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OUTLOOK 2009: PREFERRED SECTORS AND COMPANIES

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Analyst:

ANKIT KHAITAN
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INDEX
INDIAN ECONOMY - 01

BANKING INDUSTRY
OVERVIEW RECENT NEWS PRODUCTS & SERVICES ARE INDIAN BANKS SAFE??? GRAPHICAL PRESETATION RBI STEPS TO FIGHT AGAINST LIQUIDITY CRUNCH ANALYSIS OF BANKING SECTOR A) CRAMELS STRATEGY B) PORTER'S FIVE FORCES MODEL C) PEST ANALYSIS D) SWOT ANALYSIS GROWTH PROSPECT & MARKET OPPORTUNITIES THINGS TO WATCH & KEY TAKEAWAYS - 02 - 03 - 04 - 05 - 06 - 07 - 08 - 09 - 10 -11 - 12 - 13 - 14 - 15 - 16 - 17 - 18 - 19 - 20 - 21 - 22 - 23 - 24 - 25 - 27 - 28 - 29 - 30 - 31 - 32 - 34 - 36 - 38 - 40 - 42 - 44 - 46 - 48 - 50 - 52 - 54

TELECOM INDUSTRY
OVERVIEW RECENT UPDATES ALL ABOUT TELECOM INDUSTRY SEGMENTS GOVERNMENT REGULATIONS ALL ABOUT ‘3RD GENERATION TECHNOLOGY (3G)’ FUTURE OF INDIAN TELECOM INDUSTRY ANALYSIS OF TELECOM SECTOR A) PORTER'S FIVE FORCES MODEL B) SWOT ANALYSIS & KEY TAKEAWAYS WHAT’S ROAD AHEAD

FMCG INDUSTRY
OVERVIEW INDUSTRY CATEGORY AND PRODUCTS GROWTH PROSPECT GOVERNMENT INITATIVE MARKET OPPORTUNITIES ANALYSIS OF FMCG SECTOR A) PORTER'S FIVE FORCES MODEL B) SWOT ANALYSIS & KEY TAKEAWAYS

COMPANIES
BHARTI AIRTEL LIMITED RELIANCE COMMUNICATION HDFC BANK STATE BANK OF INDIA UNION BANK OF INDIA AXIS BANK LIMITED PUNJAB NATIONAL BANK HINDUSTAN UNILEVER LIMITED GODREJ CONSUMER PRODUCTS LIMITED DABUR INDIA LIMITED EMAMI LIMITED ICSA INDIA LIMITED

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Indian Economy

20th February 2009

Indian Economy: An Overview
Indian Economy is among one of the fastest growing economy in the World. It has registered a robust growth rate in past few years. But weakening of U.S. Economy coupled with higher inflation rate, higher interest rate, higher crude prices and higher commodity prices have a reflection on Indian Economy too. The Index of Industrial Production (IIP) has registered a double digit growth of 11.5 per cent in the year 2006-07 but it slip down by 300bp to 8.5 per cent in the year 2007-08. According to Centre for Monitoring Indian Economy (CMIE) forecast, the IIP could be at 3.9 per cent for the year 2008-09. The IIP for the month ended December was quite disappointing at -2 per cent as compare to 8 per cent for last year ended December. Indian Economy has registered an over of 9 per cent of growth in Gross Domestic Product (GDP) for last 3 years. Economic Advisory Council expects GDP to be 7.1 per cent for the year 200809.

According to CMIE forecast, the IIP could be at 3.9 per cent for the year 2008-09.

Source: CMIE

To fight against the slowdown of the Economy, Government of India & Reserve Bank of India took many fiscal as well as monetary actions. Clubbed with fiscal & monetary actions, decreasing commodity prices, decreasing crude prices and lowering interest 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.

Inflation stands at 3.92 per cent against a high of 12.63 per cent.

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Banking Industry – Funding the Economy
Banking Industry is an essential part of any economy. In fact, banks are the single most important supplier of credit. The banking industry has the capital and commitment to support the financial needs of individuals, businesses and all levels of government. Banks make loans to consumers to finance purchases of homes, education, cars and major appliances. Bank credit helps small businesses get started, grow and prosper. Banks help state and local governments fund a variety of public improvements like schools, roads, water & sewer and public health facilities. In each of these roles, banks support the creation of jobs and the growth of our economy. India has 79 scheduled commercial banks with 28 public sector banks, 23 private banks and 28 foreign banks. They have a combined network of over 67,000 branches and 914,241 employees, according to a release by Reserve Bank of India published on Sep 24, 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 liquidity 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 becoming 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 asset-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.

India has 79 scheduled commercial banks, 28 public sector banks, 23 private banks and 28 foreign banks.

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Recent News in Banking Industry
RBI turns down plea to relax NPA norms Companies, especially small and medium enterprises (SMEs) has plea to treat loan to be treated as Non Performing Assets (NPA) if it is overdue for 180 days rather than the current treatment which consider loan as NPA if it is overdue for 90 days. But Reserve Bank of India (RBI) has turned down plea. RBI feels such a move will affect banks’ financial health. SBI loans at 8 per cent could trigger a rate war State Bank of India’s has taken a decision to offer home loans at 8 per cent and allow loan borrowers to switch to SBI after foreclosing existing loans. This may compel the other government-owned banks to reduce rates. The primarily reason for the reduction in interest rate is to stimulate growth in the economy and not to attract customers of their competitor. Why aren’t banks lowering their Prime Lending Rate (PLR)? 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. India needs more bank branches for rural areas According to a joint study by ASSOCHAM and Ernst & Young, India needs to increase the number of bank branches in the country to cater to the large number of people especially those living in rural areas. “Population to Branch Ratio” of India stands at more than 16,000 individuals which are very high as compare to other developed countries stands at around 1,600 to 4,500 individuals. PSBs to see higher pressure on margins Public sector banks (PSBs) could see higher pressure on their net interest margins (NIMs) in the coming months as they have mopped up large amounts of deposits at higher rates and have also affected by steep cuts in lending rates. Bank credit shrinks by INR 25,000 Crores Reflecting moderation in economic growth, bank credit contracted by about INR 25,000 Crores from 27,42,947 Crores in December ended 2008 to 27,18,077 Crores in January 2009. Centre to infuse INR 3800 Crores in three state-run banks The Union Cabinet has approved a proposal to infuse INR 3800 Crores out of which UCO Bank will received INR 450 crore in fund infusion in the year ending March 2009 and additional INR 750 crore in next year. Central Bank of India will receive INR 700 crore each this fiscal and the next year whereas Vijaya Bank to receive INR 500 crore in year ending March 2009 and INR 700 crore in next year. Populations to Branch Ratio for different countries: UK stand at 4484 US stand at 2720 Singapore stand at 10101 & India stand at 16129

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Vehicle Insurance. ForEx. It has also offered services like Demat. House Insurance. Types of accounts offered are Current.02 million.267 at end-March 2007 and 2006. Plastic Money With the use of credit cards increasing significantly over the last few years. mobile banking. mobile and internet banking.088 and 20. Retail banking Retail banking provides many services to retailer. They offers Life Insurance.39 million in June 2007. Faster Services and Safety are the buzzing word of Banking Industry. Insurance.hemonline. Today banking is not limited to traditional banking which just offers deposits and loans but Internet banking. It provides need of the hour services like around-the-clock accessibility through automated teller machines (ATMs). Now banking is not limited to traditional banking which just offers deposits and loans. the number of ATMs in the country had gone up to 36. Deposits Excepting deposits are prime functions of bank. But in today world. ATMs Banks have increased their ATM network over the past three years. Convenience. education to marriage loan. Complete Solution. Demat Services Bank offer demat account for Individual and to corporate. Traditional banks were limited to deposit and loan. Internet banking. They manage long term loans with short terms deposit. According to the RBI. Health Insurance.Indian Banking Industry Insurance Banks are offering insurance products also.com Products & Services Banking Industry has evolved a lot over past few decades. Loan sector has grown at ~30 per cent per year over the past 4-5 years. The services offered are in equities.73 per cent growth. commodity and currency. One Stop Point for Every Financial Service . personal to vehicle loan. Goods Insurance to name a few. ATMs and technology advancement. They charge a spread between loan and deposit. Financial Services Wealth Management Banks offer wealth management services to individual and HNI. ATMs and technology advancement has help banks to lower there cost and at the same time offer new and sophisticated products and services to there customers. mobile banking. respectively. and online transfers. it has played an important role in promoting retail banking.www. plastic money (credit and debit cards). posting a 10. Gilt funds. The investment service offers all financial products not limited to Mutual funds. The number of credit cards (outstanding) in June 2008 stood at 27. For Private Circulation Only 4 Hem Institutional Research Desk . Loans Banks provide loans from the deposit. the banks offer loans from consumer loan to corporate loan. theft Insurance. The average CASA (Current account saving account) deposit accounts for Indian Bank are around 25-30 per cent of the total deposit.314 against 27. Bank offers loan to SME (Small & Medium Enterprise) at lower interest rate. by June 2008. derivatives. Saving and Recurring account. against 24.

Reserve Bank of India while restricting the overnight unsecured market for funds to banks and primary dealers has also imposed limits on their borrowing and lending operations in the overnight inter-bank call money market. The bulk of retail lending ~80 per cent consists of mortgages and vehicle loans. Even Reserve Bank of India continuously monitored the incremental credit-deposit ratio of the banking industry. and at par with Japan and Singapore. The mandated limit for CAR posed by the Basel II is 8 per cent. An important improvement in Basel II. Indian banks have little exposure to sub-prime mortgages which are mainly through the bank overseas branches. risk weights and provisioning requirements for specific off-balance sheet items (including derivatives) have been reviewed in the last few years.www. this give banking industry a safer picture. 19 Indian banks/financial institution in the 500 Global 2009 reported an average 35 per cent growth in interest income and an average of 42 per cent jump in net profit. which are considered relatively safe. For Private Circulation Only 5 Hem Institutional Research Desk . stricter prudential regulations with respect to capital and liquidity and strong growth performance (a growth of ~9 per cent) in recent years. Basel II Norms The Indian banks with overseas presence and foreign banks operating in India have successfully migrated to Basel II Framework by March 2008 and all other scheduled commercial banks are encouraged to migrate to Basel II not later than March 2009. But this exposure is part of the normal course of their business and is quite small relative to the size of their overall business. While many big companies of financial markets are either going bust or getting bailed-out. In order to encourage greater reliance on stable sources of funding. Indian banks are insulated from the mortgage-lending woes currently afflicting developed-country banks.com Are Indian Banks Safe??? India Banks are relatively placed better due to its robust policy framework. the Reserve Bank of India has imposed prudential limits on banks’ purchased inter-bank liabilities and these limits are linked to their net worth. compared with Basel I. which is complicated than Basel I. The Basel Committee on Banking Supervision (BCBS) is now deliberating on Basel II. the credit conversions factors. For three months ending December 2008. 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.hemonline.not just credit risk and market risk but also operational risk. The average deposits in government securities and cash are ~34 per cent. Indian banking industries are quite healthy. The regulatory systems of Indian banks are rated above China and Russia. interest rate risk and other risks. In order to strengthen capital requirements. as their lending criteria remained strict even throughout the boom years and their exposure to complex securitizations are minimal. Regulatory systems of Indian banks are rated above China and Russia. Indian banks are performing well and have secured a place in the latest Top 500 Global Financial Brands 2009. up from 6 Indian Banks for the year 2007. 19 Indian banks have secured a place in Global 500 for the year 2008. and at par with Japan and Singapore. is that banks will hold more capital against a wider range of risks . As per RBI. The Asset-Liability Management guidelines in India take into account both on and off balance sheet items.

Kotak Mahindra Bank CAR stands at the highest with 17. Non-Performing Assets (NPA) is lower for Union Bank which stands at 0. For Private Circulation Only 6 Hem Institutional Research Desk . banks having Non-Performing Assets (NPA) less than 1. The above values are for December Quarter 2008 The numerical represent Capital Adequacy Ratio (CAR) and then Non-Performing Assets (NPA).14 per cent For both. whereas NPA higher than 1. CAR for above banks are calculated according to Basel II norms.hemonline.www.Best for Banks In graphical representation.5 per cent are not consider stable. State Bank of India and ICICI Bank the total net-worth stands at more than 50. Capital Adequacy Ratio (CAR) above 12 per cent gives a stable picture.5 per cent are consider stable.00 per cent. The next figure represents the Net Worth of the Banks in INR Crores. Lower NPA and Higher CAR .000 Crores. State Bank of India’s net worth is ~20 per cent more with its nearest revival ICICI Bank.com Graphical Representation .Are Indian Banks Safe??? Among 9 banks considered.

