participants needing account assistance with share transfers, plan purchases/sales, lost stock certificates, etc. should contact P&G Shareholder Services at:

Website: www.pg.com/en_US/investors/shareholder_services E-mail: shareholders.im@pg.com Personal assistance (MF, 9a4p Eastern): 1-800-742-6253; 1-513-983-3034 (outside
U.S. and Canada)

Financial information request line (24 hours): 1-800-764-7483

Transfer Agent The Procter & Gamble Company Shareholder Services Department P.O. Box 5572, Cincinnati, OH 45201-5572

Page |8

Registrar: The Procter & Gamble Company P.O. Box 599, Cincinnati, OH 45201-0599 Exchange Listings: New York Stock Exchange, NYSE Euronext-Paris

Stock Symbol PG

Shareholders of Common Stock There were approximately 2,311,000 common stock shareowners, including shareholders of record, participants in the P&G Shareholder Investment Program, participants in P&G stock ownership plans and beneficial owners with accounts at banks and brokerage firms, as of June 30, 2010.

6.PLANT AND MACHINERY:

The company has established many production plants in different countries but here we focus on the plants that are operational in Pakistan. Three years after establishment in Pakistan P&G acquired a soapmanufacturing facility sprawling over 7acres of land at Hub, Balochistan in 1994. By 2002 the plant tripled its soap manufacturing capacity with an additional investment of $ 3 million. In 2004, the Company made an initial

Page |9

investment of about half a million US dollars to establish a manufacturing facility for PuR water purifier. Procter and Gamble Pakistan inaugurated its state of the art Ariel Plant at Port Qasim in year 2010. The Plantl manufacture P&Gs premium detergent brand, Ariel in Pakistan by combining breakthrough technology with world class innovation. The inauguration ceremony was held in the presence ofActing Governor Sindh, Mr. Nisar Ahmad Khuhro. This new investment by P&G in Pakistan stems from the Companys purpose-inspired growth strategy to touch and improve lives of more consumers in more parts of the world, more completely. P&G has been in Pakistan for only two decades and in this short time, the company has launched several premium quality brands to serve Pakistan consumers. This landmark investment is expected to create about 3,500 direct and indirect jobs in the country over the next ten years. This Ariel plant is also estimated to create hundreds of millions of dollars in local value addition to the Pakistan economy resulting in significant local supplier base development over the next ten years. Answering a question regarding WikiLeaks, he said that it would not affect US-Pakistan relationship as we are working together for long-term relations. Vice Chairman, P&G Global Household Care, Dimitri Panayotopoulos highlighted the key aspects of the Plant and said that the plant has been designed to integrate the latest sustainability innovations, technological equipments and e-systems to minimise impact on environment. This plant is zero effluent plant completely recycling wastewater for industrial use, he added. He said that over 70 Pakistanis were given more than 4,000 hours of international training in several P&G locations & technical centres for the plant. While talking about investment opportunities in Pakistan he said that with the population of 180 million people Pakistan has been identified by P&G as a high potential emerging market to explore P&G in future and this hallmark investment bears testimony to our long term outlook on the country.

P a g e | 10

From 25 acres of land P&G has utilised only 20 percent yet and we will surely be expanding in future, he added. He congratulated the P&G team for making this plant and said that this is a historic moment and the plant investment is cause for celebration and pride both for P&G and Pakistan as well as for our employees, consumers and partners. This shows success of our product in Pakistan, he added. Vice Chairman, P&G Global Operations, Werner Geissler, while addressing the inauguration ceremony said that for the last 20 years the company has not only offered quality products to enhance the lives of Pakistanis but also created thousands of jobs and invested Rs 6 billion in Pakistan's economy. He said that P&G's purpose-inspired growth strategy enables us to reach the un-served consumers with increased presence in emerging and developing markets, as P&G brands in Pakistan are amongst leading household names in their respective categories. We are hopeful that Pakistan will offer us an even stronger platform in future, he added. He said that P&G has done its part to support government of Pakistan as last year the company paid Rs 4 billion in taxes, which shows a serious commitment of P&G with Pakistan. P&G also provided $1.9 million in immediate cash and food items in recent flood catastrophe, he added. Geissler said that the plant is based on cutting edge technology comparable to the best P&G plants in the world to ensure high quality local production. We are serving consumers in more than 135 countries, he added. Qaiser Shareef, Country Manager, P&G Pakistan addressing the occasion said that P&G has been in Pakistan for only two decades and in this short time the company has launched several premium quality brands to serve consumers. He said that we have achieved an important milestone in Pakistan with the establishment of a dry laundry detergent plant and this investment is testimony to our continued commitment to Pakistan and its consumers.

