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Navigating India's complex market using actionable intelligence
May 2013
Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.
INDEX
About ValueNotes
Structure of Indian markets
CI strategies for India
Case studies
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About ValueNotes
• Background• Experience • Recognition
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From data to decisions…
Background
Level of education Qualification
India’s premier research & consulting firm
Corporate office in Pune, India
Adherence to strong ethical framework
Established in 2000
Global partnerships
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~ Over 100 CI projects in the India geography in the last 5 years
Experience in serving highly specific needs
Market potential in India for state-of-the-art power conditioning solutions and electric power distribution equipment of a US-basedmanufacturer
Opportunity assessment
Profiles of major chemical manufacturers in India, including information about their products, product strategies, pricing, revenues,organization charts, future plans, etc.
Competitor profiles
Pharma: competitive landscape for a psycho-active substance - assessed its therapeutic potential in India and China; and establishedthe stage of development by competitors
Product launch intelligence
Comparison of competitors of an MRO services company, on service focus, senior management experience, global delivery capabilities,ability to scale, BCP infrastructure, and implementation capabilities, etc.
Due diligence on hedge fund companies based in India
Niche non-dairy segment: investigated how competitors were able to price their products more competitively
Competitor practices / benchmarking / evaluation
Global market monitoring for over 20 companies
News monitoring
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…ValueNotes’ research is highly regarded
Recognition
Our research has been quoted in the international media…
Awards
• Black Book of Outsourcing: Nominated to the top-10 ranking three years in a row (2007 to 2009)
• Nasscom Emerge 50: Nominated to the 50 emerging companies list in 2009
Nominated to present at several SCIP conferences
2011 Orlando, USA • Competitor profiling
2010 Sao Paulo, Brazil • Social media for CI
2009 Chicago, USA• The deep web unfolded: effective use of the
invisible web tools for CI
2009 Chicago, USA• Competitive intelligence offshoring: how
much is too much?
2008 Rome, Italy• CI in India - perspectives of a local
practitioner
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Structure of Indian markets• Structural characteristics of Indian markets• Organized vs. un-organized sectors• Small scale industries (SSI) sector• Grey market• Diversity• Under documentation• Decentralized statistical machinery• Problems with Government statistics
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…pose challenges for performing CI
Structural characteristics of Indian markets
Large unorganized
sector
High level of fragmentation
Large grey market
Unorganized - unregistered and/or unregulated
Very large number of small enterprises
Goods/services bought or sold, without paying taxes
Low level of documentation
Data/statistics on large chunks of economic activity is not collected and/or collated
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… the unorganised sector is critical to the Indian economy
Organised vs unorganised sector
% GDP
% of Workforce
% GDP
% of Enterprises
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…mainly comprises of proprietary firms
Micro Small and Medium Enterprise sectors
45% of industrial employment
50% of manufacturing output
40% of exports
8% of GDP
% of MSME Sector % of Registered MSME Sector
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…make it more difficult to do CI
Grey market
Large grey markets, particularly in electronics, pharmaceuticals, branded clothing, etc
Grey market distribution is thought of as a viable solution for overstocking and over production
Difficult to size grey markets
India has a huge grey market for electronics where goods are sold at 20-25% discount rates
60-90% of iPods in India are sold in the grey market
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Andhra Pradesh
Arunachal Pradesh
AssamBihar
Chhattisgarh
Goa
Gujarat
Haryana
Himachal Pradesh
Jammu and
Kashmir
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
ManipurMeghalaya
Mizoram
Nagaland
Orissa
Punjab
RajasthanSikkim
Tamil Nadu
Tripura
Uttar Pradesh
Uttaranchal
West Bengal
West
North
South
East
Diversity
28 States and 7 Union Territories
22 officially recognized languages
Different taxation / regulatory norms across states
Regional cultural nuances
High differentials in income, education
Rural urban diversity
Different states have different levels of development and growth
It’s like doing business in > 30 countries!
The Indian curry
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…key hurdle for effective CI
Under documentation
Fragmentation
Inadequate statistical machinery
Weak or no industry associations
Under documentation Immature market
Diversity
Large unorganised sector
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Divergence in depth and breadth across states
Decentralised statistical machinery
CSOCoordination, standard
setting & training
NSSO Large scale statistical
surveys
Census of IndiaMinistries/Departments
Government of India
DES - Directorate of Economics and
Statistics
National Statistical Office
66 state subjects – including health, police, agriculture, libraries, museums, education, mining, gas, many
types of taxes, etc
97 central subjects
47 joint domain subjects
Co-ordination & Advice
Ministry of Statistics and
Program Implementation
Home Ministry
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Government statistics may also need to be validated…
Problems with Government statistics
Existence of gaps in information
Delays in publication of results
Available data not easy to find
Large and frequent revisions of published results
Discrepancies in official statistics from different sources
Lack of transparency in statistical operations
Water pipelines is a key infrastructure area. There is no data on length of water pipelines in India, their age, materials used, etc.