For Private Circulation Only 7 Hem Institutional Research Desk .20. (agreement by one party to sell a security by another and agreed to purchase it on a specified date) to 5. Even reductions of 100 bps results in infuse of additional liquidity of INR 40. The Bank rate directly impacts the cost portion of the bank and hence the bank lending rates. Monetary action by Reserve Bank of India has eased significantly Liquidity in the banking system by pumping over INR 3.000 Crores into the system. the RBI consistently pruned it to bring it down to 5 per cent by 17 January 2009.60.hemonline.000 Crores into the banking system since October 2008.000 Crores. the central bank.000 Crores into the banking system since October 2008. or CRR. CRR from the peak of nine per cent has come down to 5 per cent. Liquidity has returned to comfortable levels following swift. (amount which banks have to park in government securities) to 24 per cent. (portion of funds that the banks have to park with RBI) to 5 per cent.www. lending rates of banks eased. RBI has reduced the statutory liquidity ratio. RBI.50 per cent. or Repo rate.com Steps by RBI to fight against the Liquidity Crunch Liquidity in the banking system has eased significantly with the Reserve Bank of India pumping over INR 3. Reductions of 100 bps results in infuse of additional liquidity of INR 40. prompt and extensive measures by the RBI such as CRR and SLR cuts and opening of refinance windows. Other step taken by RBI was reduction in Reverse Repurchase-agreement rate. RBI has also cut the Repurchase-agreement rate.000 Crores.000 Crores into the system. We further expect RBI to announce cut in Repo rate and in Reverse Repo rate. Bank Rate (at which central banks lend funds to national banks) stands at 6 per cent. 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. when the CRR was at its peak of nine per cent. Even we expect Banks for further reduction in prime lending rate. An reduction in reverse repo rate discourage banks from parking surplus short term funds with the RBI and encourage them to lend those funds.20. 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. This amounts to a liquidity infusion to the tune of INR 1. (agreement by one party to purchase a security by another and agreed to sell it on a specified date) to 4 per cent. or SLR. Since 4 October 2008. or reverse repo rate. has reduces the Cash Reserve Ratio. The reduction in the repo rate will make short term (overnight) borrowing from the RBI cheaper for banks.

Management & System evaluation. (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.com CRAMELS Strategy – Must for Banking Industry The statutory mandated areas for banking industry are solvency. its business strategies and its ability to track and respond according to changes in market condition. Bank has access to call market or RBI refinance facilities in the event of liquidity crunch. banks with a larger volume of liquid assets are perceived safe.www.hemonline. (d) Management & System evaluation: The quality of a company’s management. the bank needs to have access as well as control over the systems. The spread has come down to 3-4 per cent as compare to over 8 per cent a decade back. It is measured by the ratio of capital to risk-weighted assets (CRAR). This has leads to increase in efficiencies to maintain overall profitability. liquidity and operational health. This give banks a competitive advantage over other financial institutions. Although CRAR is lower for bank as compare to finance companies. Due to electronic technology advancement. The CRAR for Indian Banking is higher as compare to the statutory requirement. capitalization policy and diversification philosophy. Resource raising ability. According to release by Reserve Bank of India the average CRAR for all banks is 13 per cent and 12. ‘CRAMELS’ Strategy: Capital Adequacy Resource raising ability Asset Quality Management & System evaluation Earning potential Liquidity/Assets Liability Management System & Control The CRAR for Indian Banks are higher as compare to the statutory requirement. (g) Systems and Control: The Systems and control access plays an important part in today’s highly advance banking technology. Lower NPA is indicative of good and robust credit decision-making. Liquidity/Assets Liability Management and System & Control. (f) Liquidity/Assets Liability Management: Cash maintained by the banks and balances park with central bank is an indicator of bank's liquidity.3 per cent for the year ended 2007-08 and 2006-07 respectively. The ‘CRAMELS’ model stand for: Capital Adequacy. The non-performing loans to advances ratio is more indicative of the quality of credit decisions made by bankers. reflects the management policy stance. In general. Asset Quality. This variable. Low NPA of Indian Banks give the Industry a saver picture. The ratio of non-interest expenditures to total assets can be one of the measures to assess the working of the management. its ability to generate them is essential for its operating model. the model we prefer is known as CRAMELS. Earning potential directly attract debt and equity. (e) Earnings potential: Earnings are the key input for supporting growth. The banks properly manage the time difference between short term deposits with long term loans. One of the indicators for asset quality is the ratio of non-performing loans to total loans (NPA). (c) Asset Quality: Asset quality is of primary consideration when assessing credit risk of a finance company. (b) Resource raising ability: Since funds are finance company’s raw material. We need to analysis management’s risk appetite in terms of its growth. For Private Circulation Only 8 Hem Institutional Research Desk . For analyzing banking industry. Safety and security plays a vital role in today world. workers compensation and training investment. since these assets would allow banks to meet unexpected withdrawals. Banks has an advantage for raising resource as compare to others financing institution. which includes a variety of expenses. but bank are positioned better on account of big capital base and strong recapitalization prospect. such as payroll. Earning potential. Earning for finance company is driven by net interest margin and the difference between the yield generated by assets and cost of debts. A sound capital base strengthens confidence of depositors.

Reserve Bank of India is lay down the rules and regulation for Banking Industry . . Hence the intensity of rivalry is very high. if there is a wide spread in the interest. The wide range of choices and needs give a sufficient room for new product development and product enhancement. The intensity of rivalry among competitors is very high Potential Entry of New Competitors Reserve Bank of India has laid out a stagnant rules and regulation for new entrant in Banking Industry. .www. We expect merger and acquisition in the banking industry in near future. Reserve Bank of India is the authority to take monetary action which leads to direct impact on circulation of money in the Economy. The rules and regulation lay down by RBI. Customer is the King. Rivalry among Competing Firms Rivalry among competitors is very fierce in Indian Banking Industry. today banks offers loans for all products. For Private Circulation Only 9 Hem Institutional Research Desk . Banks offers different services according to clients need and requirement. Insurance. ForEx. Potential Entry of New Competitors is very less Potential Development of Substitute Products Every day there is one or the other new product in financial sector.hemonline. . Demat account to name a few. Market Players use all sorts of aggressive selling strategies and activities from intensive advertisement campaigns to promotional stuff. derivatives. Hence. Wide range of choices and needs results in new product development and product enhancement Bargaining Power of Suppliers Banking industry is governed by Reserve Bank of India. Mutual Fund. They offer loans at Prime Lending Rate (PLR) to their trust worthy clients and higher rate to others clients. Even consumer switch from one bank to another. Bargaining Power of Consumers is little high as “Customer is the King” Bargaining Power of Consumers In today world. the industry is less porn of new competitor. Banks are not limited to tradition banking which just offers deposit and lending. In addition. The services banks offer is more of homogeneous which makes the company to offer the same service at a lower rate and eat their competitor market’s share. .com Porter's Five Forces Model Porter's Five Forces model outlines the primary forces about competitiveness within the industry.

Every Industry has Governmental or Social influence on their workings. and at par with Japan and Singapore. Low Interest Rates Reserve Bank of India controls the Interest rate.hemonline. Political Factors Focus on Regulations Indian Banking is least affected as compare to other developed economy which is attributed to Reserve Bank of India for its robust policy framework. Recently RBI has reduced the interest rate which stimulates the growth rate of banking industry. 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. which is based on several monetary policies. This gives India an advantage in terms of credibility over other countries. The banks need to have a good royalty factor as compare to counter part in other countries. High Capital Adequacy Ratio The Implementation of Basel II norm has stricter rules and regulations. The financial meltdown on Indian Banks is less impact as compare to other countries. Social and Technological analysis. Banking Industry is directly related to the growth of the economy. Inflation Rates Different fiscal and monetary policies have curbed the Inflation rate from the high of 12. For Private Circulation Only 10 Hem Institutional Research Desk .92 per cent.com PEST Analysis PEST analysis of any industry investigates the important factors that affect the industry and influence the companies operating in the sector. Technological Factors IT Services & Mobile Banking Technology advancement has changed the face of traditional banking systems.www. Increased Penetration of Cards India has registered a robust growth in plastic money. India just spend 1 per cent of their total purchases through credit cards where as the world average is stands more that 9 per cent. stricter prudential regulations with respect to capital and liquidity. Pest Analysis stands for: Political Factor Economic Factor Social Factor Technological Factor Social Factors Loyalty Factor Banking industry services is lending and borrowing of funds.63 per cent to 3. PEST stands for Political. Technology advancement has offer 24X7 banking even giving faster and secured service. There is a still lot of potential in the plastic market. India’s regulatory systems are places above China and Russia. PEST Analysis gives insights on different influence. Economic. The PEST Analysis is a tool to analyze the forces that drive the industry and how those factors can influence the industry.

Connected Globally Faster and safer banking Specialized services offering Weaknesses: Intensive competition has reduce the margins Cyber crime Opportunities: Large market – over a billion populations Foreign banks eyeing over India banks for Merger and Acquisition From traditional banking to a Hub of every financial products Increase in loans due to easy and faster loan approval Rising disposable income has resulted in demand of different financial products Threats: Non Banking Financial Institution (NBFC) offering financial services Reserve Bank of India persuade banks to lower the spread RBI control the Supply of money in the Economy.www.hemonline.com SWOT Analysis Strengths: Wider presence of branches and ATM Micro Finance Low expenditure cost due to high usage of ATM & Internet Banking Electronic banking . has an impact in loan offering 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 For Private Circulation Only 11 Hem Institutional Research Desk .

To sustain an average capital adequacy ratio of 12. accounting and transparency and skilled personnel of foreign banks will pose major challenges to Indian banks. According to BCG. with the second phase of opening expected to commence in April 2009.000 per annum. 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.www. Where as the credit market is estimated to grow to US$ 23 trillion by 2050. and further relaxations are on the anvil by 2010.00. Dresdner Bank and United Overseas Bank. with incomes of varying between INR 45. However. For Private Circulation Only 12 Hem Institutional Research Desk . best practices in audit. Around 91 million households. Some of the biggest names in global financial services and banks like Credit Suisse. Bigger capital reserves. Under WTO. it would expand the revenue pool by around US$ 2. According to a report by Boston Consultancy Group. Citi and HSBC. ANZ and Rabobank Group. The Rabobank Group already holds 18. given fresh banking licenses to UBS .2 per cent stake in another local private bank YES Bank. only 60 million Indian households are actively involved with regular banking activities. The Indian banking system can see an enormous transformation after the opening of the financial services sector under the World Trade Organisation (WTO). April 2009 to be extended further.e. banking authorities has not announced about the extension of the phase. This year is likely to set a reform process in the banking sector with most banks are expected to comply Basel II guidelines. India is expected to become the third largest banking hub in the world by 2040.hemonline.24 billion for banks.Switzerland's largest bank. hold India as one of their top markets. in recent months. is now in the process acquiring a banking license.com 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.50 billion. Though there are 334 million bank accounts in India.000-2. are yet to be tapped by the banking sector. the Dutch Group. Under such favorable conditions. Due to current Global crisis. we expect the deadline for second phase i. Market Opportunities Road Ahead The Indian consumer holds the biggest opportunity for the Indian banking system and retail banking has immense opportunities in India. If 30 million additional households are targeted over the next three years. Foreign players are allowed to set up branches in rural India and take over weak banks with an investment of up to 74 per cent. The RBI has. Some of the existing players such as StanChart. the public sector banks would require an additional capital of approximately US$ 67.0 per cent by March 2010. cutting edge technology. 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. the Indian banking sector will be open to foreign banks. Rabo Group and ANZ are seeking a banking license in India.

