consumer durable 28feb 0808

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    C O N S U M ER D U R A B L ESOctober 2007

    ww w .ibef.org

    http://www.ibef.org/http://www.ibef.org/
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    C O N S U M E R D U R A BL E SSSS

    The Indian Consumer Durables Industry

    can be segmented into 3 Key Gr oups

    Consumer Durab les

    White Goods

    Refrigerators

    Washing Machines

    Air Conditioners

    Speakers and Audio Equipments

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    E

    C O N S U M E R D U R A BL E SSSS

    The Indian Consumer Durables Industry

    can be segmented into 3 Key Gr oups

    Consumer Durab les

    Kitchen Appliances/B rown Goods

    Mixers

    Grinders

    Microwave Ovens

    Ir on

    Electric Fans

    Cooking Range

    Chimneys

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    C

    C O N S U M E R D U R A BL E SSSS

    The Indian Consumer Durables Industry

    can be segmented into 3 Key Gr oups

    Consumer Durab les

    Consumer Elect r onics

    Mobile Phones

    Televisions

    MP3 Players

    DVD Players

    VCD Players

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    C O N S U M E R D U R A BL E SSS

    Several key trends are driving growth in the sector

    Income growth and availability of financing

    Disposable income levels are rising and consumer financing has become easier

    Increased affordability of pr oducts

    Advanced technology and increasing competition

    are narrowing the price gap and the once expensiveappliances are becoming chea per

    Increasing share of organised r etail

    Urban and rural markets are growing at the annualrates of 7%10% and 25%, respectively, with organisedretail expected to garnera 10% share by 2010 from amere 3%share at pr esent

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    C O N S U M E R D U R A BL E SS

    Several key trends are driving growth in the sector

    Entry of heavyweight retail players isincreasing competition

    Competitive evolution of organised retail due to theentry of heavyweight players like Croma, E Zone andRelianceDigital is stimulating the demand thr oughexposur e

    to experiencesIncreasing appreciation of the Rupee

    Raw materials constituting almost 75% of the costsare mostly imported and willnow be chea per

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    C O N S U M E R D U R A BL E S

    Consumer Durables is one of the fastest growing industries in India

    Industry sales were US$ 4.5 billion in value,in 2006-07 and mo re than 7 million units involume terms

    Key Consumer Durables - Share b y Volume (%)

    34% 30%

    5%

    18%

    13%

    n Colour TVs n Refrigerators n

    Air Conditioners n Washing M/Cs nOthers

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    Projected Growth RatesColour TVs 25-30%Refrigerators 18-22%Washing Machines 15-20%Air Conditioners 32-35%Others (including VCDsand DVDs)

    35-40%

    Consumer Durables is one of the fastest growing industries in India

    A strong growth is expected acr ossall key segments

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    Overall, the sector is a dynamic one, with significant growth oppor tunities

    HIGH

    MEDIUM

    LO W

    Threat of New Entrants

    Most current players are global players

    New entrants willneed to invest in Brand,Technology and Distribution

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    Overall, the sector is a dynamic one, with significant growth oppor tunities

    Supplier P o w er

    Indigenoussupply base limited - most rawmaterials are imported

    Competiti ve Rivalry

    Number of well established players, withnew players entering

    Good technological capability

    Many untapped potential mark ets

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    Overall, the sector is a dynamic one, with significant growth oppor tunities

    Customer P o w er

    Multitude of brands across price points - wide varietyof choice for customers

    Threat of Substitutes

    Unbranded products and cheaper impor tscould enter the mark et

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    Some of the attractive areas f or investment include

    High End Colour TVs

    Plasmadisplay panels and liquid crystal display TVshave registered an average growth of more than 250%in 2006-07 and the trend is expected to continue

    Split Ai r -conditioners

    Split ACs have been growing at a much faster ratethan window ACs - Growth of 97% in 2006-07 ascompared to a 32% growth of window ACs

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    Some of the attractive areas f or investment include

    Mobile Phones

    Production is expected to grow at a compound annualgrowth rate (CAGR) of 28.3% from 31 million units in2006 to 107 million units in 2011

    Low mobile penetration and favourable government

    policies are driving mobile phone Original EquipmentManufacturers (OEMs) to set up manufacturingfacilities in India

    Distribution and Retail

    With the rural and semi-urban markets creatingopportunity and an almost sedentary urban mark et, theneed to have a strong distribution network is crucialf or the companies to remain price competitiv e

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    Attractive States f or Investment

    Key parameters used for determiningattracti veness of states:

    Incentives f or manufacturing sector

    Consolidation of factors, includingskilled workf or ce

    Proximity to demand centr es

    Proximity to ports f or raw material impor ts

    Maharashtra, Uttar Pradesh and Tamil Naduare attracti ve locations for investment inmanufacturing consumer durab les.