- How can the government plan its investment?
As much as 40% discrepancy in the import figures of an engineering company as recorded by DGCIS
- How reliable are the import figures?
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CI strategies for India• CI strategies in India• Getting to Government data• Heavy reliance on primary research• Identifying external touch points• Primary research• Approaches and methodologies• Question of ethics
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CI strategies
…jugaad and innovation
CI strategies in India
High reliance on primary
research
Innovative methodologies –
proxies, extrapolation,
triangulation, validation
Low reliance on
desk research
CI Strategies
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Published macro-economic data is quite good
Secondary information sources
As much as 40% discrepancy in the import figures of an engineering
company as recorded by DGCIS
- How reliable are the import figures?
Category Source Data AvailableData available (Rating 1-4)
Comprehensiveness Quality Recency
Economy
RBI, Economic Survey,
CMIE Economic
Intelligence Service,
Investment
Commission, IBEF
Macro data
Micro data
Research & Analysis
Paid databases
Trade
Ministry of Industry &
Commerce, RBI,
Economic Survey, FICCI,
IBEF
Macro data
Micro data
Research & Analysis
Company
data
CMIE Prowess, Ministry
of Corporate Affairs,
CRISIL
Macro data
Micro data
Research & Analysis
Paid databases
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Some industries are reasonably well covered
Information sources
Category Source Data AvailableData available (Rating 1-4)
Comprehensiveness Quality Recency
Telecom
COAI, TRAI, Ministry of
Information Broadcast,
Industry magazines,
published research
Macro data
Micro data
Research & Analysis
Paid databases
Auto
ACMA, SIAM, ARAI,
WIAA, industry
magazines, published
research
Macro data
Micro data
Research & Analysis
Paid databases
FMCG
CIFTI, Ministry of Food
Processing Industries,
IMRB, AC Nielsen,
published research
Macro data
Micro data
Research & Analysis
Paid databases
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Category Source Data AvailableData available (Rating 1-4)
Comprehensiveness Quality Recency
Banking & Financial Services
RBI, IBA, AMFI
Macro data
Micro data
Research & Analysis
Paid databases
Real EstateBAI, CREDAI, ACRI, published research
Macro data
Micro data
Research & Analysis
Paid databases
Chemicals
Ministry of Chemicals & Fertilizers, industry
magazines, ICMA, ISCMA Indian
chemical portal, published research
Macro data
Micro data
Research & Analysis
Paid databases
Engineering
Dept. of Chemicals & Fertilizers, TIE,
industry magazines, published research
Macro data
Micro data
Research & Analysis
Paid databases
… but most industries suffer from a lack of quality micro data
Information sources
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Look in the right place…
Getting to government data
Identify which government departments are the touch-points for the activity to be researched
Contact the government department/ explore their websites
Right to information can yield unpublished data that is available with the authorities
Key Government touch-points
Industrial licensing
authorities
Regulators
Tax authorities
Environmental agencies
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…so you can get (virtually) any info you want
Heavy reliance on primary research…
Competitors
Bankers Customers
Sources
SuppliersIndustry associations
Dealers/Retailers
Distributors
Industry experts
Ex employees
Recruitment consultants
Government agencies
Social networking associations
and others
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…..gave us a validated information on the plans
Identifying external touch points
Construction contractors
Distributors and suppliers of raw
material
Neighboring units and local grapevine
Local HR consultants for blue collar
hiring
Logistics service provider
Expansion plans of a pharma
company in ruralUP
Every transaction leaves a trail….
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…need appropriate approaches
Primary research
References and connections important
Cultural diversity & sensitivity
• Language
• Background of respondent
• Interpreting responses
• Gift giving versus money giving
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…multiple approaches to obtain reliable intelligence
Approaches and methodologies
Validation & triangulation
Use of proxies & multipliers
Extrapolation
Validation
Validate each assumption, data point and also triangulate the total market size
Multiple sources for one data point
Industry experts
Market intermediaries (distributors, traders, dealers, retailers, etc)
Upstream and down stream estimates for intermediate goods
Proxy indicators
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Ethical CI is the only sustainable approach…
The question of ethics
Unethical ways of gathering information are
prevalent in India
‘Under the table dealing’ required with public
authorities like the police, judiciary and
bureaucrats
Misrepresentation is common
Ethical CI
Honest recommendations
No misrepresentation
No conflict of interest
Laws of the land
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Case studies
• Indian consumer finance market• Food ingredient manufacturer losing market share
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Understand borrowing patterns in lower & middle income groups
Purpose
Lenders
Market Dynamics
Growth
Profitability
Undocumented, unorganised, fragmented….
