Professional Documents
Culture Documents
com
OUTLOOK 2009:
PREFERRED SECTORS AND COMPANIES
INDEX
INDIAN ECONOMY - 01
BANKING INDUSTRY
OVERVIEW - 02
RECENT NEWS - 03
PRODUCTS & SERVICES - 04
ARE INDIAN BANKS SAFE??? - 05
GRAPHICAL PRESETATION - 06
RBI STEPS TO FIGHT AGAINST LIQUIDITY CRUNCH - 07
ANALYSIS OF BANKING SECTOR
A) CRAMELS STRATEGY - 08
B) PORTER'S FIVE FORCES MODEL - 09
C) PEST ANALYSIS - 10
D) SWOT ANALYSIS -11
GROWTH PROSPECT & MARKET OPPORTUNITIES - 12
THINGS TO WATCH & KEY TAKEAWAYS - 13
TELECOM INDUSTRY
OVERVIEW - 14
RECENT UPDATES - 15
ALL ABOUT TELECOM INDUSTRY - 16
SEGMENTS - 17
GOVERNMENT REGULATIONS - 18
ALL ABOUT ‘3RD GENERATION TECHNOLOGY (3G)’ - 19
FUTURE OF INDIAN TELECOM INDUSTRY - 20
ANALYSIS OF TELECOM SECTOR
A) PORTER'S FIVE FORCES MODEL - 21
B) SWOT ANALYSIS & KEY TAKEAWAYS - 22
WHAT’S ROAD AHEAD - 23
FMCG INDUSTRY
OVERVIEW - 24
INDUSTRY CATEGORY AND PRODUCTS - 25
GROWTH PROSPECT - 27
GOVERNMENT INITATIVE - 28
MARKET OPPORTUNITIES - 29
ANALYSIS OF FMCG SECTOR
A) PORTER'S FIVE FORCES MODEL - 30
B) SWOT ANALYSIS & KEY TAKEAWAYS - 31
COMPANIES
BHARTI AIRTEL LIMITED - 32
RELIANCE COMMUNICATION - 34
HDFC BANK - 36
STATE BANK OF INDIA - 38
UNION BANK OF INDIA - 40
AXIS BANK LIMITED - 42
PUNJAB NATIONAL BANK - 44
HINDUSTAN UNILEVER LIMITED - 46
GODREJ CONSUMER PRODUCTS LIMITED - 48
DABUR INDIA LIMITED - 50
EMAMI LIMITED - 52
ICSA INDIA LIMITED - 54
Source: CMIE
To fight against the slowdown of the Economy, Government of India & Reserve Bank
Inflation stands at 3.92 per
of India took many fiscal as well as monetary actions. Clubbed with fiscal & monetary
cent against a high of 12.63
actions, decreasing commodity prices, decreasing crude prices and lowering interest
per cent.
rate, we expect that Indian Economy could again register a robust growth rate in the
th
year 2009-10. Inflation stands at 3.92 per cent on 7 February 2009 against a high of
th
12.63 per cent on 9 August 2008.
According to a report by ICRA Limited, a rating agency, the public sector banks hold
around 75.3 per cent of total assets of the banking industry and the private and foreign
banks hold of 18.2 per cent and 6.5 per cent respectively.
Banking Industry is the most dominant sector of the financial system in India, and with
good valuations and increasing profits, the sector has been among the top performers in
the markets. But currently worldwide the banking industry is facing a tough time due to
the failure of financial system in the biggest economy i.e. United State of America. The
problem arises due to default in sub prime mortgage lending clubbed with rising national
debt, current account deficit, and fiscal policies of US. This has led to the failure of some
big investment banking firm leading to file bankruptcy. Financial Institutions are the one
to face challenge because of liquidity crunch.
Indian Industries have been witnessing today is an indirect, knock-on effect of the global
financial situation and is a reflection of the uncertainty and anxiety in the global financial
markets. While no country in today’s globalizing world can remain completely insulated
from the global financial crisis, Indian banking industry is better placed to cope with the
adverse consequences of the financial turmoil. India is relatively better placed due to its
robust policy framework, stricter prudential regulations with respect to capital and liquid-
ity and strong growth performance (a growth of ~9 per cent) in recent years.
An added obstacle to the sustained improvement of the banking system is the fact that
banks are mandated to provide funding to government-defined priority sectors dominated
by small-scale business and agriculture. Loans to these sectors are at high risk of be-
coming non-performing. Private-sector banks must ensure that 25 per cent of their loans
are directed towards these priority sectors; for state-owned banks, the figure is 40 per
cent. These thresholds restrict the level of credit available to more efficient companies in
non-priority sectors.
The level of bad loans has been falling in recent years as a result of the creation of as-
set-reconstruction companies and a rapid expansion in lending. Non-performing assets
(NPA) fell to 1.0 per cent for the fiscal year 2007-08, according to the latest data from the
Reserve Bank of India. In the near future, for a stint, we expect to see an increase in
Non-performing Assets.
SBI loans at 8 per cent could trigger a rate war Populations to Branch
Ratio for different coun-
State Bank of India’s has taken a decision to offer home loans at 8 per cent and allow loan tries:
borrowers to switch to SBI after foreclosing existing loans. This may compel the other gov-
ernment-owned banks to reduce rates. The primarily reason for the reduction in interest rate UK stand at 4484
is to stimulate growth in the economy and not to attract customers of their competitor. US stand at 2720
Singapore stand at 10101
Why aren’t banks lowering their Prime Lending Rate (PLR)? & India stand at 16129
Under RBI norms, certain loans are benchmarked to Prime Lending Rate (PLR) and if it
declines, banks’ earnings on such loans are compromised drastically. For instance, loans to
exporters are given at 250 basis points lower than PLR. So if PLR for a bank is 12.25 per
cent, they offer loans to exporters at 9.75 per cent. Similarly, all small-firm loans are priced
cheaper than a bank’s PLR and same for home loans. 30 to 35 per cent of the total loan
provided accounts for such concessional loans.
Deposits
Excepting deposits are prime functions of bank. Types of accounts offered are Current, Today banking is not lim-
Saving and Recurring account. The average CASA (Current account saving account) ited to traditional banking
deposit accounts for Indian Bank are around 25-30 per cent of the total deposit. which just offers deposits
and loans but Internet
Loans banking, mobile banking,
Banks provide loans from the deposit. They manage long term loans with short terms ATMs and technology
deposit. They charge a spread between loan and deposit. Traditional banks were limited advancement.
to deposit and loan. But in today world, the banks offer loans from consumer loan to cor-
porate loan, education to marriage loan, personal to vehicle loan. Bank offers loan to
SME (Small & Medium Enterprise) at lower interest rate. Loan sector has grown at ~30
per cent per year over the past 4-5 years.
Retail banking
Retail banking provides many services to retailer. It provides need of the hour services
like around-the-clock accessibility through automated teller machines (ATMs), mobile and
internet banking. It has also offered services like Demat, plastic money (credit and debit
cards), and online transfers.
Convenience, Complete
ATMs Solution, Faster Services
and Safety are the buzz-
Banks have increased their ATM network over the past three years. According to the RBI,
ing word of Banking In-
by June 2008, the number of ATMs in the country had gone up to 36,314 against 27,088
dustry.
and 20,267 at end-March 2007 and 2006, respectively.
Plastic Money
With the use of credit cards increasing significantly over the last few years, it has played
an important role in promoting retail banking. The number of credit cards (outstanding) in
June 2008 stood at 27.02 million, against 24.39 million in June 2007, posting a 10.73 per
cent growth.
Insurance
Banks are offering insurance products also. They offers Life Insurance, Health Insurance,
theft Insurance, Vehicle Insurance, House Insurance, Goods Insurance to name a few.