Indian Banking performance . besides raising rates on NRI deposits. Rising NPLs Higher rates. Key Takeaways Key highlights of our analysis are: Accelerated growth rate . Where as major other countries consider it NPL when it is due for more than 180 days. This gives India a safer picture.com Things to Watch Out For in 2009: Remittances.Even during the Global Meltdown. Future growth rate . are consider as NPL.The financial sector is expected to maintain a decent growth rate in future. Wide distribution network . Though far from peak levels.Indian Banking and Financial Services led to impressive value creation. default on loans either on principal amount or interest amount for more than 90 days. For Private Circulation Only 13 Hem Institutional Research Desk . ForEx assumptions going wrong. NPLs Remittances The global recession coupled with declining oil prices could result in a deceleration in remittance flows which have played an integral role in the Balance of Payment (BoP). the macro implication is cautious lending.hemonline. Over 5 year period from April 2003 to March 2008 the total shareholder return for the sector was more than 53 per cent which was better than the overall return of 42 per cent by the complete stock market. To counter this. Indian Financial sector performs better than its peer in the developed and other BRIC countries.www. slowing industrial output and corporate profits are likely to result in a rise in NPLs and weakness in asset quality. Higher Disposable Income .Rise in household income has resulted in increase in disposable income and hence increase in savings and investment. This would escalate the negative feedback loop currently in play.Public sector bank and even now private sector bank are entering into rural area too. introducing another ‘diaspora’ bond and further reducing remittance costs would be steps in the right direction. In India. with aggressive policy easing not being matched by banks lowering rates or increasing advances.

the largest globally. has gone through many phases of growth and diversification. The service providers are offering services at cheap call rates.79 million as of December-end. like any other sector in the country. Reliance Communications had 62.Low-cost.000 Crores.62 million in the corresponding period a year ago and the total number of telephone connections (wireless and wireline) is 384. The Indian telecom industry has been growing rapidly at a CAGR of 40. total revenue for Telecom industry for current year is around 100.5 million customers added every month. There exists enormous business potential for telecom companies on account of the country’s low teledensity.26 million new customers in 2008. with an average 9. which stand at 33. Even there is a huge potential in broadband segment. there is huge untapped potential for mobile phone penetration in rural India. The growth in 2008 was led by Bharti Airtel. the country’s cellular base witnessed around 48. Telecom sector contributed 3. The country added 113.50 per cent growth in 2008.02 million and Vodafone of about 60. It implies that one out of every three Indian has a telephone connection. Bharti has more customers than the state-owned BSNL’s mobile and landline users combined. India has added around 9. In fact.' According to Capitaline Database. the field of telephonic communication has now expanded to advanced technologies like GSM. Upcoming services such as 3G and WiMax (Worldwide Interoperability for Microwave Access) will help for further growth rate.5 million new mobile subscribers to the network each month for the year 2008.com Telecom Industry – Connecting the World Introduction.4 per cent by 2010. technology advancement and reduction in traffic charges.65 million customers as of December-end. Every day there is an addition in Value added Services (VAS). Telecom Industry in India is the fastest growing markets in the World and become the second largest mobile market in the world just after China. The growth will primarily driven by the rise in communications demand from semi urban and rural India. The country had 346.93 million.23 for December 2008. The teledensity in rural areas being a little more than 10 per cent against the national average of 33. There is still a big room for further growth. Segment Analysis India's growth story in the telecom space shows no signs of slowdown. Starting from telegraphic and telephonic systems in the 19th century.28 million by the end of November 2008. For Private Circulation Only 14 Hem Institutional Research Desk . Increase in private and public players in the sector has enhanced the telecommunication technology to give the maximum benefits to their customers.45 million by the end of December 2008 as compared to 5.hemonline.4 per cent to India’s gross domestic product in for the year 2008 and is expected to contribute 5. low-cost handsets and network expansion is fuelling the boom for the industry. the country’s largest communications provider. High-Quality networks & Innovative Marketing Indian Telecom sector.23 per cent.89 million mobile phone users as of December 2008 compared to 233. To put this growth into perspective. and WLL to the much awaited great 3G (Third Generation) Technology in mobile phones.63 per cent from 2003 to 2008. India's telecom services industry revenues is projected to reach $54 billion in 2012. The total Broadband subscriber base has reached 5. Bharti had 85. CDMA. taking the telecom penetration to over 36 per cent. as compared with $31 billion in 2008 according to the CII Ernst & Young report titled 'India 2012: Telecom growth continues.www.

35 mobile subscribers in the month November. According to Gartner Inc.www. 3G Auction With the announcement of a 3G policy on 1 August 2008.577 Crore are stalled. Mobile entertainment and mobile banking are likely to be the biggest drivers for data services.hemonline.09. close to 70 projects entailing an investment of INR 1. video. with the auctions being postponed and the economic slowdown affecting the major players vying for 3G. 99 per cent of new mobile connections in India are pre-paid Call it the death of post-paid mobile user in the world’s fastest-growing mobile market. A recent study pointed out that having to give up their mobile numbers was the single most reason that subscribers did not want to change their operator despite poor quality of services. By 2012. Mobile number portability gets nod and bid invited for mobile number portability Department of Telecommunications (DoT) has invited bids for mobile number portability. could attract about 8-10 million subscribers and could account for about $1-1. WiMax. on the other hand. However.com Recent updates in Telecom Industry Around 11 million mobile subscribers added in the month December According to telecom regulator TRAI. India joined a select list of countries to have a policy on the much-hyped 3G revolution. 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. thereby offering greater growth opportunities for service providers.821 crore are under implementation and seven projects encompassing an investment of INR 4. against 10. the highest monthly addition.81 million mobile subscribers were added in the month December. Out of new mobile user additions in the country. India could have around 25-30 million 3G subscribers and around $4-5 billion 3G revenues. Telecom Industry on robust expansion plans The total outstanding investment in the telecom industry at the end of December 2008 quarter stood at INR 2. 3G & WiMax The launch of 3G and WiMax (Worldwide Interoperability for Microwave Access) services is expected to drive the data revolution. 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.5 billion by 2012. For Private Circulation Only 15 Hem Institutional Research Desk . Third generation mobile services would offer voice.. The average revenue per user per month is likely to drop further since most of the growth in subscriber additions is coming due to expansion in non-metro regions. the journey towards 3G in India was not quite uneventful. Of these.007 crore spread over 140 projects. Most of the existing telecom companies have robust expansion plans out of which majority have not witnessed any delay in execution. This will be an advantage for the customer. pre-paid connections accounts for around 99 per cent. 10. India's mobile subscriber base is projected to exceed 737 million connections by 2012 growing at a CAGR of 21 per cent. The Government has plans to raise teledensity to 40-45 per cent by 2010. data and downloading services on mobile phones.53.

industry consolidation will result in about five to seven large operators.89 million (December 2008) Teledensity: 33.6 billion by 2011.44 Million (Year 2008) Annual growth rate of telecom subscribers: 48. India will become the leading market for WiMAX in the Asia pacific region and is expected to have 15.23 per cent (December 2008) Addition of new mobile subscribers in month: 10. The Telecom sector in India has witnessed unparalleled growth by global standards.7 per cent of revenues from the region. The telecom sector could witness another round of Mergers & Acquisitions.81 Million (December 2008) Average Addition of new mobile subscribers per month: 9. Circle B and Circle C have witnessed the highest growth rate as compare to Metros and Circle A. In a little over a decade of wireless telephony.48 per cent (Year 2007-08) Fastest growing cellular telephony markets in the world Average Revenue per User (ARPU) for GSM: INR 261 per month (December 2008) Average Revenue per User (ARPU) for CDMA: INR 176 per month (December 2008) More Wireless subscribers than Wireline subscribers Minute of Usage (MoU) for GSM: 464 Minute per month (December 2008) Minute of Usage (MoU) for CDMA: 375 Minute per month (December 2008) According to Springboard Research.7 per cent of total subscribers in Asia-Pacific and 35. India has moved from a subscriber base of zero to becoming the second-largest market in the world after China. accounting for 46. Network expansion will continue in order to support the rural growth. The availability of adequate spectrum could remain a hurdle for wireless growth. the value-added services (VAS) market in India is expected to grow to about US$ 5. Rural telephony. It is imperative for the government to revisit high levies on the telecom sector and lay down a clear roadmap for future spectrum allocation. The industry will witness sustained growth in mobile services and data revenues.com All about Telecom Industry Industry Fact Book Total mobile phone subscribers: 346. Over past few years. by end of 2012. Subscriber base to grow Further growth will be primarily driven by a rise in communications demand from semi urban and rural India. WiMax and data services will drive sector growth in 2012. As new operators roll-out networks. For Private Circulation Only 16 Hem Institutional Research Desk .8 million WiMAX subscribers by 2012. However.www. there could be 10-12 operators in each circle. 3G. According to Gartner.hemonline.

90 million for the year ended December 2008 compared to 39. India's mobile subscriber base is projected to exceed 737 million connections by 2012 growing at a compound annual growth rate (CAGR) of 21 per cent and India is likely to remain the world's second largest wireless market after China in terms of mobile connections. In Public Call Offices. Village Public Telephones Number of Village Public Telephones (VPT) has increased from 5.67 per cent.01 million respectively. MTNL market share is a little less than 4 per cent and the rest of market is capture by other private operators.12 million which stand at 3. Bharti with 85. 31. BSNL and Idea with subscriber’s base of 60. The number of addition in GSM subscriber for month ended December 8.12 per cent. According to Gartner.www. Other Telephone Services Public Call Offices Number of Public Call Offices (PCOs) has reported a positive number over past few years.hemonline.63 lakh in quarter ending June 2008. The Wireline has registered a decline of 3.com Segment Mobile Services India's telecom growth pattern continues with mobile operators adding 113.07 millions.29 million which stand at 2. Wireline Wireline services subscriber base stood at 37. CDMA The CDMA subscriber base has reached 87.98 million in the year ending December 2008.63 per cent.36 million. Reduction in the subscriber base of wireline is mainly due to switching to wire less which is more convenient and cheaper. For Private Circulation Only 17 Hem Institutional Research Desk . More than 85 per cent of the villages have VPTs.26 millions subscribers in the year 2008 to the world's second largest wireless market. BSNL is market leader with a share of little more than 30 per cent. 100 per cent of Villages in Haryana and Panjab have access to Village Public Telephone. The overall cellular services revenue in India is projected to grow at a CAGR of 18 per cent from 2008-2012 to exceed US$ 37 billion. The number of addition in CDMA subscriber for month ended December 2.42 million last year. Reliance remains the largest CDMA mobile operator followed by Tata Teleservices and BSNL with subscriber base of 52. GSM The GSM subscriber base has reached to 257. It contributes more than 10 per cent of the total revenue.13 million last year to registered a growth of 74. The fixed (Wireline) subscriber base registered a decline of 1. 41. There are around 6 lakh villages in India.25 per cent.62 millions respectively. and 38. Non Voice Services Value added service has registered a robust growth rate.93 million.18 millions and 2.60 lakh in quarter ending March 2008 to 5. Wireline internet subscriber Broadband Growth: Total Broadband subscribers base has reached to 5.52 million in the year 2008.91 million in the year ending December 2008. The market leader in wireline is BSNL and market follower is MTNL.45 million by the end of December 2008 as compared to 3.66 million subscriber base remains the largest GSM mobile operator followed by Vodafone.

86 per cent of total FDI inflow.86 per cent just after Service sector and Computer Software & Hardware sector. Establishment of an independent regulator .www. generated Rs 7. The Indian telecom industry has a 74 percent FDI limit in the telecom services segment.88 Million. Total FDI inflow in Telecom Sector from April 2000 to November 2008 amounts to INR 25.for the telecom sector. VAS.the Telecom Regulatory Authority of India (TRAI) . The Indian telecom industry has attracted foreign investors.716. For Private Circulation Only 18 Hem Institutional Research Desk . 08. SMSes (for contests and communication). among other non-voice services. Allowing service providers to share active infrastructure.68 Crores which is 7. FDI calculation takes into account radio paging. or the sale of ring tones. The cumulative FDI inflow. in the telecommunication sector amounted to INR 256. wallpapers. The Government of India (GOI) has permitted 100 percent FDI in manufacturing of telecom equipment in India through the automatic route.com Telecom Industry Government Government Policy Initiatives The Government has taken many proactive initiatives to facilitate the rapid growth of the Indian telecom industry. during April 2000 to November 2008 period (latest data available).500 Crores in revenues in 2008 There is a huge growth in FDI Inflow in India for the month of Sep.hemonline. It is the third largest sector to attract FDI in India which accounts for 7. According to an IMRB paper for the Internet and Mobile Association of India. Opening of telecom industry for private sector participation.671. caller tunes. cellular mobile and basic telephone services in the telecommunication sector.