Indian consumer finance market
Market Segmentation By type of loan By type of lender By income of borrower
Future Estimates
Growth DriversProduct innovationIncreased penetrationInterest RatesDemographics
Competitive Analysis Product comparison Profitability Strategies to target LM
Customer Decision Making Product comparison Availability/ Service
levels Customer perceptions
Market sizing Urban LowerMiddle Class
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Fragmentation, unorganised sectors and no documentation…
Challenges
Challenges Solutions
Definition of target groups Secondary research
On the demand side: No literature on lending/ borrowing
patterns for low income groups
Intensive primary research - 300 odd interviews across 4
cities
High degree of difficulty in conducting interviews:
suspicion among respondents
Use of appropriate approaches for different respondent types – language/ wording of questions, mode of interview, etc.
Working out costs and loan yields of unorganized lenders Multiple measurements allowed validation and triangulation
Supply side: multiple informal lenders & lack of lender data Validation and triangulation of every data point
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High reliance on primary research
Methodology
BanksMoneyLenders
Pawn Brokers
CreditCo-ops
LENDERS Occupation
Location
Market size By Lender By Purpose
Market SegmentationGrowth
Total Market
Growth Projections
Products & Economics
BORROWERS
NBFCsOthers
Chit Funds
Income
Secondary Research
Demographic data, data on some organized players, potential contacts, definition of target segments, etc
Primary research Primary research
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Marry field data with demographic and secondary data
Analysis and validation
Field Data – 300 interviews in metro, tier 1, tier 2 and tier 3 cities
Average borrowing per year per household for salaried individuals in each city
Average borrowing per year per household for self employed individuals in each city
Average borrowing by purpose
Average borrowing by type of lender
Demographic data
Number of households in the appropriate income group in each city
Demand side estimates
Supply side estimates
Field data + secondary data – over 60 interviews with lenders to low income borrowers
Average lending and terms of lending
Estimated number of lenders per city
Valid
ate
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Market size estimated in the range of $4.8 – 6.1 bn in 2003
Findings
Value of borrowing by lender Value of borrowing by purpose
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CI in undocumented, unorganized, fragmented markets
Food ingredient manufacturer losing market share
MNC food ingredient manufacturer losing market share to very small regional competitors
How is their product of high quality?
How are they selling at a low price?
How have they built up their distribution chain?
Company backgroundSourcing and cost structure
Distribution
Company history Promoters and their stakes Company financials Manufacturing facilities and offices
Technology Equipment Raw materials Manufacturing
Sales and distribution network Margins across the distribution
chain Promotions and incentives Discounts
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For challenging data requirements, primaries and more primaries…
Challenges
Challenges Solutions
Competitors small private companies with complex company structures
Relied on ROC documents and a LOT of primary research (over 70 respondents in all)
No literature on the product or industryInterviews with industry experts, food technology institutes and
large number of distributors and customers
Import data not reliableAugmented import statistics with calls to suppliers in China, Malaysia, etc.
Customers and distributors spread all IndiaLarge number of interviews with distributors and customers of all sizes across cities of all sizes
Many diverse sources of informationBuilt up the picture like a jigsaw with bits from multiple places. Lot of validation involved.
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High reliance on primary research
Methodology
Field visits to offices and manufacturing locations of
competitors
Secondary Data
Lists of distributors across cities customers across cities Food technology institutes and experts suppliers of raw materials equipment manufacturers Import data for key ingredients
Primary data
Customers Competitors (multiple levels) Distributors Importers Food technology experts Raw material suppliers Equipment manufacturers Ex- employees of competitors
Jigsaw
Pieced together to obtain actionable intelligence
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Creativity in sourcing information ensured success…
Findings
Profiled activities of 3 key competitors and analyzed their strengths and weaknesses
Identified competitors’ sources of raw materials and hence the source of their cost advantage
Intelligence on competitors’ distribution strategy
Identified opportunities and threats for the clients
Identified multiple areas for cost reduction, identified alternate sources for equipment, raw materials & packaging
Recommended restructuring of terms with distributors -Need for greater flexibility in terms and level of paperwork
Analyzed future plans of the competitors and their implications for the client
Unearthed a plan by a competitor to set up a large manufacturing unit using technology support from a Chinese equipment supplier
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Competitor profiles
Competitive benchmarking
CI process consulting
CI learning and
development
Marketintelligence
Rumourconfirmation
M&Aintelligence
Partner identification
Due diligence
Opportunityassessment
Thank youLook forward to your feedback…
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