7. PRODUCTS OF P&G:

P&G operates in 130 countries with 250 products worldwide, here we are focusing on the products based in Pakistan. Their products are divided into following categories:

P a g e | 11

Air freshners

Anti prespirants & deodorants Pet nutrition

Baby and Child care Batteries

Body wash and soap Colognes

Cosmetics

Dishwashing

Health care

Feminine care

Hair Care

Hair Color

Paper products

P&G Proline

P&G professional

Laundry and fabric care

Household cleaners oral care

Prestige fragrances

Shaving

Skincare

Small Appliances

Snacks

8. LIST OF PRODUCTS WORLDWIDE:

Some of the of P&Gs 250 products are listed below:

Cascade Bounce Gillete Escada perfume Pert Puma Safeguard Pantene Rejoice

P a g e | 12

Nioxin Old Spice Venus Scope Wella Oral-B Tampax Always HUGO BOSS Fragrances Natural Instincts Camay Ace Align Ariel Mr. Clean Pringles Swiffer Puffs Vicks etc

P a g e | 13

9. LEADERSHIP BRANDS:
P&Gs 50 leadership brands are some of the worlds most well known household names. 24 of these 50 brands each generate more than one billion dollars in annual sales. In the past 16 years, P&G has had 132 products on SymphonyIRI Groups list of each years 25 most successful new products, more than our six largest competitors combined.* These 50 brands represent 90% of P&G sales and more than 90% of profits. Here is a list of leadership brands: Ace Always/Whisper Ariel Bold Braun Clairol Dash Downy/Lenor Febreze/Ambi Pur Gain MACH3 Hugo Boss Gillette Oral-B Prestobarba/Blue Puffs SK-II Tide Secret Bounce Cascade CoverGirl Dawn/Fairy Duracell Fixodent Olay Max Factor IAMS Head & Shoulders Pampers Prilosec Rejoice/Pert Swiffer Venus Wella Bounty Charmin Crest Dolce & Gabbana Eukanuba Fusion Old Spice Mr Clean/Mr PropeR Luvs Herbal Essences Pantene Pringles Safeguard Tampax Vicks

P a g e | 14

10. LIST OF THE PRODUCTS FOR PAKISTAN:

Ariel Vicks Pampers Safeguard Always Wella Head & Shoulers Pantene ProV

P a g e | 15

P a g e | 16

11. LEADING COMPETITORS :

Top competitors of The Procter & Gamble Company are:

P a g e | 17

Johnson & Johnson (with a market share of 39.7 % in 2011) (source :dailytimes.com.pk) Unilever (with a market share of 65% in Pakistan) (source: igisecurities.com.pk) Kimberly-Clark Corporation (market share N\A) The table below illustrates the comparative analysis of leading competitors of P&G
PG Market Cap: Employees: Qtrly Rev Growth (yoy): Revenue (ttm): Gross Margin (ttm): EBITDA (ttm): Operating Margin (ttm): Net Income (ttm): EPS (ttm): P/E (ttm): PEG (5 yr expected): P/S (ttm): 183.61B 129,000 3.70% 85.14B 49.52% 18.58B 18.42% 9.86B 3.40 19.60 1.87 2.16 JNJ 177.96B N/A 3.90% 65.03B 68.83% 19.40B 24.97% 9.67B 3.49 18.60 2.23 2.74 KMB 28.56B N/A 2.00% 20.85B 31.46% 3.95B 13.71% 1.59B 3.99 18.09 2.30 1.37 PVT1 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Industry 1.33B 683.00 9.10% 983.64M 47.46% 124.40M 11.04% N/A 1.33 20.96 1.69 1.94

JNJ = Johnson & Johnson KMB = Kimberly-Clark Corporation Pvt1 = Unilever (privately held) Industry = Personal Products