There is substantial rise in subscriber base from Circle B and Circle C compare to Metros and Circle A. Wireless Vs Wireline There is a constant rise in subscriber base of wireless where as there has been a constant decrease in wireline subscriber. The high speed of data transfer can accommodate broadband applications like video conferencing. there will be an increase in revenue from usage of the service. For Private Circulation Only 19 Hem Institutional Research Desk . sending and receiving faxes.www. the fastest 2G phones can achieve up to 144Kbps (about 8 minutes to download a 3-minute song). Although we expect a decrease in the tariff charges.hemonline.79 million GSM subscribers are from Metros or Circle A. instantly downloading e-mail messages with attachments and international roaming. As average revenues per user (ARPU) fall. receiving streaming video from the internet. data and fax services.8 billion by the same year. voice. Around 129." Even introduction of 3G would also increase the Average revenue per users (ARPU).com All about the ‘Much Awaited 3rd Generation Technology (3G)’ What is 3rd Generation Technology (3G)???? The 3rd generation technology (3G) represents a shift from voice centric services to multimedia oriented services like video. This could result for 3G subscriber base of more than 10 million. What will be the impact on Revenue???? We have seen a decline in Average Revenue per User (ARPU) and the decline is due to continuous fall in the tariff charges as competition in the industry increases. Value-added Services (VAS) brings in 9 per cent of telecom industry revenues. 3G networks have potential transfer speeds of up to 3 Mbps (about 15 seconds to download a 3-minute MP3 song). the pressure on making more money from VAS will keep going up. According to a report by industry body FICCI and telecom consulting firm BDA. there would be an increase in Average Revenue per User. It accounts for more that 50 per cent of the total GMS subscriber base. "3G subscriber base will reach 90 million by 2013 and the revenue from 3G is expected to reach $ 15. Although the service is on the higher side as mobile users will have to pay a one-time fee of INR 500 as activation charges and a monthly rental of INR 599. For comparison. Recently Mahanagar Telephone Nigam Limited (MTNL) has become the first telecom operator in the country to launch 3G mobile services. Apart from the rental charges. This would leads to sharp rise in ARPU from this Circle. We expect atleast 5 per cent of the customer to opt for 3G within 2 years. but the company has receive good response from the customer. The usage is less in Circle B and Circle C as compare to other circle.

tele-booking. The Department of Telecom and TRAI are about to auction the required 3G spectrum to various service providers. inquiries. Currently.23 per cent. more than 9. Young generation and living standard is also one of the factors for the increase in subscriber base. will heat up the competition in the industry. Mobile Commerce to Become the Next Big Thing Mobile commerce is the upcoming and growing trend. The increased use of such services is welcomed by the users as it offers high utility and value for money.com Future of Indian Telecom Industry Industry on High Growth Track The telecom industry has been growing at a CAGR of 40 per cent during 2003-2008. The scarcity of spectrum and the price to be charged at the auction will purely be a matter of time. based on guideline issued by TRAI.www. Mobile Number Portability to Become a Reality Soon Indian mobile users will soon have the option to switch their service providers without changing their mobile numbers.5 million subscribers are added in the last year. and other commercial services will lead to further increase in the revenues of the companies. However. Today.5 million subscribers per month over the last year.hemonline. the handsets are available in just three-digit figures with all necessary facilities. and is expected to be 500 million and 800 million by 2010 and 2012 respectively as per TRAI. with total subscriber growing at an average of 9. makes the market more attractive. the teledensity of the Indian telecom sector is 33. Alarming Competition The rising competition from new entrants in the industry. For Private Circulation Only 20 Hem Institutional Research Desk .89 million in December 2008. Every month. both domestic and foreign players along with new technologies and their core competencies. The ARPU for the industry is INR 240. Rural Expansion & Services Abroad The number of mobile users per 100 persons is described by teledensity. Falling ARPUs – Margins under Pressure The revenues are showing a fall because of declining call tariff. whereas the TRAI expected it to reach around 45 per cent by 2010. The company is also willing to explore and share active infrastructure. Passive Infrastructure Sharing The infrastructure sharing will encourage more efficient operations. Availability of Spectrum The Government has allowed and framed the policies for introduction of new technologies in the Indian telecom sector in the form of 3G and Wimax. The increased use of mobile phones for the purpose of banking. the profit margins are stable because of rising subscriber base in the industry. Falling Handset Prices and Youth Population Falling handset prices along with added features. Implementation of mobile number will motivate and stimulate the service providers to constantly endeavor to further improve their quality of service in order to retain existing customers and attain new subscribers. thereby resulting in significant cost savings. The subscriber base totaled to 346. which is among the lowest in the world.

has already been incorporated by existing service provider Hence threat of substitutes is low for telecom industry . Medium to low bargaining power of suppliers Bargaining Power of Consumers Many telecom providers in wireline as well as in wireless Mobile number portability after getting approval will result in high bargaining power for consumer.com Porter's Five Forces Model Porter's Five Forces model outlines the primary forces about competitiveness within the industry. license fee. Bargaining Power of Consumers is little high For Private Circulation Only 21 Hem Institutional Research Desk .hemonline. hence the over all bargaining power is high . Potential Entry of New Competitors is very low Potential Development of Substitute Products Little substitutes Wireless has already substituted the wireline which has registered a decline in wireline subscriber base Voice over Internet Protocol (VoIP). Product development and enhancement is serviced by the market player Bargaining Power of Suppliers Tower upliftment companies and silicon chip manufacturers . Rivalry among Competing Firms New entrant and commencement of WLL services has resulted in intense competition Due to higher setup cost the intensity of rivalry is very high . future threats. hence threat of entry is low .www. The intensity of rivalry among competitors is very high Potential Entry of New Competitors High start up cost result as an obstacle for new competitor Nation wide player has an advantage for network.main suppliers has high competition among them has in low bargaining power but medium switching cost for telecom vendors has resulted in medium to low bargaining power of suppliers . new technology and to maintain margin.

hemonline.com SWOT Analysis Strengths: Technology Advancement has offered enhanced services Widening of network coverage to rural areas also Low Operational Costs Demand of Mobile Commerce Weaknesses: High start-up cost Reducing ARPU Reducing MoU Opportunities: Large domestic market – over a billion populations Low Teledensity as compare to other developed countries Potential in rural market 3G and WiMax to be launched Threats: Higher bidding cost for 3G Government control companies get regulatory benefits over private player Net-phone Key Take Away for Investors Rapid CAGR of more than 40 per cent over last from few years Low Teledensity as compare to other developed countries leave place for future growth Upcoming 3G and WiMax Technology to result in high ARPU For Private Circulation Only 22 Hem Institutional Research Desk .www.

there seems to be huge untapped potential for mobile phone penetration in rural India.5 times for Kolkata and category B circles and retaining the current base price for category C circles.020 Crores as recommend by ministry of finance. Mumbai and category A circles and increasing it by 1. State-owned telcos MTNL and BSNL were given 3G spectrum last year before the private players.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. "3G subscriber base will reach 90 million by 2013 and the revenue from 3G is expected to reach $ 15. set a base price of INR 2. which was been proposed at INR 1. For Private Circulation Only 23 Hem Institutional Research Desk .www. WiMax.8 billion by the same year. As per Department of Telecom (DoT). Broadband Wireless Access (BWA). including Bharti Airtel. This could again put off the muchawaited roll-out of advanced mobile services.040 Crore. Reliance Communications.010 Crore could be doubled to INR 2. MTNL competes with private firms. Mahanagar Telephone Nigam (MTNL) becomes the first telecom company to launch th third-generation (3G) mobile services in India on 5 February 2009." Even introduction of 3G would also increase the Average revenue per users (ARPU). 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. According to a report by industry body FICCI and telecom consulting firm BDA. Vodafone. Idea Cellular and Tata Teleservices. Note: Teledensity for certain Countries are for March 2008 The much awaited Third Generation (3G) Auction has been delayed. in India.com Telecom Industry – What’s Road Ahead Growth Potential The Indian rural market is going to be the next big thing for wireless telecom providers.23 per cent. With the tele-density in rural areas being a little more than 10 per cent against the national average of 33.hemonline. giving them the first mover's advantage.

000 Crores. Personal Care and Food & Beverages. low penetration levels.hemonline.92 per cent for the week ended 7 February 2009. The key players in FMCG Industry are Hindustan Unilever Limited. Nirma and Godrej Consumer Products. Inflation as measured by the wholesale price index (WPI) shot up to 9. Its principal constituents are Household Care.2 per cent during the December 2008 quarter. palm oil price continued to weaken further and in November 2008 its price ruled 38 per cent lower than the year ago level. low operating cost. Commodity prices after peaking are on the downswing. the industry was largely able to hold on to margins through a combination of strategies such as reduction in packaging cost and changes in product mix.63 per cent in September quarter. In September 2008 quarter. Aggregate sale FMCG industry is expected to increase by 19. Emami Limited.2 per cent during the December 2008 quarter.000 Crores Indian FMCG market is one of the important sector and has registered a robust growth rate. FMCG sector total revenue could touch around INR 140. Since October. For Private Circulation Only 24 Hem Institutional Research Desk .5 per cent for the year 2007-08. This would minimize input cost pressure for soap companies like HUL. FMCG industry sales could grow at 16 per cent during 2008-09. Aggregate sale of the industry is expected to increase by 19.000 Crores by 2015. According to CRISIL anticipation. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. According to CMIE Data. In the subsequent months.www. In both these quarters. During this period. Dabur India Limited. Colgate Palmolive India Limited. 85.5 per cent in June 2008 quarter and further climbed up to 12. According to Federation of Indian Chambers of Commerce and Industry (FICCI). FMCG Industry is characterized by a well established distribution network. The total FMCG market is in excess of INR 85.com FMCG Industry – Moving at fastest Pace FMCG Sector is one of the most important sectors for each and every Economy. It plays a vital role being a necessity and inelastic product which touches every life in one or the other aspect. The FMCG Industry remained insulated from inflation led demand slowdown. Procter & Gamble Hygiene & Health Care Limited. lower per capita consumption and intense competition between the organized and unorganized segments. the FMCG sector has registered a growth rate of 14. Federation of Indian Chambers of Commerce and Industry (FICCI) predicted that the Indian FMCG industry sales could grow 16 per cent during 2008-09. Thus demand for personal care products is likely to remain buoyant. Godrej Consumer Products Limited to name a few. India's FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities. Even fall in crude price is expected to make petroleum derivatives like LAB (key input for detergents) cheaper as well reduce packaging costs. There is a huge growth potential for all the FMCG companies as the per capita consumption of almost all products in the country is amongst the lowest in the world. inflation rate has been waning and fell th to 3. industry sales accelerated by more than 15 per cent backed by healthy growth in off take as well as price hikes affected. According to CMIE Data. Nirma Limited. palm oil price fell by 13 per cent sequentially. Even during the slowdown of the economy.

the demand for the household care products is flourishing. increase in disposable incomes. Personal Care Skin Care The total skin care market is estimated to be around INR 3. Other major players are Nirma. It is available in 5 million retail stores. emergence of small pack size and sachets. 75 per cent are in the rural areas. HUL is the leader with market share of ~53 per cent. out of which. The personal wash can be segregated into three segments: Premium. The Skin Care segment is expected to register a growth rate of mare that 16 per cent. The penetration level of this segment in India is around 20 per cent. For Private Circulation Only 25 Hem Institutional Research Desk . Henkel and Proctor & Gamble. The segment is expected to grow by double digit. Household care segment is characterized by high degree of competition and high level of penetration. people are becoming aware about personal grooming. followed by CavinKare with a market share of ~12 per cent and Godrej with a market share of ~3 per cent. The major players in this segment are Hindustan Unilever with a market share of ~54 per cent. The demand for detergents has been growing but the regional and small unorganized players account for a major share of the total volume of the detergent market.400 Cr. The penetration level of soaps is ~92 per cent.300 Cr.www. The skin care market is at a primary stage in India. Hindustan Unilever Limited is the biggest producer of Personal wash and detergents. With increase in disposable incomes. In washing powder HUL is the leader with ~38 per cent of market share. in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps.hemonline. greater product choice and availability.000 Cr. Godrej occupies second position with market share of ~10 per cent. With changing life styles. With rapid urbanization. because increase in prices has led some consumers to look for cheaper substitutes. Economy and Popular.com Industry Category and Products Household Care Personal Wash The market size of personal wash is estimated to be around INR 8. growth in rural demand is expected to increase because consumers are moving up towards premium products. However. Detergents The size of the detergent market is estimated to be INR 12.

The oral care market. with all India penetration levels exceeding 90 per cent. P&G occupies second position with market share of around ~23 per cent. Marico is the leader in Hair Oil segment with market share of ~ 33 per cent. and others. Colgate and Dabur are the major players. It has the penetration level of only 13 per cent in India. Coffee The Indian beverage industry faces over supply in segments like coffee and tea. More than 50 per cent of the market share is capture by unorganized players. Leading branded tea players are HUL and Tata Tea. remains under penetrated in India with penetration level ~50 per cent.600 Cr.com Industry Category and Products (Cont…) Personal Care Hair Care The hair care market in India is estimated at around INR 3.www. shampoos. the export of tea is expected to be more that 210 million kg for the year 2008 against about 179 million kg last year. hair colorants & conditioners. Personal Wash is a highly penetrated category. Tea The major share of tea market is dominated by unorganized players. In toothpowders market. more than 50 per cent of the market share is in unpacked or loose form. The total toothpaste market is estimated to be around INR 3. ITC. HUL and Tata Tea. Dabur occupies second position at ~17 per cent. Oral Care The oral care market can be segmented into toothpaste . especially toothpastes. According to Tea Board of India. Nestle and Amul slug it out in the powders segment. while HUL occupies second position with market share of ~30 per cent. The market is further expected to increase due to increased marketing by players and availability of shampoos in affordable sachets. This segment is dominated by Colgate-Palmolive with market share of ~49 per cent. toothbrushes . It has low penetration level even in metros.60 per cent. Shampoos The Indian shampoo market is estimated to be around INR 2. toothpowder . This category has 18 major brands aggregating INR 4. However. On the other hand. The hair care market can be segmented into hair oils. shampoo is not as penetrated which is expected to be around 40 per cent.500 Cr.700 Cr. The food category has also seen innovations like softies in ice creams. Food & Beverages Food Segment The foods category in FMCG is gaining popularity with a swing of launches by HUL.17 per cent. Again the market is dominated by HUL with around ~47 per cent market share. Companies can bet on growth rate for the shampoo category.23 per cent. ready to eat rice by HUL and pizzas by both GCMMF and Godrej Pillsbury. For Private Circulation Only 26 Hem Institutional Research Desk . The penetration level of toothpowder/toothpaste in urban areas is three times that of rural areas. Sachet makes up to 40 per cent of the total shampoo sale.hemonline. The major players in this segment are Nestlé.800 Cr. Godrej. and hair gels. Anti-dandruff segment constitutes around 15 per cent of the total shampoo market.