Demat Services
Bank offer demat account for Individual and to corporate. The services offered are in equi-
ties, commodity and currency.
In order to strengthen capital requirements, the credit conversions factors, risk weights and
provisioning requirements for specific off-balance sheet items (including derivatives) have
been reviewed in the last few years.
As per RBI, Indian banks have little exposure to sub-prime mortgages which are mainly
through the bank overseas branches. But this exposure is part of the normal course of their
business and is quite small relative to the size of their overall business.
The bulk of retail lending ~80 per cent consists of mortgages and vehicle loans, which are
considered relatively safe. Indian banks are insulated from the mortgage-lending woes
currently afflicting developed-country banks, as their lending criteria remained strict even
throughout the boom years and their exposure to complex securitizations are minimal.
While many big companies of financial markets are either going bust or getting bailed-out,
Indian banks are performing well and have secured a place in the latest Top 500 Global
Financial Brands 2009. 19 Indian banks have secured a place in Global 500 for the year Regulatory systems of In-
2008, up from 6 Indian Banks for the year 2007. dian banks are rated above
China and Russia; and at
For three months ending December 2008, 19 Indian banks/financial institution in the 500 par with Japan and Singa-
Global 2009 reported an average 35 per cent growth in interest income and an average of pore.
42 per cent jump in net profit.
Basel II Norms
The Indian banks with overseas presence and foreign banks operating in India have suc-
cessfully migrated to Basel II Framework by March 2008 and all other scheduled commer-
cial banks are encouraged to migrate to Basel II not later than March 2009.
The Basel Committee on Banking Supervision (BCBS) is now deliberating on Basel II,
which is complicated than Basel I. An important improvement in Basel II, compared with
Basel I, is that banks will hold more capital against a wider range of risks - not just credit
risk and market risk but also operational risk, interest rate risk and other risks.
The financial health of Indian banking industry improved significantly in terms of capital
adequacy ratio (CAR) during the third quarter of the fiscal 2007-08. The mandated limit for
CAR posed by the Basel II is 8 per cent.
Non-Performing Assets
(NPA) is lower for Union
Bank which stands at 0.14
per cent
The numerical represent Capital Adequacy Ratio (CAR) and then Non-Performing Assets
(NPA). The next figure represents the Net Worth of the Banks in INR Crores.
Capital Adequacy Ratio (CAR) above 12 per cent gives a stable picture. CAR for above
banks are calculated according to Basel II norms.
RBI, the central bank, has reduces the Cash Reserve Ratio, or CRR, (portion of funds that
the banks have to park with RBI) to 5 per cent. Reductions of 100 bps results in infuse of Monetary action by Reserve
additional liquidity of INR 40,000 Crores into the system. Bank of India has eased
significantly Liquidity in the
RBI has reduced the statutory liquidity ratio, or SLR, (amount which banks have to park in banking system by pump-
government securities) to 24 per cent. Even reductions of 100 bps results in infuse of ad- ing over INR 3,20,000
ditional liquidity of INR 40,000 Crores into the system. Crores into the banking
system since October 2008.
RBI has also cut the Repurchase-agreement rate, or Repo rate, (agreement by one party
to sell a security by another and agreed to purchase it on a specified date) to 5.50 per
cent. The reduction in the repo rate will make short term (overnight) borrowing from the
RBI cheaper for banks.
Other step taken by RBI was reduction in Reverse Repurchase-agreement rate, or re-
verse repo rate, (agreement by one party to purchase a security by another and agreed to
sell it on a specified date) to 4 per cent. An reduction in reverse repo rate discourage
banks from parking surplus short term funds with the RBI and encourage them to lend
those funds. CRR from the peak of nine
per cent has come down to
Bank Rate (at which central banks lend funds to national banks) stands at 6 per cent. The 5 per cent.
Bank rate directly impacts the cost portion of the bank and hence the bank lending rates.
Since 4 October 2008, when the CRR was at its peak of nine per cent, the RBI consis-
tently pruned it to bring it down to 5 per cent by 17 January 2009. This amounts to a liquid-
ity infusion to the tune of INR 1,60,000 Crores. A 100 bps reduction in SLR cut from 25
per cent to 24 per cent in November 2008 had yielded a liquidity infusion of INR 40,000
Crores.
Liquidity has returned to comfortable levels following swift, prompt and extensive meas-
ures by the RBI such as CRR and SLR cuts and opening of refinance windows, lending
rates of banks eased. The prime lending rates (PLR) for most of the banks have come
st
down by an average of 150 basis points from 1 October 2008.
We further expect RBI to announce cut in Repo rate and in Reverse Repo rate. Even we
expect Banks for further reduction in prime lending rate.
(a) Capital Adequacy: Capital represents the level of cushion or protection available to the
company creditor’s to absorb losses from credit and other risks. It is measured by the ratio
of capital to risk-weighted assets (CRAR). Although CRAR is lower for bank as compare
to finance companies, but bank are positioned better on account of big capital base and
strong recapitalization prospect. A sound capital base strengthens confidence of deposi- ‘CRAMELS’ Strategy:
tors. According to release by Reserve Bank of India the average CRAR for all banks is 13 Capital Adequacy
per cent and 12.3 per cent for the year ended 2007-08 and 2006-07 respectively. The Resource raising ability
CRAR for Indian Banking is higher as compare to the statutory requirement. Asset Quality
Management & System
(b) Resource raising ability: Since funds are finance company’s raw material, its ability to evaluation
generate them is essential for its operating model. Banks has an advantage for raising Earning potential
resource as compare to others financing institution. This give banks a competitive advan- Liquidity/Assets Liability
tage over other financial institutions. Management
System & Control
(c) Asset Quality: Asset quality is of primary consideration when assessing credit risk of a
finance company. One of the indicators for asset quality is the ratio of non-performing
loans to total loans (NPA). The non-performing loans to advances ratio is more indicative
of the quality of credit decisions made by bankers. Lower NPA is indicative of good and
robust credit decision-making. Low NPA of Indian Banks give the Industry a saver pic-
ture.
The CRAR for Indian Banks
(d) Management & System evaluation: The quality of a company’s management, its busi-
are higher as compare to
ness strategies and its ability to track and respond according to changes in market condi-
the statutory requirement.
tion. The ratio of non-interest expenditures to total assets can be one of the measures to
assess the working of the management. This variable, which includes a variety of ex-
penses, such as payroll, workers compensation and training investment, reflects the man-
agement policy stance. We need to analysis management’s risk appetite in terms of its
growth, capitalization policy and diversification philosophy.
(e) Earnings potential: Earnings are the key input for supporting growth. Earning potential
directly attract debt and equity. Earning for finance company is driven by net interest mar-
gin and the difference between the yield generated by assets and cost of debts. The
spread has come down to 3-4 per cent as compare to over 8 per cent a decade back. This
has leads to increase in efficiencies to maintain overall profitability.
(f) Liquidity/Assets Liability Management: Cash maintained by the banks and balances
park with central bank is an indicator of bank's liquidity. Bank has access to call market or
RBI refinance facilities in the event of liquidity crunch. The banks properly manage the
time difference between short term deposits with long term loans. In general, banks with a
larger volume of liquid assets are perceived safe, since these assets would allow banks to
meet unexpected withdrawals.
(g) Systems and Control: The Systems and control access plays an important part in to-
day’s highly advance banking technology. Due to electronic technology advancement, the
bank needs to have access as well as control over the systems. Safety and security plays
a vital role in today world.
PEST Analysis
PEST analysis of any industry investigates the important factors that affect the industry
and influence the companies operating in the sector. PEST stands for Political, Economic,
Social and Technological analysis. The PEST Analysis is a tool to analyze the forces that
drive the industry and how those factors can influence the industry.