P a g e | 18

12.STOCK PRICE

$66.66 Today's Open Previous Close Daily Range 52-Week Range Market Cap P/E Ratio Dividend (Yield) Ex-Dividend Date Dividend Pay Date

-$0.96 (-1.42%) $67.44 $67.62 $66.46 - $67.69 $57.56 - $67.77 $183.61B 19.89 $2.10 (3.1%) 01/18/12 02/15/12

Volume Average Daily Volume Current FY EPS

11,967,640 11,643,440 $4.04

P a g e | 19

P a g e | 20

13. FUTURE GROWTH:

Growth Challenges P&G executed the Companys growth strategy this past year,we faced a number of extremely challenging external headwindstwo of which are most important and most likely to continue in the year ahead. Company is facing rapid and signicant increases in commodity costs Materials and energy costs were up more than $1.8 billion before tax for the scal year. P&Gre taking a holistic approach to manage these cost increases. P&G is turning up the dial on our productivity and cost-savings initiatives, as indicated previously. P&G is creating alternative product formulations and developing materials that use renewable feed stocks. P&G is reducing its dependency on commodity and energy costs through its own and its suppliers sustainability efforts. P&G is increasing prices where necessary, coupled with innovation where possible, to deliver the best consumer value. P&G expect commodity costs to continue escalating in the year ahead and will remain highly disciplined to ensure it can offset increases as fully as possible while continuing to invest in growth and create shareholder value .Developed markets are growing slower than expected. These marketsprincipally North America, Western Europe and Japanaccount for about two-thirds of our sales. Their under-performance reduced total Company growth by one percentage point in scal year 2011. P&G primary response to slow-growth markets is innovation the only sustainable way to grow faster than the markets in which P&G competes. Innovation creates consumer value, stimulates market growth and attracts retail support. We dont anticipate accelerated economic recovery in developed markets in the coming year, but P&G remain condent that its focus on creating and expanding innovations will enable P&G to grow even where underlying market growth rates remain soft

P a g e | 21

Growth Opportunities: P&G has the right strategy and supporting capability to grow well into the future. The growth opportunities created by our strategy are clearest when you look at population and economic growth trends and P&G geographic expansion plans. Its estimated that the worlds population will be nearly eight billion people by 2020. All these peoplein developed and developing countries alikewill have the same fundamental needs, wants and aspirations for products and services that make their lives better. There is tremendous potential for P&G to grow by meeting those needs. P&G is going after this potential by making its products available in more categories, countries and channels, expanding product lines to meet a fuller range of regimen needs, and stimulating market growth. P&G currently compete in a total of 38 product categories. Today, on average, P&G compete in 19 categories in any given country. P&Gs most developed market, the United States, where it competes in 35 product categories. In Russia and Mexico, P&G in the 20s. In China, Brazil and India, it is in the mid-to-high teens. In Nigeria, it is in the mid-single-digits .P&G ve-year plan will increase the average number of categories from 19 to 24.Within each of these categories and countries, there are generally ve distinct price tiersranging from the best performing and highest priced products in the super premium and premium tiers, down to products that offer basic benets at a lower price in the value tier .On this basis, P&G currently compete in only about one-third of the potential segments. Here, too, it is expanding its presence. P&G has recently introduced the Crest 3D White lineup, Gillette Fusion Pro Glide, and Olay ProX as premium products. At lower price points, innovations such as Gillette Guard (P&G entry point razor system in India), Pampers Simply Dry and Gain Dishwashing Liquid are attracting new consumers to P&G brands. P&G brands available in more retail channels. Today, P&G compete in less than 40% of possible channel segments. Across the seven predominant channels, the vast majority of its current business is in four of them. P&G is executing plans now to increase our presence in all channels. It is lling out product lines to fulll consumers regimen needs. A good example is Pantene in Japan, where P&G has recently redesigned its regimen and pricing strategy. Japanese women are meticulous about caring for their hair .Many use up to eight steps throughout the day. It starts with a nighttime shampoo washing, then a conditioner and in-shower treatment. Then she uses a jar treatment before bed. In the morning, she uses water to get the frizz out and applies a leave-in treatment. She carries a tube treatment in her purse for midday application, and she applies another treatment when she gets home in the evening. We were previously serving her in only a few of these subcategories. By launching a full line, addressing all points in her regimen,