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    Several global players are well established in the Consumer Durables sector

    in India, with competition from strong Indian players

    Some of the key players in the sectorin India include:

    Samsung

    Philips

    LG

    Whirlpool

    Nokia

    Sony

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    A successful MNC in India Sample case

    Situation

    Mobile phone landscape in 1995 was oneopen business opportunity f or all the playersto capture and succeed

    Nokia s Key Strate g y

    Being f ocused and ahead of the cur ve

    Invested in each vertical of the handset ecosystemmanufacturing, distribution and design R&D

    Parent company is always ready to investmore in India

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    A successful MNC in India Case Study

    Key Success F actors

    Strong Distribution Network

    India has some 95,000 outlets that sell mobile phoneswith a conservative estimate of 50,000 of them sellingonly Nokia

    Manufacturing Edge

    Nokia has several R&D centres and labs in Indiaincluding a $150 million handset manufacturing facilityin Chennai set up in 2005

    The Mother Brand

    Whether it is N series or the E series, thekey f ocus is the Mother Brand Nokia

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    A successful MNC in India Case Study

    Key Success F actors

    Local Pr oducts

    Custom-made mobiles f or Indian conditions: Nokia1100, having a torch built into a mobile phone helpsin a country with frequent power cuts - distinct andtangible benefit

    Such examples highlight the Key Success F actorsto succeed in the Indian mark et

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    Success in the industry would depend on addressing

    key factorsMarket Positioning and Branding

    Addressing key customer requirements that actas demand drivers by proactive marketing andestablishing strong brand association

    Product T echnol o g y Providing technologies that benefit the customer

    through - low power consumption, low servicerequirement, low cost of operation, etc .

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    Success in the industry would depend on addressing

    key factors

    Distribution and Service Net w ork

    From saturated urban regions to low penetrationrural areas and tier II/IIItowns, distribution netw ork and brand recognition willcontinue to play mor esignificant r oles

    Attracti ve Locations

    With raw materials f orming a significant chunk of costs, production facilities located near portsto import cheaper raw materials could pr ovidean advantage

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    Profiles of Key Indian Consumer Durables Players

    Bluestar

    Largest central air conditioning company with anetwork of 23 offices, 4 modern manufacturingfacilities and around 2,000 employees

    Established leadership in the field of commercialrefrigeration equipment ranging from water coolersto cold storages

    The company plans to increase its production capacity by setting up a new manufacturing plant at Thane andenhance its product range, which includes developingspecial purpose products and comfort applications

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    Profiles of Key Indian Consumer Durables Players

    MIRC Electr onics

    Commands strong brand equity among consumers,largely owing to the success of its Onida brand

    Finest design has made the company a leading player in the electronics and entertainment business toda y

    Planning to set up a manufacturing plant inUttaranchal f or manufacturing various consumer electronic pr oducts

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    Profiles of Key Indian Consumer Durables Players

    V oltas

    Offers engineering solutions in areas such as heating,ventilation and air conditioning, r efrigeration,electro-mechanical projects, textile machinery,machine tools, mining and construction equipment,materials handling, water management, building

    management systems, indoor air quality and chemicals Operations have been organiaed into 4 independent

    business specific clusters: air conditioning andrefrigeration, unitary products, engineering pr oductsand international operations

    Tied up with RBSHome Appliances Ltd f or the use of

    640 service centres that Voltas has across the countr yf or after sales services

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    v

    Profiles of Key Indian Consumer Durables Players

    Videocon

    Market leader of consumer electronics and homeappliances in India - manufactures home appliancessuch as refrigerators, microwave ovens, compressors,ACs and washing machines

    Planning to acquire Dae woo s consumer electr onic businesses worldwide to bring LCD TVs, Plasma TVsand components into its f old and also helpsin having a consuming partner f or the r ecentl yacquired Thomson s picture tube business

    http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/
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    b

    Profiles of Key Indian Consumer Durables Players

    Bajaj Electricals

    Engaged in marketing of various consumer householdand industrial goods

    Manufactures erection and commissioning of transmission line towers, telecom towers, mobiletelecom towers and wind energy towers

    Planning to outsource manufacturing of gas appliancesand water dispensers, which will be marketed under itsown brand

    Planning to introduce inverters and 2 new linesof business

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    C O N S U M E R D U R A BL E SS

    D ISCLAIMER

    This presentation has been prepared jointly by the India BrandEquity Foundation (IBEF)and KPMG Advisory Services PrivateLimited (Author).

    Allrights reserved. Allcopyright in this presentation and relatedworks is owned by IBEFand the Authors.The same may not bereproduced, wholly or in part in any material f orm (including

    photocopying or storing it in any medium by electr onic

    means and whether or not transiently or incidentally to someother use of this presentation), modified or in any manner communicated to any third party except with the writtenapproval of IB EF.

    This presentation is f or information purposes only.While duecare has been taken during the compilation of this pr esentationto ensure that the information is accurate to the best of the

    Author s and IBEF s knowledge and belief, the content is notto be construed in any manner whatsoever as a substitute f or

    professional advice.

    The Author and IBEFneither recommend or endorse anyspecific products or services that may have been mentionedin this presentation and nor do they assume any liability or responsibility f or the outcome of decisions taken as a r esult

    of any reliance placed in this pr esentation. Neither the Author nor IBEFshall be liable f or any direct or indirect damages that may arise due to any act or omissionon the part of the user due to any reliance placed or guidancetaken from any portion of this pr esentation.

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    C O N S U M E R D U R A BL E SS

    ww w .ibef.org

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