Political Factors
Focus on Regulations
Indian Banking is least affected as compare to other developed economy which is attrib-
uted to Reserve Bank of India for its robust policy framework, stricter prudential regula- Every Industry has Gov-
tions with respect to capital and liquidity. This gives India an advantage in terms of credi- ernmental or Social influ-
bility over other countries. ence on their workings.
Economic Factors
Growing Economy
Indian economy has registered a growth of more that 9 per cent for last three year and is
expected to maintain robust growth rate as compare to other developed and developing
countries. Banking Industry is directly related to the growth of the economy.
PEST Analysis gives in-
Low Interest Rates sights on different influ-
Reserve Bank of India controls the Interest rate, which is based on several monetary poli- ence. Pest Analysis stands
cies. Recently RBI has reduced the interest rate which stimulates the growth rate of bank- for:
ing industry. Political Factor
Economic Factor
Inflation Rates Social Factor
Different fiscal and monetary policies have curbed the Inflation rate from the high of 12.63 Technological Factor
per cent to 3.92 per cent.
Social Factors
Loyalty Factor
Banking industry services is lending and borrowing of funds. The banks need to have a
good royalty factor as compare to counter part in other countries. The financial meltdown
on Indian Banks is less impact as compare to other countries.
Technological Factors
IT Services & Mobile Banking
Technology advancement has changed the face of traditional banking systems. Technol-
ogy advancement has offer 24X7 banking even giving faster and secured service.
SWOT Analysis
Strengths:
9 Wider presence of branches and ATM
9 Micro Finance
9 Low expenditure cost due to high usage of ATM & Internet Banking
9 Electronic banking - Connected Globally
9 Faster and safer banking
9 Specialized services offering
Weaknesses:
9 Intensive competition has reduce the margins
9 Cyber crime
Opportunities:
9 Large market – over a billion populations
9 Foreign banks eyeing over India banks for Merger and Acquisition
9 From traditional banking to a Hub of every financial products
9 Increase in loans due to easy and faster loan approval
9 Rising disposable income has resulted in demand of different financial products
Threats:
9 Non Banking Financial Institution (NBFC) offering financial services
9 Reserve Bank of India persuade banks to lower the spread
9 RBI control the Supply of money in the Economy, has an impact in loan offering
9 To ensure minimum loans towards priority sectors 25 per cent for private banks
and 40 per cent for state-owned banks has a limitation on growth
Growth Prospect
Advantage India – FDI
The Reserve Bank of India (RBI), has allowed foreign players to set up branches in rural
India and take over weak banks with an investment of up to 74 per cent, and further re- Foreign players are allowed to
laxations are on the anvil by 2010, with the second phase of opening expected to com- set up branches in rural India
mence in April 2009. and take over weak banks
with an investment of up to 74
Some of the biggest names in global financial services and banks like Credit Suisse, per cent.
Rabo Group and ANZ are seeking a banking license in India. The RBI has, in recent
months, given fresh banking licenses to UBS - Switzerland's largest bank, Dresdner
Bank and United Overseas Bank.
ANZ and Rabobank Group, the Dutch Group, is now in the process acquiring a banking
license. The Rabobank Group already holds 18.2 per cent stake in another local private
bank YES Bank. Some of the existing players such as StanChart, Citi and HSBC, hold
India as one of their top markets.
Due to current Global crisis, we expect the deadline for second phase i.e. April 2009 to
be extended further. However, banking authorities has not announced about the exten-
sion of the phase.
This year is likely to set a reform process in the banking sector with most banks are ex-
pected to comply Basel II guidelines. The Indian banking system can see an enormous
transformation after the opening of the financial services sector under the World Trade
Organisation (WTO). Under WTO, the Indian banking sector will be open to foreign
banks. Bigger capital reserves, cutting edge technology, best practices in audit, account-
ing and transparency and skilled personnel of foreign banks will pose major challenges
to Indian banks.
According to a report by Boston Consultancy Group, the profit pool of the Indian banking
industry is estimated to increase to US$ 20 billion in 2010 and further to US$ 40 billion
by 2015 and credit market is estimated to grow to US$ 23 trillion by 2050.
To sustain an average capital adequacy ratio of 12.0 per cent by March 2010, the public
sector banks would require an additional capital of approximately US$ 67.50 billion. Un-
der such favorable conditions, India is expected to become the third largest banking hub
in the world by 2040.
Remittances
The global recession coupled with declining oil prices could result in a deceleration in re-
mittance flows which have played an integral role in the Balance of Payment (BoP). To
counter this, besides raising rates on NRI deposits, introducing another ‘diaspora’ bond
and further reducing remittance costs would be steps in the right direction.
Rising NPLs
Higher rates, ForEx assumptions going wrong, slowing industrial output and corporate
profits are likely to result in a rise in NPLs and weakness in asset quality. Though far from
peak levels, the macro implication is cautious lending, with aggressive policy easing not
being matched by banks lowering rates or increasing advances. This would escalate the In India, default on loans
negative feedback loop currently in play. either on principal amount
or interest amount for more
than 90 days, are consider
Key Takeaways as NPL.
Wide distribution network - Public sector bank and even now private sector bank are
entering into rural area too.
Higher Disposable Income - Rise in household income has resulted in increase in dis-
posable income and hence increase in savings and investment.
Future growth rate - The financial sector is expected to maintain a decent growth rate in
future.
There exists enormous business potential for telecom companies on account of the
country’s low teledensity, which stand at 33.23 for December 2008. Every day there is an
addition in Value added Services (VAS), technology advancement and reduction in traffic
charges. Increase in private and public players in the sector has enhanced the telecom-
munication technology to give the maximum benefits to their customers.
Segment Analysis
India's growth story in the telecom space shows no signs of slowdown. The country
added 113.26 million new customers in 2008, the largest globally. To put this growth into According to Capitaline Data-
perspective, the country’s cellular base witnessed around 48.50 per cent growth in 2008, base, total revenue for Tele-
with an average 9.5 million customers added every month. com industry for current year
is around 100,000 Crores.
The country had 346.89 million mobile phone users as of December 2008 compared to
233.62 million in the corresponding period a year ago and the total number of telephone
connections (wireless and wireline) is 384.79 million as of December-end, taking the
telecom penetration to over 36 per cent. It implies that one out of every three Indian has
a telephone connection.
The Indian telecom industry has been growing rapidly at a CAGR of 40.63 per cent from
2003 to 2008. Telecom sector contributed 3.4 per cent to India’s gross domestic product
in for the year 2008 and is expected to contribute 5.4 per cent by 2010.
There is still a big room for further growth. The growth will primarily driven by the rise in
communications demand from semi urban and rural India. The teledensity in rural areas
being a little more than 10 per cent against the national average of 33.23 per cent, there
is huge untapped potential for mobile phone penetration in rural India.
The total Broadband subscriber base has reached 5.45 million by the end of December
2008 as compared to 5.28 million by the end of November 2008. Even there is a huge
potential in broadband segment.
The growth in 2008 was led by Bharti Airtel, the country’s largest communications pro-
vider. Bharti had 85.65 million customers as of December-end, Reliance Communica-
tions had 62.02 million and Vodafone of about 60.93 million.
In fact, Bharti has more customers than the state-owned BSNL’s mobile and landline
users combined.
3G Auction
With the announcement of a 3G policy on 1 August 2008, India joined a select list of According to Gartner Inc.,
countries to have a policy on the much-hyped 3G revolution. Third generation mobile India's mobile subscriber
services would offer voice, video, data and downloading services on mobile phones. base is projected to exceed
However, the journey towards 3G in India was not quite uneventful, with the auctions 737 million connections by
being postponed and the economic slowdown affecting the major players vying for 3G. 2012 growing at a CAGR of 21
per cent.