P a g e | 22

P&G has increased our average sales per unit of Pantene by nearly 15% and market share has continued to grow. In addition to entering and creating new markets, it needs to grow our current markets, which P&G do by driving usage frequency and trade-up to higher value items. Consider P&G position in the diaper market in Egypt. Pampers currently has roughly an 80% share of the disposable diaper market. However , only about 10% of changes are done with disposable diapers. The rest are done with cloth or nothing at all. In India, Duracell has a share of over 75% of the alkaline battery marketwhich sounds good, until you realize that only about 3% of batteries used are alkaline. P&G growth in these markets will not be dependent on growing share. It will be dependent on growing markets. How fast markets can develop when P&G launch new innovation and build broad-based consumer awareness of its products. For example, the size of the Greater China diaper market was only $200 million in the year 2000when Pampers was just starting to gain a foothold. Today, the China diaper market is $2.8 billionan increase of 14 times in ten years. This level of market growth happens when brands like Pampers innovate in ways that genuinely improve peoples everyday lives, for example, that when babies stay dry throughout the night, they sleep better, which in turn helps them grow and develop. P&G innovate based on insights like this and consumers reward because they value the improvements and innovations bring to their lives. PNG wants to bring this kind of innovation to more consumers in more parts of the world, and we have abundant opportunity to do so. In China and India, the average consumer changes a diaper less than once per day, in Brazil twice per day and in the U.S. four times per day. Getting China and India usage levels up to the levels of Brazil represents not only a $2.5 billion opportunity for Pampers, but also the chance to improve parents and babies lives in very fundamental ways. In India, the market size for wet shaving systems grew by 15% in just one year following the launch of our low-cost Mach3 razor . Were working to accelerate that growth with Gillette Guard. Developed markets can also be stimulated to drive higher growth as we demonstrated with the Febreze I Wish I Could Wash advertising campaign in Japan, which restored the growth of the brand in that country. Clearly, there is huge opportunities for growth, and for consumers, behind our Purpose-inspired Growth Strategy. P&G is expanding into more categories, countries, and channels. P&G is meeting a broader range of consumer needs and stimulating market growth in developed and developing markets alike. And P&G portfolio of businesses presents abundant opportunity to grow. P&G has the largest Beauty and Grooming business in the world, with a market share of only 18%. P&G has the second largest consumer health care business in the world and P&G has only a 6% share. In Household Care, P&G oldest and most developed business, has only a 27% share. Increasing market share by ve points in each of these three businesses is more than a $20 billion sales opportunity.Looked at a different way, P&G generates annual sales of about $96 per person in the U.S. and about $20 per person in Mexico. P&G sales in China are only about $4 per person. Indonesia is just over $1, and India and Sub-Saharan Africa are just under $1.Getting per capita spending on P&G products in

P a g e | 23

these four big markets up to the level of Mexico would add more than $60 billion to annual sales. Economic growth should help. A study released in November 2010 by the Boston Consulting Group projected that over the next decade China will add 270 million consumers to its middleincome and afuent class. This is roughly the same number as there are in the U.S. today. The study went on to say that 41% of the current middle-income and afuent class plans to trade up to more premium productsespecially in packaged goods and clothing In 2009, when we established P&G growth strategy, it is serving four billion consumers. P&G established a goal of increasing the number of consumers P&G serve by 1 billion by 2014/ 15. Last year, P&G served 4.2 billion consumersand remain on track to serve 5 billion by 2015. Today, consumers purchase a P&G product about 40 billion times a year. As a result of the strategy and plans P&G is executing currently, and expecting to increase those purchases to about 60 billion a year by the midpoint of this decade.

The above chart shows that PG has underperformed its dividend increases, suggesting that its future growth opportunities are declining and investors are becoming more concerned about PG. PG is returning significant cash to shareholders through dividends and stock buybacks (about 95% for fiscal 2011 relative to net income and 87% relative to operating cash flow). However, the underlying performance is not growing. While revenues are up, net income and operating cash flow are down from 2009 and 2010 levels. Furthermore, PG has consistently invested about $3 billion per year into its business. This means that to maintain the dividends, buybacks and investments, PG has started to expand its balance sheet with debt. In reviewing the balance sheet over the past three years, one can see an upward creep in accounts payable as well as the issuance of $1.5 billion in net debt in fiscal 2011.