Nielsen shows about 71 per cent of Indian take notice of packaged goods' labels containing nutritional information compared to two years ago which was only 59 per cent. because of changing lifestyles. of household mainly because of increase in nuclear family where both the husband and wife are earning.hemonline.www.450 Billion and will surpass China to become the World largest in terms of population. There is an upward trend in urban as well as rural market and also an increase in spending in organized retail sector.150 Billions which is just behind China. FMCG Industry which is directly related to the population is expected to maintain a robust growth rate. by 2030 India population will be around 1. Changing Profile and Mind Set of Consumer People are becoming conscious about health and hygienic. For Private Circulation Only 27 Hem Institutional Research Desk .com Growth Prospect Large Market India has a population of more than 1. We have seen willingness in consumers to move to evolved products/ brands. Findings according to a recent survey by A. C. According to the estimates. Nielsen shows about 71 per cent of Indian take notice of packaged goods' labels containing nutritional information compared to two years ago which was only 59 per cent. An increase in disposable income. has leads to growth rate in FMCG goods. Consumer mind set changed towards “Money for Value” from “Value for Money” Survey by A. India is second largest Country in terms of Population growth and increase in population has a direct relation to FMCG Products. Consumers are switching from economy to premium product even we have witnessed a sharp increase in the sales of packaged water and water purifier. C. There is a change in the mind set of the Consumer and now looking at “Money for Value” rather than “Value for Money”. Source: UN Population Division: Medium variant Spending Pattern An increase is spending pattern has been witnessed in Indian FMCG market. rising disposable income etc. Increase in spending pattern because of higher disposable income.

alcoholic beverages and those reserved for small scale industries (SSI). biscuits (Britannia Industries. up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (OCBs) investment. reducing excise duties. ITC) or ready-to-eat foods. 100 per cent export oriented units can be set up by government approval and use of foreign brand names is now freely permitted. Only large FMCG-makers may be the key ones to bet and gain on excise cut. automatic foreign investment and food laws resulting in an environment that fosters growth. 4 per cent reduction in excise duty Foreign Direct Investment (FDI) Automatic investment approval (including foreign technology agreements within specified norms).com Advantage India Governmental Policy Indian Government has enacted policies aimed at attaining international competitiveness through lifting of the quantitative restrictions. There is a continuous growth in FDI Inflow in India. This announcement has a positive impact on the industry. The changes in excise duty do not impact cigarettes (ITC. Source: DIPP For Private Circulation Only 28 Hem Institutional Research Desk . as these products are either subject to specific duty or are exempt from excise. Even players with manufacturing facilities located mainly in tax-free zones will also not see material excise duty savings.hemonline. Central & State Initiatives Recently Government has announced a cut of 4 per cent in excise duty to fight with the slowdown of the Economy.www. is allowed for most of the food processing sector except malted food. But the benefit from the 4 per cent reduction in excise duty is not likely to be uniform across FMCG categories or players. There is an increase of about 150 per cent in Net Inflow for Vegetable Oils & Vanaspati for the year 2008. Godfrey Phillips). There is a continuous growth in net FDI Inflow.

“Leveraging the Cost Advantage” Cheap labor and quality product & services have helped India to represent as a cost advantage over other Countries.hemonline. Still there is an untapped market and most of the FMCG Companies are taking different steps to capture rural market share. It adds a cost advantage as well as easily available raw materials. Even investment opportunities exist in value-added products like desserts. milk. Oral Care The oral care industry. The market for FMCG products in rural India is estimated ~ 52 per cent and is projected to touch ~ 60 per cent within a year. Even the Government has offered zero import duty on capital goods and raw material for 100 per cent export oriented units. wheat. For Private Circulation Only 29 Hem Institutional Research Desk . puddings etc. or ~70 per cent of the Indian population and accounts for ~50 per cent of the total FMCG market. sugarcane. Multi National Companies outsource its product requirements from its Indian company to have a cost advantage. Hindustan Unilever Ltd is the largest player in the industry and has the widest market coverage. With rise in per capita incomes and awareness of oral hygiene. the growth potential is huge. Beverages Indian tea market is dominated by unorganized players. Packaged Food Only about 10-12 per cent of output is processed and consumed in packaged form. The working rural population is approximately 400 Millions. especially toothpastes. fruits & vegetables. remains under penetrated in India with penetration rates around 50 per cent. thus highlighting the huge potential for expansion of this industry. And an average citizen in rural India has less then half of the purchasing power as compare to his urban counterpart.Leveraging the Cost Advantage India offers cost advantage benefits by offering lower raw material & labor cost Sectoral Opportunities Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below: Dairy Based Products India is the largest milk producer in the world. FMCG Industry has Sectoral Opportunities as rural market has growth potential. More than 50 per cent of the market share is capture by unorganized players highlighting high potential for organized players. India is the largest producer of livestock. The organized liquid milk business is in its infancy and also has large longterm growth potential. Export .com Market Opportunities Vast Rural Market Rural India accounts for more than 700 Million consumers. Export . coconut. yet only around 15 per cent of the milk is processed. spices and cashew apart from being the second largest producer of rice.www. Lower price and smaller packs are also likely to drive potential up trading.

The wide range of choices and needs give a sufficient room for new product development that can replace existing goods. Every other day there is some short of new product. . For Private Circulation Only 30 Hem Institutional Research Desk . There is a threat for new entrants as well as for substitute. This is because in FMCG industry the switching costs of most of the goods is very low and there is no threat of buying one product over other. There is ample number of substitute suppliers available and the raw materials are also readily available and most of the raw materials are homogeneous. There is no monopoly situation in the supplier side because the suppliers are also competing among themselves. Customers are never reluctant to buy or try new things off the shelf. Hence potential entry of new firms is highly viable.com Porter's Five Forces Model Porter's Five Forces model outlines the primary forces about competitiveness within the industry. Potential Development of Substitute Products There are complex and never ending consumer needs and no firm can satisfy all sorts of needs alone. There are plenty of substitute goods available in the market that can be replaced if consumers are not satisfied with one. The resistance is very low and the structure of the industry is so complex that new firms can easily enter and also offer tough competition due to cost effectiveness. This leads to higher consumer’s expectation. variants and design. Bargaining Power of Suppliers The bargaining power of suppliers of raw materials and intermediate goods is not very high. Hence the intensity of rivalry is very high. Bargaining Power of Consumers Bargaining power of consumers is also very high. There are scarce customers because the industry is highly saturated and the competitors try to snatch their share of market. The intensity of rivalry is very high among the competitor of FMCG Industry. . Rivalry among Competing Firms In the Fast Moving Consumer Goods (FMCG) Industry.hemonline. Potential Entry of New Competitors FMCG Industry does not have any measures which can control the entry of new firms. . rivalry among competitors is very fierce. Even there is high bargaining power for Suppliers as well as for Buyers. Market Players use all sorts of tactics and activities from intensive advertisement campaigns to promotional stuff and price wars etc.www.

www.com SWOT Analysis Strengths: Presence of established distribution networks in both urban and rural areas Low Operational Costs Presence of well-known brands in FMCG sector Availability of raw materials Weaknesses: "Me-too" products which illegally mimic the labels and brands of the established brands Lower scope of investing in technology and achieving economies of scale.e. increase in purchasing power of consumers Export potential and tax & duty benefits for setting exports units Threats: Tax and regulatory structure Removal of import restrictions resulting in replacing of domestic brands Temporary Slowdown in Economy can have an impact on FMCG Industry Key Take Away for Investors Robust Growth rate in Future Wide distribution network and supply chain Customized Product range to suit local market requirements Superior processing technology Brand building and marketing Higher Disposable Income Awareness about Nutrition and Hygiene For Private Circulation Only 31 Hem Institutional Research Desk . especially in small sectors Low exports levels Opportunities: Large domestic market – over a billion populations Untapped rural market Rising income levels. i.hemonline.

65 million by adding an additional of 2. The rating upgrade reflects the strengthening of the company consolidated financial.com Bharti Airtel Limited Company Outlook Positive Company Description Bharti Airtel Limited (Airtel) is India’s largest integrated and first private telecom services provider with a footprint in all the 23 telecom circles. Wholesale Data Services and Mobile Services categories under the Telecom Services category-one of the six major award categories.5-3 billion for passive infrastructure. The company also won three Market Leadership Awards in the Large Enterprise Telecom Services. For Private Circulation Only 32 Hem Institutional Research Desk .www. Further.5 billion for CAPEX of mobile services and approximately USD 2. According to Fitch.hemonline. Bharti is the only Indian company to have existence in all 23 telecom circles.Mobile Services. The allocation is USD 2. Major Recent News Bharti Airtel introduced a broad range of new mCommerce services and announce milestone of One Million users Bharti Airtel announced that more than One Million users have registered for the mChek on Airtel service. 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. National & International long distance services to carriers and services to corporates. 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. Fitch upgrades Bharti Airtel rating to BBBFitch Ratings has upgraded Bharti Airtel long-term foreign currency Issuer Default Rating (IDR) to BBB. the outlook for the company is Stable. Airtel also introduced a new range of capabilities and offers for users of mChek on Airtel.from BB+.73 million of new subscriber in the month of December 2008. Airtel Telemedia Services (ATS) & Enterprise Services. The company is been structured into three individual strategic business units (SBU) . The company’s subscriber base for the year ended December 2008 is 85. Bharti Airtel plans USD 5 Billion CAPEX for 2009-10 Bharti Airtel has set aside around USD 5 billion as capital expenditure (CAPEX) for mobile services and infrastructure business for the next financial year. since its commercial launch in June 2008.22 per cent in the mobile GSM sector. The company has a market share of 33. The Enterprise services provide end-to-end telecom solutions which has two sub units.

regulatory changes and uncertain 3G bidding remains a concern.420. For Private Circulation Only 33 Hem Institutional Research Desk .4 Crores to registered a growth rate of ~57 per cent over the last year which stood at INR 4.65 million user on December 2008. The company reported a net sales of INR 20.4 Crores as compare to INR 9. added a record 8.020.3 Crores on QOQ basis to register a growth rate of 6. along with brand equity.www.1 Crores.712.1 million-plus new customers during the OctoberDecember 2008 quarter. Bharti Airtel Q3 (Dec’ 08) Results: Revenue Soars by ~8 per cent to INR 9633 Crores The Company has registered revenue of INR 9.633.com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in 2007-08.2 Crores whereas the profit after taxes were INR 6. The Company plans $5 billion as CAPEX on mobile services and infrastructure in FY10. The company's strong cash position along with low gearing will support its expansion plans.395. Intense competition. The Company consolidated revenue and EBITDA has grown at a CAGR of 54 per cent and 72 per cent respectively over the last five years.79 per cent. first-mover advantage and quality of services will help the company in maintaining its leadership position. Bharti Airtel is India largest mobile company by user base. Outlook Company’s strong operational metrics coupled with its low cost structure and scale of operations will help the company to maintain strong growth rate.062. The Average Revenue per user (ARPU) has decreased to 324 from 331 on QOQ basis.2 Crores registered a growth rate of ~47 per cent over the last year which was INR 18. The Minute of Usage (MoU) has also reduced to 505 minutes from 526 minutes. of which 99.hemonline. Total wireless Subscriber base for the company stands at 85. The pan-India existence. The reduction on ARPU is mainly due to continuous reduction in traffic charges and new scheme coming to market.6 per cent were pre-paid users. This CAPEX is in addition to the amount the company plans to spend on 3G and WiMax.

The Investment to roll out 3G license is not included in 15000 Crores. The company has a market share of 3.86 per cent of the total GSM market. Vodafone and Idea have slashed tariffs on several entry-level schemes. The company has a lion share of around 60 per cent in CDMA segment. The company offers a complete range of telecom services covering mobile and fixed line telephony.000 with combined tenancy of 1. About INR 47 billion investments in 3G. The company has existence in 8 circles out of 23. 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.000 towns and 600. will be funded through the company’s internal cash treasury of INR 120 billion. It has a subscriber base of 52.com Reliance Communications (RCom) Company Outlook Positive Company Description Reliance Communications (RCom) is one of the largest private sector communications and Information Company. The company expects CAPEX intensity to slow down going forward and expects to have 50.000 towers by the end of current financial year which currently stands at 40.hemonline. RCom geared up with USD 1 Billion for 3G rollout Reliance Communications (RCom) has kept aside USD 1 billion for its 3G (third generation) telecom services. Major Recent News Reliance Communications launches GSM service in all over India Reliance Communications launch a nationwide enhanced GSM service covering over 1 billion people in 24. For Private Circulation Only 34 Hem Institutional Research Desk .00 million in GSM. Estimates CAPEX of INR 15000 Crores in FY10 By next year the company expects to incur a CAPEX of INR 15000 Crores including CAPEX for Reliance Infratel. the company has already launched the services in many other circles and has planned to cover all 23 circles. Recently the company has launched GSM services in many circles. The company is market leader in CDMA segment. national and international long distance services and data services along with an exhaustive range of value-added services and applications.000 villages. It includes broadband.www. with over 62 million subscribers.07 million in CDMA and more than 10. RCom has created a low-price environment. 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.7 for CDMA and GSM.