3G & WiMax
The launch of 3G and WiMax (Worldwide Interoperability for Microwave Access) services
is expected to drive the data revolution. Mobile entertainment and mobile banking are
likely to be the biggest drivers for data services. 3G and WiMax services are expected to
gain popularity initially in the top 20 cities in India and then gradually penetrate to the rest
of the country. By 2012, India could have around 25-30 million 3G subscribers and
around $4-5 billion 3G revenues. WiMax, on the other hand, could attract about 8-10 The Government has plans to
million subscribers and could account for about $1-1.5 billion by 2012. raise teledensity to 40-45 per
cent by 2010, thereby offering
The average revenue per user per month is likely to drop further since most of the greater growth opportunities
growth in subscriber additions is coming due to expansion in non-metro regions. for service providers.
Mobile number portability gets nod and bid invited for mobile number
portability
Department of Telecommunications (DoT) has invited bids for mobile number portability.
Mobile Number Portability (MNP) will provide the customer the facility to retain the same
number while switching over from one operator (service provider) to another within the
same service area. A recent study pointed out that having to give up their mobile num-
bers was the single most reason that subscribers did not want to change their operator
despite poor quality of services. This will be an advantage for the customer.
Minute of Usage (MoU) for GSM: 464 Minute per month (December 2008)
Minute of Usage (MoU) for CDMA: 375 Minute per month (December 2008)
The Telecom sector in India has witnessed unparalleled growth by global standards. In a According to Gartner, the
little over a decade of wireless telephony, India has moved from a subscriber base of value-added services (VAS)
zero to becoming the second-largest market in the world after China. market in India is expected to
grow to about US$ 5.6 billion
Rural telephony, 3G, WiMax and data services will drive sector growth in 2012. The in- by 2011.
dustry will witness sustained growth in mobile services and data revenues. Network ex-
pansion will continue in order to support the rural growth. It is imperative for the govern-
ment to revisit high levies on the telecom sector and lay down a clear roadmap for future
spectrum allocation.
The availability of adequate spectrum could remain a hurdle for wireless growth. The
telecom sector could witness another round of Mergers & Acquisitions. As new operators
roll-out networks, there could be 10-12 operators in each circle. However, by end of
2012, industry consolidation will result in about five to seven large operators.
Segment
Mobile Services
India's telecom growth pattern continues with mobile operators adding 113.26 millions
subscribers in the year 2008 to the world's second largest wireless market.
Wireline
Wireline services subscriber base stood at 37.90 million for the year ended December
2008 compared to 39.42 million last year. The Wireline has registered a decline of 3.63
per cent. The market leader in wireline is BSNL and market follower is MTNL. The fixed
(Wireline) subscriber base registered a decline of 1.52 million in the year 2008. Reduc- The overall cellular services
tion in the subscriber base of wireline is mainly due to switching to wire less which is revenue in India is projected
more convenient and cheaper. to grow at a CAGR of 18 per
cent from 2008-2012 to ex-
Other Telephone Services ceed US$ 37 billion.
Public Call Offices
Number of Public Call Offices (PCOs) has reported a positive number over past few
years. In Public Call Offices, BSNL is market leader with a share of little more than 30
per cent. MTNL market share is a little less than 4 per cent and the rest of market is cap-
ture by other private operators.
The Indian telecom industry has a 74 percent FDI limit in the telecom services segment.
The Government of India (GOI) has permitted 100 percent FDI in manufacturing of tele- Total FDI inflow in Telecom
com equipment in India through the automatic route. Sector from April 2000 to No-
vember 2008 amounts to INR
The Indian telecom industry has attracted foreign investors. The cumulative FDI inflow, 25,671.68 Crores which is 7.86
during April 2000 to November 2008 period (latest data available), in the telecommunica- per cent of total FDI inflow.
tion sector amounted to INR 256,716.88 Million. It is the third largest sector to attract FDI
in India which accounts for 7.86 per cent just after Service sector and Computer Soft-
ware & Hardware sector.
FDI calculation takes into account radio paging, cellular mobile and basic telephone ser-
vices in the telecommunication sector. According to an IMRB paper
for the Internet and Mobile
Opening of telecom industry for private sector participation. Association of India, VAS, or
the sale of ring tones, caller
Establishment of an independent regulator - the Telecom Regulatory Authority of India tunes, wallpapers, SMSes (for
(TRAI) - for the telecom sector. contests and communica-
tion), among other non-voice
Allowing service providers to share active infrastructure. services, generated Rs 7,500
Crores in revenues in 2008
Around 129.79 million GSM subscribers are from Metros or Circle A. It accounts for more
that 50 per cent of the total GMS subscriber base. We expect atleast 5 per cent of the Value-added Services (VAS)
customer to opt for 3G within 2 years. This could result for 3G subscriber base of more brings in 9 per cent of tele-
than 10 million. com industry revenues. As
average revenues per user
This would leads to sharp rise in ARPU from this Circle. Recently Mahanagar Telephone (ARPU) fall, the pressure on
Nigam Limited (MTNL) has become the first telecom operator in the country to launch 3G making more money from
mobile services. Although the service is on the higher side as mobile users will have to VAS will keep going up.
pay a one-time fee of INR 500 as activation charges and a monthly rental of INR 599, but
the company has receive good response from the customer. Apart from the rental
charges, there will be an increase in revenue from usage of the service.
Although we expect a decrease in the tariff charges, there would be an increase in Aver-
age Revenue per User.
Wireless Vs Wireline
There is a constant rise in subscriber base of wireless where as there has been a con-
stant decrease in wireline subscriber.
Alarming Competition
The rising competition from new entrants in the industry, both domestic and foreign play-
ers along with new technologies and their core competencies, will heat up the competi-
tion in the industry.
Availability of Spectrum
The Government has allowed and framed the policies for introduction of new technolo-
gies in the Indian telecom sector in the form of 3G and Wimax. The Department of Tele-
com and TRAI are about to auction the required 3G spectrum to various service provid-
ers. The scarcity of spectrum and the price to be charged at the auction will purely be a
matter of time.
SWOT Analysis
Strengths:
Weaknesses:
9 High start-up cost
9 Reducing ARPU
9 Reducing MoU
Opportunities:
9 Large domestic market – over a billion populations
9 Low Teledensity as compare to other developed countries
9 Potential in rural market
9 3G and WiMax to be launched
Threats:
9 Higher bidding cost for 3G
9 Government control companies get regulatory benefits over private player
9 Net-phone
The much awaited Third Generation (3G) Auction has been delayed. As per Depart-
ment of Telecom (DoT), set a base price of INR 2,020 crore for a pan-India 3G spectrum
where as the Union Finance Ministry stepped in with a recommendation to double this
price to INR 4,040 Crore.
The Cabinet Committee on Economic Affairs (CCEA) is likely to consider the proposal to
set INR 3540 crore by the means of doubling the reserve price for Delhi, Mumbai and
category A circles and increasing it by 1.5 times for Kolkata and category B circles and
retaining the current base price for category C circles. This could again put off the much-
awaited roll-out of advanced mobile services.
WiMax, Broadband Wireless Access (BWA), which was been proposed at INR 1,010
Crore could be doubled to INR 2,020 Crores as recommend by ministry of finance.
Mahanagar Telephone Nigam (MTNL) becomes the first telecom company to launch
th
third-generation (3G) mobile services in India on 5 February 2009. MTNL competes
with private firms, including Bharti Airtel, Vodafone, Reliance Communications, Idea Cel-
lular and Tata Teleservices, in India. State-owned telcos MTNL and BSNL were given
3G spectrum last year before the private players, giving them the first mover's advan-
tage.