P a g e | 24

The next graph shows the normalized performance of the stock price, the dividend and the trailing dividend yield.

The above chart shows that PG has underperformed its dividend increases, suggesting that its future growth opportunities are declining and investors are becoming more concerned about PG. PG is returning significant cash to shareholders through dividends and stock buybacks (about 95% for fiscal 2011 relative to net income and 87% relative to operating cash flow). However, the underlying performance is not growing. While revenues are up, net income and operating cash flow are down from 2009 and 2010 levels. Furthermore, PG has consistently invested about $3 billion per year into its business. This means that to maintain the dividends, buybacks and investments, PG has started to expand its balance sheet with debt. In reviewing the balance sheet over the past three years, one can see an upward creep in accounts payable as well as the issuance of $1.5 billion in net debt in fiscal 2011. In contrast, KMB shows slight increases in revenue and relatively flat net income, but also has a much lower payout ratio for buybacks and dividends relative to its operating cash flow. JNJ, another tremendous dividend stock, shows even lower payout ratios. JNJ has slightly declining revenues from 2008 to 2010, but a slight increase in net income. JNJ has effectively no leverage with an enterprise value lower than its market capitalization. While PG has very little debt, these small trends could be the sign of something more worrisome in the future. However, they could also be a short term blip that will resolve itself

P a g e | 25

with future growth. In this case, with some additional analysis, PG might be buying opportunity. A company ramping up for increased demand may increase raw materials and work-in-progress inventory at a faster rate when it expects robust future growth. As such, we might consider oversized growth in those categories to offer a clue to a brighter future, and a clue that most other investors will miss. We call it "positive inventory divergence.

P&Gs most developed market, the United States, where it competes in 35 product categories. In Russia and Mexico, P&G in the 20s. In China, Brazil and India, it is in the mid-to-high teens. In Nigeria, it is in the mid-single-digits .P&G ve-year plan will increase the average number of categories from 19 to 24.Within each of these categories and countries, there are generally ve distinct price tiersranging from the best performing and highest priced products in the super premium and premium tiers, down to products that offer basic benets at a lower price in the value tier .On this basis, P&G currently compete in only about one-third of the potential segments. Here, too, it is expanding its presence. PG's estimated forward dividend yield is 3.6% based upon a recent closing price of $62.72 and the author's projected annual dividend of $2.23. The following table shows the estimated forward quarterly dividends as well as the recent historical quarterly dividends. Historical and Projected Dividends Type Projected Projected Projected Quarterly Dividend ($ Change on per share) prior year 0.567 0.567 0.567 8.0% 8.0% 8.0%

Ex-Dividend Date 10/19/2012 7/20/2012 4/27/2012

P a g e | 26

Projected Historical Historical Historical Historical Historical Historical Historical Historical Historical Historical Historical Historical Historical

1/19/2012 10/19/2011 7/20/2011 4/27/2011 1/19/2011 10/20/2010 7/21/2010 4/28/2010 1/20/2010 10/21/2009 7/22/2009 4/22/2009 1/21/2009 10/22/2008

0.525 0.525 0.525 0.525 0.482 0.482 0.482 0.482 0.440 0.440 0.440 0.440 0.400 0.400

8.9% 8.9% 8.9% 8.9% 9.5% 9.5% 9.5% 9.5% 10.0% 10.0% 10.0% 10.0% 14.3% 14.3%

The above table shows strong dividend growth, but also highlights the fact that dividend growth is slowing down.