6 Crores as compare to INR 1. 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 5.372. The company is expecting an increase in ARPU with the launch of 3G services.850. For Private Circulation Only 35 Hem Institutional Research Desk .5 million new additions in the quarter went in for a pre-paid connection.401. The company reported a net sales of INR 19. Total GSM wireless Subscriber base for the company stands at 9. The Company revenue has registered a growth of ~50 per cent in the wireless and broadband segment.067. Profit after taxes has registered a growth rate of 2. Even Minute of Usage (MoU) has also reduced to 410 minutes from 449 minutes compare to Q3FY07.2 Crores as compare to INR 4.2 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 1.59 Crores.167.76 Crores registered a growth rate of 31. The company expects to become a major player in GSM segment too.14 Crores to registered a growth rate of 70.51 per cent over the last year which stood at INR 3.61 where at Bharti Airtel and Idea was at INR 0.7 per cent growth.9 Crores for the last year.96 million user on November 2008.com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in 2007-08.9 per cent of RCom 5.hemonline. The net realizations per minute in wireless segment for RCom were low at INR 0.79 per cent over the last year which was INR 14. Total CDMA wireless Subscriber base for the company stands at 52. The Average Revenue per user (ARPU) has decreased drastically to INR 251 from INR 339 compare to Q3FY07.www. The revenue has registered a CAGR of ~33 per cent over the last two years where as the profit after taxes has registered a CARG ~350 per cent over the last two years.874. About 99.410.468.07 million user on December 2008.29 Crores whereas the profit after taxes were INR 5.64. 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.

28 Billion via bonds HDFC Bank has issued on a private placement basis unsecured non-convertible redeemable subordinated bonds in the nature of debentures as Upper Tier . HDFC Bank raises INR 17. The company deals with three key business segments . money markets.412 branches where as ICICI Bank has a network of 1. was incorporated in the year of 1994 by Housing Development Finance Corporation Limited (HDFC).www. HDFC Bank opened branch in Bahrain HDFC Bank opened its overseas branch in Bahrain with a 25-member strong staff. 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 bank also provides sophisticated product structures in areas of foreign exchange and derivatives. For Private Circulation Only 36 Hem Institutional Research Desk .412 branches and 3.II Bonds for an amount of INR 11. Major Recent News HDFC’s disbursement plan on track HDFC expects to record a growth rate of around 20-25 per cent in home loan disbursements during the current fiscal. a private sector bank. 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.hemonline. In 2008. trade services. the bank merged with Centurion Bank of Punjab (CBoP).Wholesale Banking Services.416 branches.50 billion. Currently Bank has distribution network comprised 1.com HDFC Bank Company Outlook Positive Company Description HDFC Bank. HDFC Bank after adding 658 branches last year have a network of 1. the bank has recorded a 22 per cent growth.II Bonds for an amount of INR 5.177 ATMs across the country. Retail Banking Services and Treasury.78 billion and Lower Tier . corporate finance and merchant banking. debt trading and equity research. In the first nine months of the current fiscal. The branch will offer cash management and trade finance solutions to corporate clients and wealth management services for NRIs. It has entered the banking consortia of over 50 corporates for providing working capital finance.

8 Crores whereas the net profit were INR 1. Note: The results for the quarter ended December 31. The bank has lots of expansion plans in near future also. it is among the lowest in the industry.416. 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. The bank operates with 1. Outlook There is an increase in NPA from 0.40 per cent to current 0.492.com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in 2007-08.177 numbers of ATMs across India. Net Profit growth rate was 42.www. The bank has 3.407.85 cent where as net profit amount for the quarter was INR 621.60 NPA. Even at 0.301.592 Crores to registered a growth rate of ~39 per cent over the last year which stood at INR 1. 2008 includes operations of Centurion Bank of Punjab Limited.143 Crores.80 per cent.hemonline. It is second among the private players and very near to it competitor ICICI bank at 1.89 Crores as compare to INR 3. NPA for the bank has increased due to merger with Central Bank of Punjab.405.36 Crores for the last year.74 Crores as compare to INR 429.60 per cent. Business India declare HDFC Bank as the 'Best Bank 2008' For Private Circulation Only 37 Hem Institutional Research Desk .79 Crores for the last year to report a growth rate of 58. The Company revenue has registered a CAGR of ~50 per cent across the last three years where as the net profit has registered a CARG ~33 per cent over the last three years.8 Crores registered a growth rate of more than 50 per cent over the last year which was INR 8. The company reported net revenue of INR 12.412 branches in India.

hemonline. branches and employees which was constituted through an act of Parliament in 1955.com State Bank of India (SBI) Company Outlook Positive Company Description State Bank of India (SBI) commenced its operations from the year 1955 is country’s largest commercial Bank in terms of profits. particularly for the disbursement of social security pensions and wages under the National Rural Employment Guarantee Scheme. Plastic Money is ‘OUT’ and fingerprints are ‘IN’ Smart cards have been outsmarted as the country's largest lender. Bank will open 2000 new branches in FY09 The bank has planned to open 2000 new branches in FY09 of which more than 300 has already opened. The primarily reason for the reduction in interest rate is to stimulate growth in the economy and not to attract customers of their competitor. The Bank is actively involved in non-profit activity called community services banking apart from its normal banking activity. The company offer banking services as well as non. Credit Cards. The internet banking services at these kiosks have been specially designed to provide e-ticket facility for railway travelers through IRCTC gateway. This may compel the other government-owned banks to reduce rates. The bank is also planning to open add 300 ATMs over the next few weeks thereby taking the total number of ATMs to 10. has come up with a card-less transactions that requires only an account holder's fingerprints. Major Recent News SBI loans at 8 per cent could trigger a rate war State Bank of India’s has taken a decision to offer home loans at 8 per cent and allow loan borrowers to switch to SBI after foreclosing existing loans. For Private Circulation Only 38 Hem Institutional Research Desk . State Bank of India has 21 subsidiaries and more than 11. SBI wins IBA Award State Bank of India got two prestigious awards from Indian Banks Association namely 'Rural Banking Initiative' and 'Best IT Architecture' in the IBA & TFCIs 5th Annual Banking Technology Awards function 2009. It provides a whole range of financial services which includes Life Insurance.www. assets. The bank has decided to dispense with cards to lower the cost of transactions. In addition to the ticket reservation facility. other internet banking facilities would also be there in the kiosk. Factoring.000 branches. Security Trading & Primary dealership in the Money market.000.banking services to their customers. Mutual Funds. SBI to set up 383 I-banking kiosks State Bank of India is planning to set up 383 internet banking kiosks at ATM centers located on railway stations across the country over the next couple of months. State Bank of India (SBI). Merchant Banking. deposits.

83 Crores as compare to INR 6. The bank has more than 11. Outlook State Bank of India has largest number of branches in world.079.619.com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in 2007-08.079.25 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.www.788. For Private Circulation Only 39 Hem Institutional Research Desk .213.hemonline.000 by FY10. The bank has more than 9000 ATMs at present and has a plan to scale up its ATM network to 15.8 Crores.212. State Bank of India presence in rural and sub-urban regions is a distinct advantage over its private peers. The Company revenue has registered a CAGR of ~18 per cent across the last three years where as the net profit has registered a CARG ~24 per cent over the last three years. The company reported a net revenue of INR 91. besides volumes from these regions.81 Crores to registered a growth rate of ~46 per cent over the last year which stood at INR 6.1 Crores as compare to INR 67. Net Profit growth rate was ~47 per cent. Greater propensity to mobilise low-cost deposits and technology-driven connectivity would ensure profitability.111 branches in the World.000 by FY09 and 25.619. 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 91.1 Crores to registered a growth rate of ~33 per cent over the last year which was INR 67.788. A large branch network and improving distribution network would sustain greater volumes from rural areas.25 Crores whereas the net profit were INR 9.80 Crores for the last year.

Edelweiss will be offering a whole range of wealth management products and alternative investment options such as structures product. Social Banking. The Bank services include the broad categories of Government Business. Major Recent News Union Bank of India made it existence globally Union Bank of India has made it global presence and has finalized plans to open representative offices or subsidiaries in a few more countries by 2009. Art and so on. Union Bank focuses on MSMEs. a leading nationalized bank in India.www. The company is committed to consolidating and maintaining its identity as a leading.com Union Bank of India (Union) Company Outlook Positive Company Description Union Bank of India is a leading nationalized bank of India which was incorporated in the year 1919. Union Bank of India to set up an asset management joint venture company with KBC Asset Management Union Bank of India. and KBC Asset Management. corporate financial services. Union Bank to add more than 500 branches by March 2009 Union Bank of India is planning to add more than 500 new branches by March 2009 to the current 2500 branches in the country. Real Estate Funds. in which they will take a stake of 51 per cent and 49 per cent. Small and Medium Enterprise (MSME) sector. For Private Circulation Only 40 Hem Institutional Research Desk . Union Bank ties up with Edelweiss Securities Union Bank of India had tied up with Edelweiss Securities. The bank is also expected to add 1000 ATMs by the end of next year. retail financial services and agricultural financial services along with other allied services. Mutual Fund and Non-Life Insurance. Out of which more than 60 per cent is expected to be in rural areas. The company has branch in Hong Kong and representative offices in Shanghai in China and Abu Dhabi in UAE. The bank’s business is mainly divided into three main areas. formally signed the shareholders agreement to set up a joint venture asset management company in India. the globally active asset manager of the Belgian KBC group. innovative commercial Bank. The bank has planned to recruit specially trained staff including credit analysts and technical officers for these branches and would be located in the MSME-centric regions. with a proactive approach to the changing needs of the society. respectively. Insurance. 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 industries (SSIs).hemonline. opens 100 branches Union Bank will open 100 specialized branches in order to increase the focus on the Micro. a part of Edelweiss Group to launch Wealth Management Services to cater its High Net worth Individuals (HNI) in Mumbai. Under the terms of the tie-up.

The Company revenue has registered a CAGR of ~25 per cent across the last three years where as the net profit has registered a CARG ~25 per cent over the last three years.8. Net profit growth rate was ~84 per cent.50.03 Crores to registered a growth rate of ~64 per cent over the last year which stood at INR 845.02 Crores for the last year. Productivity (INR Lakhs) Business/ Employee .98.24 Crores to registered a growth rate of ~27 per cent over the last year which was INR 8. Union bank added 427 outlets during 9M FY'09 increasing total ATMs to 1573 as on 31st December 2008.35 per cent to 0.672 Business/Branch .806.79 Crores as compare to INR 2.653.hemonline.47 Net Profit/Branch .4.73 Gross Profit/Branch .04 Crores for the last year to report a growth rate of ~30 per cent where as net profit for the quarterly amount to INR 671.387.603. It is among the lowest in banking industries.64 Gross Profit/Employee.81 For Private Circulation Only 41 Hem Institutional Research Desk .36 Crores whereas the net profit were INR 1.189.7609 Net Profit/Employee .39 Crores. Outlook Union Bank of India is among the top performer in public sector bank.14 per cent. We expect the bank to register a robust growth rate in the future also. Union Bank of India Q3 (Dec’ 08) Results: Net Profit Soars by ~84 to INR 672 Crores The Company has registered quarterly revenue of INR 3.www. The Bank NPA has decreased from 0. The bank added 82 new outlets during 9M FY'09 increasing total outlets to 2596 as on 31st December 2008.74 Crores as compare to INR 365.com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in 2007-08. The company reported a net revenue of INR 11.