India's FMCG sector is the fourth largest sector in the economy and creates employment
for more than three million people in downstream activities. Its principal constituents are
Household Care, Personal Care and Food & Beverages. The total FMCG market is in 85,000 Crores Indian FMCG
excess of INR 85,000 Crores. It is currently growing at double digit growth rate and is market is one of the important
expected to maintain a high growth rate. FMCG Industry is characterized by a well estab- sector and has registered a
lished distribution network, low penetration levels, low operating cost, lower per capita robust growth rate.
consumption and intense competition between the organized and unorganized seg-
ments.
The FMCG Industry remained insulated from inflation led demand slowdown. Inflation as
measured by the wholesale price index (WPI) shot up to 9.5 per cent in June 2008 quar-
ter and further climbed up to 12.63 per cent in September quarter. In both these quar- According to CMIE Data, Ag-
ters, industry sales accelerated by more than 15 per cent backed by healthy growth in off gregate sale FMCG industry is
take as well as price hikes affected. During this period, the industry was largely able to expected to increase by 19.2
hold on to margins through a combination of strategies such as reduction in packaging per cent during the December
cost and changes in product mix. Since October, inflation rate has been waning and fell 2008 quarter.
th
to 3.92 per cent for the week ended 7 February 2009. Thus demand for personal care
products is likely to remain buoyant.
According to CMIE Data, Aggregate sale of the industry is expected to increase by 19.2
per cent during the December 2008 quarter.
Commodity prices after peaking are on the downswing. In September 2008 quarter, palm
oil price fell by 13 per cent sequentially. In the subsequent months, palm oil price contin-
ued to weaken further and in November 2008 its price ruled 38 per cent lower than the According to Federation of
year ago level. This would minimize input cost pressure for soap companies like HUL, Indian Chambers of Com-
Nirma and Godrej Consumer Products. Even fall in crude price is expected to make pe- merce and Industry (FICCI),
troleum derivatives like LAB (key input for detergents) cheaper as well reduce packaging FMCG industry sales could
costs. grow at 16 per cent during
2008-09.
Even during the slowdown of the economy, the FMCG sector has registered a growth
rate of 14.5 per cent for the year 2007-08.
There is a huge growth potential for all the FMCG companies as the per capita consump-
tion of almost all products in the country is amongst the lowest in the world. Federation of
Indian Chambers of Commerce and Industry (FICCI) predicted that the Indian FMCG
industry sales could grow 16 per cent during 2008-09.
According to CRISIL anticipation, FMCG sector total revenue could touch around INR
140,000 Crores by 2015.
The key players in FMCG Industry are Hindustan Unilever Limited, Dabur India Limited,
Procter & Gamble Hygiene & Health Care Limited, Nirma Limited, Emami Limited, Col-
gate Palmolive India Limited, Godrej Consumer Products Limited to name a few.
Personal Care
Skin Care
The total skin care market is estimated to be around INR 3,400 Cr. The skin care market
is at a primary stage in India. The penetration level of this segment in India is around 20 The Skin Care segment is
per cent. With changing life styles, increase in disposable incomes, greater product expected to register a
choice and availability, people are becoming aware about personal grooming. The major growth rate of mare that
players in this segment are Hindustan Unilever with a market share of ~54 per cent, fol- 16 per cent.
lowed by CavinKare with a market share of ~12 per cent and Godrej with a market share
of ~3 per cent.
Growth Prospect
Large Market
India is second largest
India has a population of more than 1.150 Billions which is just behind China. According to Country in terms of Popula-
the estimates, by 2030 India population will be around 1.450 Billion and will surpass China tion growth and increase in
to become the World largest in terms of population. FMCG Industry which is directly related population has a direct rela-
to the population is expected to maintain a robust growth rate. tion to FMCG Products.
Advantage India
Governmental Policy
Indian Government has enacted policies aimed at attaining international competitiveness
through lifting of the quantitative restrictions, reducing excise duties, automatic foreign in-
vestment and food laws resulting in an environment that fosters growth. 100 per cent ex-
port oriented units can be set up by government approval and use of foreign brand names
is now freely permitted.
But the benefit from the 4 per cent reduction in excise duty is not likely to be uniform across
FMCG categories or players. The changes in excise duty do not impact cigarettes (ITC,
Godfrey Phillips), biscuits (Britannia Industries, ITC) or ready-to-eat foods, as these prod-
ucts are either subject to specific duty or are exempt from excise. Even players with manu-
facturing facilities located mainly in tax-free zones will also not see material excise duty
savings. Only large FMCG-makers may be the key ones to bet and gain on excise cut.
There is a continuous growth in net FDI Inflow. There is an increase of about 150 per cent
in Net Inflow for Vegetable Oils & Vanaspati for the year 2008.
There is a continuous
growth in FDI Inflow in In-
dia.
Source: DIPP
Market Opportunities
Vast Rural Market
Rural India accounts for more than 700 Million consumers, or ~70 per cent of the Indian
population and accounts for ~50 per cent of the total FMCG market. The working rural
population is approximately 400 Millions. And an average citizen in rural India has less
then half of the purchasing power as compare to his urban counterpart.
Still there is an untapped market and most of the FMCG Companies are taking different
steps to capture rural market share. The market for FMCG products in rural India is esti-
mated ~ 52 per cent and is projected to touch ~ 60 per cent within a year. Hindustan
Unilever Ltd is the largest player in the industry and has the widest market coverage.
India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew
apart from being the second largest producer of rice, wheat, fruits & vegetables. It adds a
cost advantage as well as easily available raw materials.
Sectoral Opportunities
Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below:
FMCG Industry has Sectoral
Opportunities as rural mar-
Dairy Based Products
ket has growth potential.
India is the largest milk producer in the world, yet only around 15 per cent of the milk is
processed. The organized liquid milk business is in its infancy and also has large long-
term growth potential. Even investment opportunities exist in value-added products like
desserts, puddings etc.
Packaged Food
Only about 10-12 per cent of output is processed and consumed in packaged form, thus
highlighting the huge potential for expansion of this industry.
Oral Care
The oral care industry, especially toothpastes, remains under penetrated in India with
penetration rates around 50 per cent. With rise in per capita incomes and awareness of
oral hygiene, the growth potential is huge. Lower price and smaller packs are also likely to
drive potential up trading.
Beverages
Indian tea market is dominated by unorganized players. More than 50 per cent of the mar-
ket share is capture by unorganized players highlighting high potential for organized play-
ers.
SWOT Analysis
Strengths:
9 Presence of established distribution networks in both urban and rural areas
9 Low Operational Costs
9 Presence of well-known brands in FMCG sector
9 Availability of raw materials
Weaknesses:
9 "Me-too" products which illegally mimic the labels and brands of the established
brands
9 Lower scope of investing in technology and achieving economies of scale, es-
pecially in small sectors
9 Low exports levels
Opportunities:
9 Large domestic market – over a billion populations
9 Untapped rural market
9 Rising income levels, i.e. increase in purchasing power of consumers
9 Export potential and tax & duty benefits for setting exports units
Threats:
9 Tax and regulatory structure
9 Removal of import restrictions resulting in replacing of domestic brands
9 Temporary Slowdown in Economy can have an impact on FMCG Industry
Company Description
Bharti Airtel Limited (Airtel) is India’s largest integrated and first private telecom ser-
vices provider with a footprint in all the 23 telecom circles. The company is been struc-
tured into three individual strategic business units (SBU) - Mobile Services, Airtel Tele-
media Services (ATS) & Enterprise Services. The mobile business provides mobile &
fixed wireless services using GSM technology across 23 telecom circles while the Airtel
Telemedia Services business offers broadband & telephone services in 95 cities. The
Enterprise services provide end-to-end telecom solutions which has two sub units. Na-
tional & International long distance services to carriers and services to corporates.