P a g e | 27

P a g e | 28

14. FINDINGS
Net Sales ($ billions)

Operating Cash Flow

($ billions)

Diluted Net Earnings

(per common share)

2011 Net Sale

By geographic region

By market maturity

By business segment

P a g e | 29

15. FINANCIAL HIGHLIGHTS

Amounts in millions, except per share am ounts Net Sales

2011

2010

2009

2008

2007

$82, 559 15,8 18 11,7 97 14.3 % $3.9 3 3.93 1.97

$78, 938 16,0 21 12,7 36 13.9 % $3.5 3 4.11 1.80

$76, 694 15,3 74 13,4 36 13.9 % $3.3 9 4.26 1.64

$79, 257 15,9 79 12,0 75 14.2 % $3.4 0 3.64 1.45

$72, 441 14,4 85 10,3 40 13.3 % $2.8 4 3.04 1.28

Operating Income

Net Earnings

Net Earnings Margin from Continuing Operations Diluted Net Earnings per Common Share from Continuing Operations Diluted Net Earnings per Common Share Dividends per Common Share

Net sales increased 5% to $82.6 billion. o Organic sales increased 4%. o Unit volume increased 6% versus the prior year, behind double-digit growth in developing regions and low single-digit growth in developed regions. Net earnings from continuing operations increased 8% to $11.8 billion behind sales growth and a lower effective tax rate, partially offset by operating margin contraction. o Operating margin declined 110 basis points behind a reduction in gross margin, partially offset by a reduction in selling, general and administrative expenses (SG&A) as a percentage of net sales. Gross margin declined behind higher commodity costs, partially offset by manufacturing cost savings. SG&A as a percentage of net sales declined due to reduced foreign currency exchange costs

P a g e | 30

and a reduction in overhead spending as a percentage of net sales due to productivity improvements, partially offset by increased marketing investments. Net earnings decreased 7% to $11.8 billion. o Net earnings from discontinued operations declined $1.8 billion due to the gains on the sale of the pharmaceutical business in the prior year. Diluted net earnings per share from continuing operations increased 11% to $3.93. o Diluted net earnings per share declined 4% to $3.93, including a decline in discontinued operations of $0.58. o Core EPS grew 8% to $3.95. Cash flow from operating activities was $13.2 billion. o Free cash flow was $9.9 billion. o Free cash flow productivity was 84%.

16.MARKET REPUTATION:

Corporate Overview: Proctor and Gamble is a Fortune 500 multinational corporation producing consumer goods. The headquarters are in Cincinnati, Ohio, USA. It is the 8th largest corporation in the world in terms of its market capitalization and its market capitalization is greater than the GDP of many countries. The company has operations in more than 180 countries and is serving nearly 4 billion consumers. Brand Value: P&G has a market capitalization worth $180 billion and has the strongest portfolio of brands. These 43 brands account for 85% of sales and more than 90% of profit. P&G is certainly one of the most valuable companies in the world. Corporate Image: Although corporate image changes from person to person and from time to time but P&G has created its corporate image as one of the best company dealing in household products in the world Stakeholders: Because of good market reputation P&Gs employees feel a sense of pride for being a part of its rich cultural heritage and its global scale of operations. Their strategy is to Engage and equip all P&G employees to build Sustainability thinking and practices into their everyday work.For

P a g e | 31

consumers, P&G stand for quality and value for money. P&G has always put consumer at the centre and has always evolved itself with their demands.

Communities: P&G is actively engaged in communitys welfare activities. For example, P&G made huge contributions for Haiti earthquake victims. Initiatives such as Childrens Safe Drinking Water and Pampers 1 Pack = 1 Vaccine are examples of how P&G is improving the lives of millions of people every day. Therefore, communities see P&G as responsible and committed organisation.

17.Corporate Reputation

Since its inception P&G has successfully managed to establish its reputation as a leader. P&G has established its corporate reputation as a pioneer in consumer goods.It has ranked 3rd on the worlds most respected companies list compiled by Barron magazine.

18. Conclusion:

Procter & Gamble is the world's largest producer of household and personal products by revenue, with its products reaching 4 billion people worldwide including Tide detergent, Pampers diapers, and Gillette razors, that generate over $1 billion in revenue annually. One of the key areas of growth for the company is its emerging markets worldwide. P&G already owns large and growing market share in various countries. P&G has created its different its projects specially for catering the needs of developing countries.Committed to remaining the leader in its markets, P&G is one of the most aggressive marketers and is the largest advertiser in the world. Procter & Gamble has maintained a strong link among different countries around the globe. Numerous new products and brand names were introduced over time, and Procter & Gamble is continuously branching out into new areas.Procter & Gamble acquired a number of other companies that diversified its product line and significantly increased profits.Procter & Gamble has dramatically expanded throughout its history andmost of its brands are global products that available on several continents.