Nayak to step down as Axis chairman P J Nayak will step down as Axis Bank’s Chairman & CEO from August after a nine-anda-half year’s stint with the bank. Nayak’s term is due to end in July 2009. strong technology platform and expanding network leads to best rating quality. Axis Bank to improve Credit Deposit (CD) Ratio Axis Bank has focus on improving the credit-deposit (CD) ratio in Orissa. Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies. was among the first to set up private banks. Care assigns ‘AAA’ rating to Axis Bank CARE has assigned ‘AAA’ rating to Lower Tier II Bonds of Axis Bank aggregating to INR 20 Billion. The bank is also acting as a clearing house for NSE and has also tied up with companies in e-commerce. The bank had a CD ratio of 33 per cent on mid of January 2009 and aims to increase it to 40 per cent by March 2009.www. mortgage financing. formerly known as UTI Bank. Retail. Axis Bank planning to expand its network in Orissa Axis Bank is planning to expand its networks in 30 districts of Orissa to consolidate its position in the state. Nuapada. The bank has taken control of UTI collection centers in many cities. to replace Zee Entertainment Axis Bank. Merchant & Treasury Banking and Further the bank also provide mobile banking services and mobile refill facilities. Jagatpur. 2009. Major Recent News Axis Bank secured a place in Nifty Index. strong management and resource-raising ability marked with high proportion of low-cost deposits on the back of innovative product offerings. Talcher. The bank has restructured its business into four strategic profit centres such as Corporate. It has also diversified into investment banking.com Axis Bank Limited Company Outlook Positive Company Description Axis Bank. depository services and more. a leading private sector bank will replace Zee Entertainment Enterprises in the National Stock Exchange's benchmark 50-share index Nifty. The company has planed to open six branches at Jatni. For Private Circulation Only 42 Hem Institutional Research Desk . The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTII). Sundergarh and Baripada all in Orissa during the current year. with effect from March 27. Axis Bank track record of growth and improving profitability.hemonline. healthy capitalization levels. micro-finance and mid cap corporate. The bank further plans to open 10 branches in next year. insurance. The bank has chalked out plans to lend more to sectors like agriculture. credit cards.

89 ATMs and also recruited 1.888 Crore for the quarter end December 08 from INR 15. The company has registered a decent decrease in NPA when the competitors NPA has actually shot up.801 Crores to registered a growth rate of more than 60 per cent over the last year which was INR 5. The Company has 19.86 Crores as compare to INR 306.39 per cent to 0. Axis Bank operates with 752 branches including extension counters and overseas branches and two representative offices overseas. The closing NPA for the year ended is among the lower in the sector.42 per cent in a span of just three year. In this global financial crisis. The company reported a net revenue of INR 8.719 employees as on December 2008. For Private Circulation Only 43 Hem Institutional Research Desk .www. Net profit growth rate was ~63 per cent.hemonline. This is one of the largest ATM networks in the country. Axis Bank of India Q3 (Dec’ 08) Results: Revenue Soars by ~65 to INR 2985 Crores The Company has registered quarterly revenue of INR 2984.071 Crores to registered a growth rate of more than 62 per cent over the last year which stood at INR 659 Crores.34 Crores for the last year to report a growth rate of ~65 per cent where as net profit for the quarterly amount to INR 500. Outlook Axis Bank is among the top performer in private sector bank. The company has reported a reduction in NPA from 1. The Bank has a very wide network of 3171 ATM. The company has reported lower NPA for the current quarter too.83 Crores for the last year. Even Current Account deposits grew at 20 per cent on YoY basis. the company is least affected in terms of NPA.472 Crores whereas the net profit were INR 1.77 Crores as compare to INR 1802.768 Crore last year. Savings Bank deposits registered a growth of 39 per cent on YOY basis to INR 21. During the quarter the bank opened 20 branches.com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in 2007-08.415 employees.

non-resident Indians and multinational companies. PNB aims to expand its base in the entire northern India region for providing banking facilities at the doorsteps of the people.www. The company doesn’t have any exit policy and don’t want anybody to leave with an exit package. It has continued to retain its leadership position among the nationalized banks. Punjab National Bank aims at workforce rationalization Punjab National Bank is expected to rationalize its workforce and reduce its staff strength by 28. Major Recent News Punjab National Bank Upper Tier II bonds rated CRISIL AAA CRISIL has assigned ‘AAA/Stable’ rating to the INR 10 billion Upper Tier II bonds of Punjab National Bank. The rating reflects PNB strong market position and healthy resource profile. The second-largest stateowned bank is planning to sell a 49 per cent stake in its subsidiary.hemonline.000 people. The reduction in the employee will happen by natural course of retirement. PNB Housing Finance. The Bank holds 74. Punjab National Bank to merge PNB Gilts with self Punjab National Bank is planning to merge its primary dealership subsidiary PNB Gilts with self instead of selling the company. For Private Circulation Only 44 Hem Institutional Research Desk . PNB offers a wide variety of banking services which include corporate and personal banking. the government of India. The bank enjoys strong fundamentals.000 in the next six years from 58. It is one of the most technologically advanced public sector bank with the government owning around 57. in the event of distress.8 per cent of the company equity. industrial finance. Five bidders have been short-listed and the due diligence is likely to be completed soon. It has over 37 million satisfied customers and over 4589 offices and more than 1733 ATMs. and the support it is likely to receive from its majority owner.000 now. The company long-term goal is to run the bank by 30. Carlyle. Punjab National Bank International. The PNBIL set up in May 2007 with two branches in London and Southall has asset size of more than $500 million. exporters. It is also underpinned by the bank’s comfortable capitalization and earnings positions. the Punjab National Bank International Limited (PNBIL) has recorded the fastest growth among Indian banks in the country. financing of trade and international banking. agricultural finance. large franchise value and good brand image. fastest growing Indian bank in UK In the first year of operation in the UK.com Punjab National Bank Company Outlook Positive Company Description Punjab National Bank (PNB) is the second largest state owned bank with a strong presence in cash rich North and Central India. New Silk Route and Tata Capital are in the race for a significant stake in Punjab National Bank’s housing finance company.07 per cent stake in PNB Gilts. Among the clients of the Bank are Indian conglomerates. Many in the race for Punjab National Bank’s housing finance subsidiary GE Capital. medium and small industrial units.

com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in the year 2007-08. The NPA for the quarter has decreased from 1. For Private Circulation Only 45 Hem Institutional Research Desk .68 Crores.33 per cent to 0. The bank has 1. Net profit growth rate was ~85 per cent.www. It has one of the largest numbers of branches.005.4 Crores whereas the net profit were INR 2.239.653. The bank operates with 4.45 Crores for the last year. Bank margin are among the best in the industry.50 Crores to registered a growth rate of ~36 per cent over the last year which stood at INR 1. The company has reported a net revenue of INR 16.119.912 numbers of ATMs across India.57 Crores for the last year to report a growth rate of ~51 per cent where as net profit for the quarterly amount to INR 1.589 branches in India.hemonline. Outlook The Bank has registered a robust growth rate in the past and is expected to maintain the same in the future also.82 Crores as compare to INR 541.552.187.72 Crores to registered a growth rate of ~26 per cent over the last year which was INR 13. Punjab National Bank Q3 (Dec’ 08) Results: Net Profit Soars by ~85 to INR 1006 Crores The Company has registered quarterly revenue of INR 6.39 per cent.91 Crores as compare to INR 4.119.

and personal care with brands that help people feel good. personal products. In FY ending 2007 the Company generated net sales of INR 13. hygiene.3 million retail outlets reaching the entire urban population. Close-up.hemonline. 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. detergents. tea.913. Lux. Crude prices have dropped drastically over the last quarter. Major Recent News Margins scenario likely to change We expected to see an increase in margins. Fair & Lovely. The operations involve over 2.like Lifebuoy.40 Cr. Surf Excel. coffee. Now. The mission that inspires HUL's over 15. is to "add vitality to life. Unilever's Pureit wins the UNESCO Water Digest Water Award 2008-2009 Hindustan Unilever’s product . when crude rose from US$70–80/bbl to US$140/bbl. touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. Knorr-Annapurna. reduces packaging spend Unilever is lowering its expenditure on packaging across its portfolio of food brands as part of a wider cost-cutting drive.000 suppliers and associates. HUL has pared down the colour palette used for printing across many products." HUL meets everyday needs for nutrition. Pond's. and a profit of INR 1. U. Pureit’s performance has been tested by leading international & national medical. Sunsilk. it has been recognized as a Golden Super Star Trading House by the Government of India. They are manufactured over 40 factories across India. and about 250 million rural consumers. Wheel.88 Cr. Kwality Wall's are household names across the country and span many categories .com Hindustan Unilever Limited (HUL) Company Outlook Positive Company Description Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods (FMCG) Company. The system has been used to reduce printed packaging costs for Unilever's products. ice cream and culinary products.300 managers.000 employees. Clinic. It is also eco-friendly because it reduces waste in the printing process.914. Brooke Bond. The primary reason for our upgrade is that we expect the margin scenario to turn around.www. branded staples. HUL's brands . Lakme. Rin. the drinking water regulatory agency in the USA. detergents and packing material. Kissan. Pepsodent. including over 1. HUL's distribution network comprises of about 4. Unilever. scientific & public health institutions and meets the germ-kill criteria of the Environmental Protection Agency. driving a sharp decrease in cost of key inputs for soaps. For Private Circulation Only 46 Hem Institutional Research Desk . Crude prices are down to ~25 per cent from its peak. HUL is also one of the country's largest exporters in FMCG product. covering 6.Pureit (a water purifier) has received the UNESCO Water Digest Water Award 2008-2009 in the category of best domestic non-electric water purifier.soaps.K. look good and get more out of life.000 redistribution stockists. HUL is taking different steps to reduce the cost and increase the margin. Pureit received the award for outstanding contribution in the field of water in India. HUL increases the prices of soaps and detergents to partially pass on rising costs.

71 Crores as compare to INR 3.com Key Financial Result for the Financial Year Ending Dec’ 07 The company has reported total income of INR 14. Note: The Company has change the accounting period from December to March. The company is able to maintain its margin and even to capture bigger market by widest coverage. Recently company has launch Pureit.16 Crores to register a growth rate of ~16 per cent.90 Crores to report a growth rate of ~12 per cent.74 Crores as compare to INR 631. a water purifier. The company is innovative in launching new products. received a good response from the market.83 per cent over the last three years. The Net Profit registered for the quarter was INR 615. The Company sale has registered a CAGR of 9.44 Crores. 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. has received a good response and is expected to grab big market share. The new flavor in coffee has leads HUL to snatch big market share in Coffee Division.767. HUL is a market leader in FMCG Industry.hemonline. The Company has registered a robust growth rate over last few years and has wide market coverage.307.803. The company is among one of the fastest growing in FMCG Industry.66 Crores as compare to last year of INR 1523.www. Where as. For Private Circulation Only 47 Hem Institutional Research Desk . Total Income reported by the company for the quarter was INR 4. The Company has launched Pureit. The reduction in profit margin is mainly due to increase in raw material prices which are expected to come down in next quarter. The company has a good growth rate. a water purifier.687.67 per cent across the last three years where as the profit after taxes has registered a CARG 13.366. HUL believe in product innovation and entrance into niche market. Outlook The Company is the largest FMCG player and market leader in most of the product category.54 Crores as compare to last year of INR 12.40 Crores QOQ basis. Profit after taxes were at INR 1.

The company launches some new products that include Godrej Expert Powder and Liquid hair colors. Fairglow. After the transaction.9 Crores offer. Kinky also offers hair accessories like styling gels.com Godrej Consumer Products Limited (Godrej) Company Outlook Positive Company Description Godrej Consumer Products Limited (GCPL) continues to be one of the leading FMCG companies in the country.One of South Africa’s leading hair brand Godrej Consumer Products Limited has acquired 100 per cent stake in the Kinky Group Limited. The share represents 20.hemonline. Godrej No 1. The company has wide market coverage and by the means of acquisition the company is building a presence in different countries. Godrej acquired Kinky .89 per cent of the INR 14. hair pieces. bonding glue and bonding glue removal. wigs and wefted pieces. One in three households in India uses a Godrej product every day. Cinthol Musk and Godrej Ezee Bright and Soft. hair sprays. The mission that inspires Godrej's over 950 employees.83 Lakhs shares for INR 3. oil free shampoo.www. the Joint Venture which owns the ‘Snuggy’ brand of baby diapers will become a 100 per cent subsidiary of GCPL. Rapidol and Kinky are expected to create synergy and larger market share. is to “Deliver Superior Stakeholder Value by providing solutions to existing and emerging consumer needs in the Household & Personal Care business”. For Private Circulation Only 48 Hem Institutional Research Desk .57 Crores with a CAGR in double digits over past many years. 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. human hair extensions. Major Recent News Godrej takes over Joint Venture The Board of Directors of Godrej Consumer Products Limited (GCPL) has approved the acquisition of 50 per cent stake of its joint venture partner SCA Hygiene Products’ stake in Godrej SCA Hygiene Limited. The company has annual sales of INR 1102. South Africa.11 Crores under its buy back offer. Godrej buys back equities The Company has bought back 23. The acquired arms of Godrej like Keyline. spread over 3 state-of-the-art manufacturing facilities at different location. Kinky is among one of the largest brand into hair segment with product portfolio includes dry hair. hair braids. The company is presently exporting there products to 30 different countries.