The company’s subscriber base for the year ended December 2008 is 85.65 million by
adding an additional of 2.73 million of new subscriber in the month of December 2008.
The company has a market share of 33.22 per cent in the mobile GSM sector. Bharti is
the only Indian company to have existence in all 23 telecom circles.
Bharti Airtel wins top honours at the 7th Frost & Sullivan ICT Awards 2008
Bharti Airtel won top honours at the 7th edition of the Frost & Sullivan ICT awards 2008.
The company also won three Market Leadership Awards in the Large Enterprise Tele-
com Services, Wholesale Data Services and Mobile Services categories under the Tele-
com Services category-one of the six major award categories.
Company Description
The company is market leader in CDMA segment. It has a subscriber base of 52.07 mil-
lion in CDMA and more than 10.00 million in GSM. The company has a lion share of
around 60 per cent in CDMA segment. Recently the company has launched GSM ser-
vices in many circles.
RCom venture into the GSM space sets off a price war
Reliance Communications (RCom) foray into the GSM space has set off a price war in
pre-paid segment as Airtel, Vodafone and Idea have slashed tariffs on several entry-level
schemes. The company is planning to launch more pre-paid and post-paid plans offering
maximum value suited for various other customer segments of the GSM market. RCom
has created a low-price environment.
RCom Q3 (Dec’ 08) Results: Revenue Soars by ~20 per cent and Net Profit
by ~3 per cent
The Company has registered quarterly sales of INR 5,850.2 Crores as compare to INR
4,874.2 Crores for the last year to report a growth rate of more than 20 per cent where
as the quarterly profit after taxes amount to INR 1,410.6 Crores as compare to INR
1,372.9 Crores for the last year. Profit after taxes has registered a growth rate of 2.7 per Total CDMA wireless Sub-
cent growth. scriber base for the com-
pany stands at 52.07 million
The Average Revenue per user (ARPU) has decreased drastically to INR 251 from INR user on December 2008.
339 compare to Q3FY07. Even Minute of Usage (MoU) has also reduced to 410 minutes
from 449 minutes compare to Q3FY07. The net realizations per minute in wireless seg-
ment for RCom were low at INR 0.61 where at Bharti Airtel and Idea was at INR 0.64.
Outlook
Rcom recently launch of GSM has receive good response from the market and shall
result in gaining higher net additions and improvement in subscriber market share. The
company expects to become a major player in GSM segment too. The company is ex-
pecting an increase in ARPU with the launch of 3G services. Total GSM wireless Sub-
scriber base for the com-
pany stands at 9.96 million
user on November 2008.
HDFC Bank
Company Description
HDFC Bank, a private sector bank, was incorporated in the year of 1994 by Housing
Development Finance Corporation Limited (HDFC). HDFC Bank was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in
the private sector.
The company deals with three key business segments - Wholesale Banking Services,
Retail Banking Services and Treasury. It has entered the banking consortia of over 50
corporates for providing working capital finance, trade services, corporate finance and
merchant banking.
The bank also provides sophisticated product structures in areas of foreign exchange
and derivatives, money markets, debt trading and equity research. In 2008, the bank
merged with Centurion Bank of Punjab (CBoP). Currently Bank has distribution network
comprised 1,412 branches and 3,177 ATMs across the country.
HDFC very near to the largest private sector bank in terms of branch
count
HDFC Bank and ICICI Bank are very near to each others in terms of branch network.
HDFC Bank after adding 658 branches last year have a network of 1,412 branches
where as ICICI Bank has a network of 1,416 branches.
HDFC Bank Q3 (Dec’ 08) Results: Revenue Soars by ~59 per cent to INR
5400 Crores
The Company has registered quarterly revenue of INR 5,407.89 Crores as compare to
INR 3,405.79 Crores for the last year to report a growth rate of 58.85 cent where as net
profit amount for the quarter was INR 621.74 Crores as compare to INR 429.36 Crores
for the last year. Net Profit growth rate was 42.80 per cent. The bank has 3,177 num-
bers of ATMs across India.
Note: The results for the quarter ended December 31, 2008 includes operations of Cen-
turion Bank of Punjab Limited.
Outlook
There is an increase in NPA from 0.40 per cent to current 0.60 per cent. NPA for the
bank has increased due to merger with Central Bank of Punjab. Even at 0.60 NPA, it is
among the lowest in the industry. Business India declare
HDFC Bank as the 'Best
The bank has lots of expansion plans in near future also. Bank 2008'
Company Description
State Bank of India (SBI) commenced its operations from the year 1955 is country’s
largest commercial Bank in terms of profits, assets, deposits, branches and employees
which was constituted through an act of Parliament in 1955. State Bank of India has 21
subsidiaries and more than 11,000 branches.
The company offer banking services as well as non- banking services to their customers.
It provides a whole range of financial services which includes Life Insurance, Merchant
Banking, Mutual Funds, Credit Cards, Factoring, Security Trading & Primary dealership
in the Money market. The Bank is actively involved in non-profit activity called community
services banking apart from its normal banking activity.
State Bank of India Q3 (Dec’ 08) Results: Revenue Soars by ~34 per cent
and Net Profit by ~47 per cent
The Company has registered quarterly revenue of INR 91,079.1 Crores as compare to
INR 67,788.25 Crores for the last year to report a growth rate of ~34 per cent where as
net profit for the quarterly amount to INR 9,213.83 Crores as compare to INR 6,619.80
Crores for the last year. Net Profit growth rate was ~47 per cent.
The bank has more than
11,111 branches in the
Outlook
World.
State Bank of India has largest number of branches in world. State Bank of India pres-
ence in rural and sub-urban regions is a distinct advantage over its private peers. A large
branch network and improving distribution network would sustain greater volumes from
rural areas. Greater propensity to mobilise low-cost deposits and technology-driven con-
nectivity would ensure profitability, besides volumes from these regions.
Company Description
Union Bank of India is a leading nationalized bank of India which was incorporated in the
year 1919. The company is committed to consolidating and maintaining its identity as a
leading, innovative commercial Bank, with a proactive approach to the changing needs
of the society.
The bank’s business is mainly divided into three main areas; corporate financial services,
retail financial services and agricultural financial services along with other allied services.
The bank also provides fee-based services including distribution of third-party products
and financial services to small and medium enterprises (SMEs) and small scale indus-
tries (SSIs). The Bank services include the broad categories of Government Business,
Social Banking, Insurance, Mutual Fund and Non-Life Insurance.
Outlook
Productivity (INR Lakhs)
Union Bank of India is among the top performer in public sector bank. We expect the Business/ Employee - 672
bank to register a robust growth rate in the future also. Business/Branch - 7609
The Bank NPA has decreased from 0.35 per cent to 0.14 per cent. It is among the lowest Net Profit/Employee - 4.47
in banking industries. Net Profit/Branch - 50.64
Company Description
Axis Bank, formerly known as UTI Bank, was among the first to set up private banks.
The Bank was promoted jointly by the Administrator of the specified undertaking of the
Unit Trust of India (UTII), Life Insurance Corporation of India (LIC) and General Insur-
ance Corporation of India (GIC) and other four PSU insurance companies.
The bank has restructured its business into four strategic profit centres such as Corpo-
rate, Retail, Merchant & Treasury Banking and Further the bank also provide mobile
banking services and mobile refill facilities. It has also diversified into investment bank-
ing, insurance, credit cards, mortgage financing, depository services and more. The bank
has taken control of UTI collection centers in many cities. The bank is also acting as a
clearing house for NSE and has also tied up with companies in e-commerce.