P a g e | 32

19.Recommendation:
1. P&G, Pakistan has realized the huge potential of the rural markets i.e. 64% of the total population, but has notyet developed a successful strategy to penetrate this market. They can get success by two key strategies; firstly by developing a strong distribution infrastructure and secondly, by adapting the packaging and pricing to this market. 2. Due to this growing market, there are lots of opportunities for P&G to exploit this growing market by introducing new products so they should start initiating new projects to avail those opportunities.

3. Due to rising awareness among people, switching trend toward health care soaps is high. Therefore, it is a good opportunity to capture this segment through efficient marketing practices. 4. They should try to sustain their market share in soap industry which may slip due to the entry of local soap manufacturers. Because the prices of local soaps are less than the safeguard. 5. Unlike P&G, Unilever and Reckitt Beckinser, their major competitors,have already started to promote their corporate brand as opposed to their products. Unilever distinctively display their logo on their advertisements. So they should also focus on this strategy. 6. They should give subsidiaries more freedom to develop a marketing strategy that suits the local environment and a production strategy that fits the rural market of Pakistan. In addition, since market values acquisitions that Procter & Gamble performs, so in the future, the company may conduct other mergers and acquisition that will strengthen the corporate brand image as the provider of home and personal care products. ------------------------------------------------THE END----------------------------------------------------

P a g e | 33

APPENDIX

http://seekingalpha.com/article/307094-procter-gamble-strong-but-slowing-dividend-growth
Procter & Gamble Inc. (PG) is a leading dividend stock and member of the Dow Jones Industrial Average. PG provides package consumer products to almost every corner of the world stretching across countless brands for everything from skin care to laundry detergent to snacks to pet food to batteries to razor blades. PG was founded in 1837 and is headquartered in Cincinnati, Ohio. Certain PG business lines compete with Kimberly-Clark Corporation (KMB) and Johnson & Johnson (JNJ). PG had about $82.6 billion in revenue in fiscal 2011. PG has a market capitalization of $172.6 billion and an enterprise value of $208.3 billion, suggesting little leverage. PG has a strong track record of paying dividends. For this last fiscal year, its payout ratio to net income was 49% and its payout to operating cash flow was 44%. It should also be noted that over the past three years, PG has also repurchased an equivalent amount of stock to its dividends paid. This suggests that PG will have limited space to grow its dividend without growth in its underlying metrics. More worrisome is that its net income has declined over the past three years. PG's estimated forward dividend yield is 3.6% based upon a recent closing price of $62.72 and the author's projected annual dividend of $2.23. The following table shows the estimated forward quarterly dividends as well as the recent historical quarterly dividends. Historical and Projected Dividends Type Projected Projected Projected Projected Historical Historical Historical Historical Historical Ex-Dividend Date 10/19/2012 7/20/2012 4/27/2012 1/19/2012 10/19/2011 7/20/2011 4/27/2011 1/19/2011 10/20/2010 Quarterly Dividend ($ per share) 0.567 0.567 0.567 0.525 0.525 0.525 0.525 0.482 0.482 Change on prior year 8.0% 8.0% 8.0% 8.9% 8.9% 8.9% 8.9% 9.5% 9.5%

P a g e | 34
Historical Historical Historical Historical Historical Historical Historical Historical 7/21/2010 4/28/2010 1/20/2010 10/21/2009 7/22/2009 4/22/2009 1/21/2009 10/22/2008 0.482 0.482 0.440 0.440 0.440 0.440 0.400 0.400 9.5% 9.5% 10.0% 10.0% 10.0% 10.0% 14.3% 14.3%

P a g e | 35

REFERENCES

www.wikipedia.com www.pg.com www.pg.com/brands www.pginnovation.com www.pg.com/sustainability. www.pg.com/en_US/investors/investing_in_pg www.pg.com/investors www.pg.com/en_US/investors/shareholder_services www.dailyfinance.com www.seekingalpha.com Source: Author estimates, Yahoo Finance