102.www. There is a decrease in Net profit in mainly on account of increase in raw material prices.hemonline. The company launched some new products in Liquid hair colors and Godrej Ezee.23 Crores grew by ~11 per cent from INR 144.57 Crores to register a jump of ~16 per cent compare to INR 951.14 Crores as compare to INR 272. For both the segment the company is a market leader. Outlook The Company is one of the largest FMCG player and market leader in hair colour category and Liquid Detergent category. The company has entered into several new categories during the year and expects to add significant value to the company. The company registered a decrease in profit. Godrej enjoys a market share of ~35 per cent in Hair Colour and ~80 per cent in Liquid Detergent.com Key Financial Result for the Financial Year Ending Mar’ 08 The company reported sales of INR 1.75 Crores QOQ basis. the company always does some product innovative. Where as the profit after taxes were at INR 159. now as the raw materials process are down. Total Income reported by the company for the quarter was INR 342.02 Crores QOQ basis. Although the company is market leader for Hair Colour and Liquid Detergent. Godrej Q3 (Dec’ 08) Results: Revenue Soars by 25 per cent to 342 Crores The Company continues to impress on sales growth with one more quarter of more than 26 per cent growth. The company is come international acquisitions. The Net Profit registered for the quarter was INR 40. the company will be able to maintain the margins. For Private Circulation Only 49 Hem Institutional Research Desk . mainly on account of high raw material prices.52 Crores last year.11 per cent across the last three years where as the profit after taxes has registered a CARG of 20.06 Crores as compare to INR 43.03 Crores last year The Company sale has registered a CAGR of 25.80 per cent over the last three years.

Hindustan Unilever Ltd (Ayush) and Marico (Kaya Skin) have presence in Health and Beauty Retail segment.15 per cent of Fem Care Pharma Ltd (FCPL). Dabur Chyawanprash. The company also expects to see a significant correction in packaging costs. Dabur to set up new medicine manufacturing in Himachal Pradesh Dabur got approval from Government of Himachal Pradesh to set up another medicine manufacturing unit. Major Recent News Dabur foray into health drink Dabur has entered into the malted food drink market with the launch of a new health drink “Dabur Chyawan Junior”. The mission that inspires Dabur’s over 3500 employees is to “Dedicated to the Health and well being of every household”. For Private Circulation Only 50 Hem Institutional Research Desk .www. According to the company.7 Crores in an all-cash deal. driving a sharp decrease in cost of key inputs for soaps.Real & Active.5 million retailers. today Dabur has powerful brands like Dabur Amla. Dabur is a market leader for Dabur Chyawanprash and packaged juice . they expect to capture a market share of 10 per cent of the INR 1. The Company is expected to create synergy by this deal.900 Crores malted food drink market over the next two years. a leading player in the women’s skin care products market. Dabur posses Strong capabilities which are reflected by Strong R&D infrastructure. Hajmola and Real. detergents and packing material. The Company never limits itself to power branded product but believes to strength in other business opportunities by growing in niche segments. Personal care and Food products. Crude prices have dropped drastically over the last quarter. 14 manufacturing units and wide distribution network which covers 2. The company has entered into Health and Beauty Retail segment which is an emerging retail category in India. Dabur has build on a legacy of quality and experience for over 120 years. The recent fall in commodity prices are primary reason for the margin scenario to turn around. The project has an expected investment of INR 130 Crores. Acquisition of Fem Dabur has acquired 72. for Rs 203.hemonline. Margins scenario to increase We expected to see an increase in margins of FMCG Company.com Dabur India Limited (Dabur) Company Outlook Positive Company Description Dabur India Limited is the fourth largest FMCG Company in India with interests in Health care. The company is taking different steps to reduce it packaging cost which currently consist ~17 per cent of the total cost for the company. Vatika. The Company has opened 7 H&B stores and has plan to setup 160 stores by 2010.

15 per cent across the last three years where as the profit after taxes has registered a CARG 28.64 Crores QOQ basis. For Private Circulation Only 51 Hem Institutional Research Desk . The Net Profit registered for the quarter was INR 108.3 Crores last year to register a growth rate of ~15 per cent and Profit after Tax of INR 332.30 Crores compare to INR 2080.52 Crores QOQ basis. The acquisition with Fem will add synergy to the company and will help the company to capture market in women’s products too.76 per cent over the last three years. Dabur is able to maintain is margin. Over the last five years.www.7 Crores last year to registered a growth rate of ~18 per cent.45 Crores as compare to INR 94. We expect the company to continue the growth. By this acquisition the company got an entrance into women’s skin care product. The company has continuously registered a robust growth rate.15 per cent stank in Fem. Dabur took aggressive cost management initiatives coupled with a judicious pricing strategy and continued strong performance in key categories helped Dabur to mitigate the impact of steep cost inflation and the company announced an increase in profit margin. the company has reported compound annual growth rates of 18 per cent in Net Revenues and 33 per cent in Profit after Tax. Outlook The company is well known for ayurvedic brand which have existence of over 120 years. The Company has acquired 72. Recently the company has entered into Health and Beauty Retail segment.hemonline. There is growth in Profit margin also.90 compare to INR 281.396. 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.65 Crores as compare to INR 649. Dabur is not leaving any stone un-green. The major product of the company is Dabur Chyawanprash and packaged juice. The Company sale has registered a CAGR of 19. The company has registered a continuous and high growth rate. Total Income reported by the company for the quarter was INR 778.com Key Financial Result for the Financial Year Ending Mar’ 08 Dabur has achieved a turnover of INR 2. Recently company foray into health drink and expect to capture 10 per cent market share in next two years.

Pakistan.000 retail outlets across the country. Russia.com Emami Limited (Emami) Company Outlook Positive Company Description Emami Limited (Emami) is one of the know brands whose principal activities are to develop and manufacture personal.hemonline. The company has a network which consist of 2. Bangladesh. The Company accounts for ~22 per cent share of personal care of the country’s FMCG market. Major Recent News Emami may hive off Zandu Chemical The company has recently bought Zandu Pharmaceuticals for ~INR 700 Crores is evaluating the possibility to hiving off Zandu Chemicals. The company has reversed its earlier decision to quit the property business. Navratna Oil is also a market leader with more than 50 per cent market share. For Private Circulation Only 52 Hem Institutional Research Desk .00. The plant is installed at Abhoypur with an investment of INR 500 million which will manufacture creams. Gulf countries. Some of the company power brands like Boroplus Antiseptic Cream is the market leader with a ~70 per cent market share. The plant has installed capacity to produce 5. Pondicherry and a new plant in Guwahati. Emami to install its 2nd plant in Assam Emami has established its second production facility in Assam. Company’s other power brands also plays an important part and hold a good market share.400 tons of cream. Europe. The company share swap ratio would be worked out so that Emami Realty's stake is fairly distributed among other group companies. because there are limited growth prospects and chemicals in not the core business of Emami. The products are sold across India and in countries like Holland. The company is planning to transfer its stake in 100 per cent subsidiary Emami Realty to other group companies. The company entered into Realty business in May 2007. a subsidiary of Zandu Pharmaceuticals. Sri Lanka. The company’s portfolio consists of 20 products made from herbs.www.700 distributors which have a direct coverage of 4. The company started with a vision of making people healthy and beautiful naturally. Africa and the Middle East. natural extracts and essential oils. Nepal. 1. The facility is anticipated to commence operations by 2010. Emami plans to transfer holding of realty arm to group companies The company has decided to stay rooted in the real estate business and transfer its stake in 100 per cent subsidiary Emami Realty to other group companies. Emami plans to set up a manufacturing facility in Africa The company is planning to set up a new manufacturing facility in Africa with an investment of INR 90 Crores. beauty and health care products through an effective leverage of Ayurveda.800 tons of lotion and 900 tons of ointment. Emami Realty with its joint venture partners undertook 31 projects. The company has plants located in Kolkata. lotions and ointments. Recently the company called off its earlier decision to quit the realty business.

www. The Company sale has registered a CAGR of 24.82 Crores for the last year.71 Crores registered a growth rate of ~13 per cent over the last year which was INR 515. The company has acquired stake in Zandu Pharmaceuticals. Outlook The company is one of the know brands whose principal activities are to develop and manufacture personal. The company has plans to get into different industries.80 Crores whereas the profit after taxes were INR 92. beauty and health care products through an effective leverage of Ayurveda. In 2007. For Private Circulation Only 53 Hem Institutional Research Desk .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 reported a net sales of INR 583. Emami Q3 (Dec’ 08) Results: Net Sales Soars by 43 per cent to INR 280 Crores The Company has registered sales of INR 280.hemonline.65 Crores as compare to INR 37.63 Crores as compare to INR 195. the company has undertaken 31 projects with Emami Realty.92 Crores.75 Crores to registered a growth rate of ~41 per cent over the last year which stood at INR 65.47 Crores for the last year to report a growth rate of ~43 per cent where as profit after taxes amount to INR 33. Emami is one of the best names for Ayurvedic products. The company has registered a decline in profit margin.com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in 2007-08. with its joint venture partners. 100 per cent subsidiary. Recently the company has entered into Realty business.

distribution transformers of varying capacities and allied works. representing 7. and Pole Top RTU.75 million equity shares in ICSA by exercising its right of conversion for warrants. The INR 204.3 million shares. Multiplexer Unit. erection and installation.75 Crore in ICSA India. software services and infrastructure projects. the company is also into the business of construction of power transmission lines and substations.771 shares from open market and its shareholding after the acquisition stands at over 3.com ICSA India Limited Company Outlook Positive Company Description ICSA India Limited was incorporated in 1994 is into the business of embedded solutions.www.92 crore from MP Paschim Ksehtra Vidyut Vitaran Co Ltd is for the supply of material. augmenting of existing substations.22 Crore order from Mahavitran is for the construction and commissioning of sub transmission lines. Goldman Sachs buys additional stake at 28 per cent premium in ICSA Goldman Sachs acquired an additional stake worth INR 35.14 Crore from two power utilities Mahavitaran (Maharashtra State Electricity Distribution Company Limited) and MP Paschim Kshetra Vidyut Vitaran Company Limited.hemonline. ICSA India delivers comprehensive solutions in the areas like Customized Embedded System Applications and Integrated Telemetry Applications. Micro Remote Terminal Unit. Major Recent News Government of Singapore Investment Corporation increases stake in ICSA The Government of Singapore Investment Corporation (GIC) has raised its stake in Hyderabad based ICSA India Limited. and commissioning of 11 Kilo Volts (KV) line and bays with VCB and metering. This apart. GIC bought 159. ICRA assigns LA+. power transformers. at 28 per cent premium to the company's stock price by exercising an option to convert warrants into equity. Theft Detection Devices.14 per cent stake of ICSA. Distribution Transformer Monitoring System. A1 to fund based. The company’s product line include: Intelligent Automatic Reading System.300 million fund based and non fund based limits of ICSA (India) Limited. The second order worth INR 31. Substation Controller. ICSA India Limited get approval to set up Wind Project ICSA India Limited has been permitted by the Board of Non-Conventional Energy Development Corporation of Andhra Pradesh Limited (NEDCAP) to set up a 20 MW Capacity Wind power project in Andhra Pradesh. For Private Circulation Only 54 Hem Institutional Research Desk . ICRA has also assigned rating of A1 to the short term non fund based limits indicating lowest credit risk in the short term. survey. non-fund based limits of ICSA ICRA assigns the ratings of LA+ and A1 for INR 2. Even Goldman Sachs has recently acquired 1. ICSA earns INR 236 Crores orders from Mahavitaran and MP Paschim Ksehtra Vidyut Vitaran ICSA India Limited has bagged work orders of INR 236. new substations.

13 Crores for the last year to report a growth rate of ~60 per cent where as quarterly profit after taxes amount to INR 45.55 Crores which registered double fold over the last year which was INR 333. The Company sale has registered a CAGR of more than 300 per cent over the last three years and even the profit after taxes registered a CARG of more than 300 per cent over the last three years.24 Crores for the last year.22 Crores as compare to INR 189.000 Crores.com Key Financial Result for the Financial Year Ending Mar’ 08 The company performance improved significantly in 2007-08.93 for the last year quarter. The company reported a net sales of INR 678.25 Crores whereas the profit after taxes were INR 108.66 compare to INR 8. CAGR for Revenue as well as for Net Profit was more than 300 per cent over the last three years. There is lot of potential is embedded system applications and also in integrated telemetry applications.86 Crores. For Private Circulation Only 55 Hem Institutional Research Desk .22 Crores as compare to INR 36. Lots of potential is embedded system applications and also in integrated telemetry applications. Profit after taxes growth rate was ~25 per cent. EPS for the quarter was INR 9.www.hemonline. 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 304.95 Crores to registered a growth rate of more than 82 per cent over the last year which stood at INR 59. Outlook The company has registered best growth rate in the industry. Profit after taxes for the nine month has registered a growth of more than 50 per cent. With a little more than a decade the company is expected to registered total revenue of more than INR 1.

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