Axis Bank of India Q3 (Dec’ 08) Results: Revenue Soars by ~65 to INR During the quarter the bank
2985 Crores opened 20 branches, 89
The Company has registered quarterly revenue of INR 2984.77 Crores as compare to ATMs and also recruited
INR 1802.34 Crores for the last year to report a growth rate of ~65 per cent where as net 1,415 employees. Axis Bank
profit for the quarterly amount to INR 500.86 Crores as compare to INR 306.83 Crores operates with 752 branches
for the last year. Net profit growth rate was ~63 per cent. including extension count-
ers and overseas branches
Savings Bank deposits registered a growth of 39 per cent on YOY basis to INR 21,888 and two representative of-
Crore for the quarter end December 08 from INR 15,768 Crore last year. Even Current fices overseas.
Account deposits grew at 20 per cent on YoY basis.
Outlook
Axis Bank is among the top performer in private sector bank. In this global financial cri-
sis, the company is least affected in terms of NPA. The company has reported a reduc- The Company has 19,719
tion in NPA from 1.39 per cent to 0.42 per cent in a span of just three year. The company employees as on December
has reported lower NPA for the current quarter too. 2008.
Company Description
Punjab National Bank (PNB) is the second largest state owned bank with a strong pres-
ence in cash rich North and Central India. It has over 37 million satisfied customers and
over 4589 offices and more than 1733 ATMs. It has continued to retain its leadership
position among the nationalized banks. The bank enjoys strong fundamentals, large
franchise value and good brand image. It is one of the most technologically advanced
public sector bank with the government owning around 57.8 per cent of the company
equity. PNB aims to expand its base in the entire northern India region for providing
banking facilities at the doorsteps of the people.
PNB offers a wide variety of banking services which include corporate and personal
banking, industrial finance, agricultural finance, financing of trade and international bank-
ing. Among the clients of the Bank are Indian conglomerates, medium and small indus-
trial units, exporters, non-resident Indians and multinational companies.
Many in the race for Punjab National Bank’s housing finance subsidiary
GE Capital, Carlyle, New Silk Route and Tata Capital are in the race for a significant
stake in Punjab National Bank’s housing finance company. The second-largest state-
owned bank is planning to sell a 49 per cent stake in its subsidiary, PNB Housing Fi-
nance. Five bidders have been short-listed and the due diligence is likely to be com-
pleted soon.
Outlook
The bank has 1.912 num-
The Bank has registered a robust growth rate in the past and is expected to maintain the bers of ATMs across India.
same in the future also. Bank margin are among the best in the industry.
The NPA for the quarter has decreased from 1.33 per cent to 0.39 per cent.
Company Description
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods
(FMCG) Company, touching the lives of two out of three Indians with over 20 distinct
categories in Home & Personal Care Products and Foods & Beverages. In FY ending
2007 the Company generated net sales of INR 13,913.40 Cr. and a profit of INR
1,914.88 Cr.
HUL is also one of the country's largest exporters in FMCG product; it has been recog-
nized as a Golden Super Star Trading House by the Government of India.
The mission that inspires HUL's over 15,000 employees, including over 1,300 managers,
is to "add vitality to life." HUL meets everyday needs for nutrition, hygiene, and personal
care with brands that help people feel good, look good and get more out of life.
HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk,
Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality
Wall's are household names across the country and span many categories - soaps, de-
tergents, personal products, tea, coffee, branded staples, ice cream and culinary prod-
ucts. They are manufactured over 40 factories across India. The operations involve over
2,000 suppliers and associates. HUL's distribution network comprises of about 4,000
redistribution stockists, covering 6.3 million retail outlets reaching the entire urban popu-
lation, and about 250 million rural consumers.
Unilever's Pureit wins the UNESCO Water Digest Water Award 2008-2009
Hindustan Unilever’s product - Pureit (a water purifier) has received the UNESCO Water
Digest Water Award 2008-2009 in the category of best domestic non-electric water puri-
fier. Pureit received the award for outstanding contribution in the field of water in India.
The product is available across 21 Indian states and has reached more than 1 million
homes in India giving them access to microbiologically safe drinking water.
Pureit’s performance has been tested by leading international & national medical, scien-
tific & public health institutions and meets the germ-kill criteria of the Environmental Pro-
tection Agency, the drinking water regulatory agency in the USA.
Where as, Profit after taxes were at INR 1,767.66 Crores as compare to last year of
INR 1523.16 Crores to register a growth rate of ~16 per cent. The company is able to main-
tain its margin and even to
The Company sale has registered a CAGR of 9.67 per cent across the last three years capture bigger market by
where as the profit after taxes has registered a CARG 13.83 per cent over the last widest coverage.
three years.
HUL Q4 (Dec’ 08) Results: Revenue Soars by ~17 per cent to INR 4300
Crores
The Company continues to impress on sales growth with one more quarter of near ~17
per cent growth. Total Income reported by the company for the quarter was INR The company is innovative in
4,307.71 Crores as compare to INR 3,687.40 Crores QOQ basis. launching new products. The
new flavor in coffee has leads
The Net Profit registered for the quarter was INR 615.74 Crores as compare to INR HUL to snatch big market
631.44 Crores. The reduction in profit margin is mainly due to increase in raw material share in Coffee Division.
prices which are expected to come down in next quarter.
Note: The Company has change the accounting period from December to March. The Company has launched
Pureit, a water purifier, has
Outlook received a good response and
is expected to grab big mar-
The Company is the largest FMCG player and market leader in most of the product
ket share.
category. The Company has registered a robust growth rate over last few years and
has wide market coverage. HUL believe in product innovation and entrance into niche
market. Recently company has launch Pureit, a water purifier, received a good re-
sponse from the market. The company has a good growth rate.
Company Description
Godrej Consumer Products Limited (GCPL) continues to be one of the leading FMCG
companies in the country. One in three households in India uses a Godrej product every
day.
The company is a leader in hair colour category and Liquid Detergent category and is
among the largest marketer of toilet soaps with leading brands such as Cinthol, Fairglow,
Godrej No 1.
The company has wide market coverage and by the means of acquisition the company is
building a presence in different countries. The company is presently exporting there
products to 30 different countries. The acquired arms of Godrej like Keyline, Rapidol and
Kinky are expected to create synergy and larger market share. The company launches
some new products that include Godrej Expert Powder and Liquid hair colors, Cinthol
Musk and Godrej Ezee Bright and Soft.
The mission that inspires Godrej's over 950 employees, spread over 3 state-of-the-art
manufacturing facilities at different location, is to “Deliver Superior Stakeholder Value by
providing solutions to existing and emerging consumer needs in the Household & Per-
sonal Care business”.
The company has annual sales of INR 1102.57 Crores with a CAGR in double digits over
past many years.
The Company sale has registered a CAGR of 25.11 per cent across the last three
years where as the profit after taxes has registered a CARG of 20.80 per cent over the Godrej enjoys a market share
last three years. of ~35 per cent in Hair Colour
and ~80 per cent in Liquid
Godrej Q3 (Dec’ 08) Results: Revenue Soars by 25 per cent to 342 Detergent. For both the seg-
Crores ment the company is a market
leader.
The Company continues to impress on sales growth with one more quarter of more
than 26 per cent growth. Total Income reported by the company for the quarter was
INR 342.14 Crores as compare to INR 272.75 Crores QOQ basis.
The Net Profit registered for the quarter was INR 40.06 Crores as compare to INR
43.02 Crores QOQ basis. There is a decrease in Net profit in mainly on account of
increase in raw material prices.
Company Description
Dabur India Limited is the fourth largest FMCG Company in India with interests in
Health care, Personal care and Food products. Dabur has build on a legacy of quality
and experience for over 120 years, today Dabur has powerful brands like Dabur Amla,
Dabur Chyawanprash, Vatika, Hajmola and Real.
Dabur is a market leader for Dabur Chyawanprash and packaged juice - Real & Ac-
tive. The Company never limits itself to power branded product but believes to strength
in other business opportunities by growing in niche segments. The company has en-
tered into Health and Beauty Retail segment which is an emerging retail category in
India. The Company has opened 7 H&B stores and has plan to setup 160 stores by
2010. Hindustan Unilever Ltd (Ayush) and Marico (Kaya Skin) have presence in Health
and Beauty Retail segment.
The mission that inspires Dabur’s over 3500 employees is to “Dedicated to the Health
and well being of every household”. Dabur posses Strong capabilities which are re-
flected by Strong R&D infrastructure, 14 manufacturing units and wide distribution
network which covers 2.5 million retailers.
Acquisition of Fem
Dabur has acquired 72.15 per cent of Fem Care Pharma Ltd (FCPL), a leading player
in the women’s skin care products market, for Rs 203.7 Crores in an all-cash deal. The
Company is expected to create synergy by this deal.
The company also expects to see a significant correction in packaging costs. The
company is taking different steps to reduce it packaging cost which currently consist
~17 per cent of the total cost for the company.
The Company sale has registered a CAGR of 19.15 per cent across the last three Recently company foray into
years where as the profit after taxes has registered a CARG 28.76 per cent over the health drink and expect to
last three years. capture 10 per cent market
share in next two years.
Dabur Q3 (Dec’ 08) Net Sales Soars by 20 per cent to INR 778 Crores
The Company continues to impress on sales growth with one more quarter of around
20 per cent growth. Total Income reported by the company for the quarter was INR
778.65 Crores as compare to INR 649.64 Crores QOQ basis. The Net Profit registered
for the quarter was INR 108.45 Crores as compare to INR 94.52 Crores QOQ basis.
Dabur took aggressive cost management initiatives coupled with a judicious pricing
strategy and continued strong performance in key categories helped Dabur to mitigate
Dabur is not leaving any
the impact of steep cost inflation and the company announced an increase in profit
stone un-green. The Company
margin.
has acquired 72.15 per cent
stank in Fem. By this acquisi-
Outlook tion the company got an en-
The company is well known for ayurvedic brand which have existence of over 120 trance into women’s skin care
years. The major product of the company is Dabur Chyawanprash and packaged juice. product.
The acquisition with Fem will add synergy to the company and will help the company
to capture market in women’s products too. Recently the company has entered into
Health and Beauty Retail segment. The company has registered a continuous and
high growth rate. There is growth in Profit margin also. We expect the company to
continue the growth.
Company Description
Emami Limited (Emami) is one of the know brands whose principal activities are to de-
velop and manufacture personal, beauty and health care products through an effective
leverage of Ayurveda. The company’s portfolio consists of 20 products made from herbs,
natural extracts and essential oils. The company started with a vision of making people
healthy and beautiful naturally. The products are sold across India and in countries like
Holland, Bangladesh, Nepal, Sri Lanka, Pakistan, Gulf countries, Europe, Russia, Africa
and the Middle East.
The company has a network which consist of 2,700 distributors which have a direct cov-
erage of 4,00,000 retail outlets across the country. The company has plants located in
Kolkata, Pondicherry and a new plant in Guwahati.
The Company accounts for ~22 per cent share of personal care of the country’s FMCG
market. Some of the company power brands like Boroplus Antiseptic Cream is the mar-
ket leader with a ~70 per cent market share; Navratna Oil is also a market leader with
more than 50 per cent market share. Company’s other power brands also plays an im-
portant part and hold a good market share.
The company entered into Realty business in May 2007. Emami Realty with its joint ven-
ture partners undertook 31 projects. Recently the company called off its earlier decision
to quit the realty business. The company is planning to transfer its stake in 100 per cent
subsidiary Emami Realty to other group companies.
The Company sale has registered a CAGR of 24.56 per cent across the last three years
where as the profit after taxes has registered a CARG 45.81 per cent over the last three
years.
The company has acquired
Emami Q3 (Dec’ 08) Results: Net Sales Soars by 43 per cent to INR 280 stake in Zandu Pharmaceu-
Crores ticals. The company has
The Company has registered sales of INR 280.63 Crores as compare to INR 195.47 plans to get into different
Crores for the last year to report a growth rate of ~43 per cent where as profit after taxes industries.
amount to INR 33.65 Crores as compare to INR 37.82 Crores for the last year. The com-
pany has registered a decline in profit margin.
Outlook
In 2007, the company has
The company is one of the know brands whose principal activities are to develop and undertaken 31 projects with
manufacture personal, beauty and health care products through an effective leverage of Emami Realty, 100 per cent
Ayurveda. Recently the company has entered into Realty business. subsidiary, with its joint
venture partners.
Company Description
ICSA India Limited was incorporated in 1994 is into the business of embedded solu-
tions, software services and infrastructure projects. ICSA India delivers comprehensive
solutions in the areas like Customized Embedded System Applications and Integrated
Telemetry Applications. This apart, the company is also into the business of construction
of power transmission lines and substations.
The company’s product line include: Intelligent Automatic Reading System, Multiplexer
Unit, Distribution Transformer Monitoring System, Substation Controller, Micro Remote
Terminal Unit, Theft Detection Devices, and Pole Top RTU.
ICSA earns INR 236 Crores orders from Mahavitaran and MP Paschim
Ksehtra Vidyut Vitaran
ICSA India Limited has bagged work orders of INR 236.14 Crore from two power utilities
Mahavitaran (Maharashtra State Electricity Distribution Company Limited) and MP
Paschim Kshetra Vidyut Vitaran Company Limited. The INR 204.22 Crore order from
Mahavitran is for the construction and commissioning of sub transmission lines, power
transformers, new substations, augmenting of existing substations, distribution trans-
formers of varying capacities and allied works. The second order worth INR 31.92 crore
from MP Paschim Ksehtra Vidyut Vitaran Co Ltd is for the supply of material, survey,
erection and installation, and commissioning of 11 Kilo Volts (KV) line and bays with
VCB and metering.
ICSA India Q3 (Dec’ 08) Results: Net Sales Soars by 60 per cent to INR 304
Crores
The Company has registered quarterly sales of INR 304.22 Crores as compare to INR
189.13 Crores for the last year to report a growth rate of ~60 per cent where as quarterly Lots of potential is embed-
profit after taxes amount to INR 45.22 Crores as compare to INR 36.24 Crores for the ded system applications
last year. Profit after taxes growth rate was ~25 per cent. EPS for the quarter was INR and also in integrated te-
9.66 compare to INR 8.93 for the last year quarter. lemetry applications.
Profit after taxes for the nine month has registered a growth of more than 50 per cent.
Outlook
The company has registered best growth rate in the industry. With a little more than a
decade the company is expected to registered total revenue of more than INR 1,000
Crores.
There is lot of potential is embedded system applications and also in integrated telemetry
applications.
www.hemonline.com
research@hemonline.com
MUMBAI OFFICE: 14/15, KHATAU BLDG., IST FLOOR, 40, BANK STREET, FORT, MUMBAI-400001
PHONE- 0091 22 2267 1000 FAX- 0091 22 2262 5991
PHONE- 0091 141 405 1000 FAX- 0091 141 510 1757
GROUP COMPANIES
Disclaimer: This document is prepared on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on
this information, all care has been taken to ensure that the facts are accurate and opinions given fair and reasonable. This information is not intended as an offer or solicitation
for the purchase or sell of any financial instrument. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited and any of its employees
shall not be responsible for the content. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this
material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used
the information prior to, or immediately following the publication