Mobile handset market in India

Mobile handset market in India to witness tremendous growth in next 5 years

The Indian mobile handset market is expected to continue its upward trajectory if a recent report by Frost and Sullivan is to be believed. The report continues to portray the happy sentiments in the mobile industry in the country.

India has reached the coveted position of the second largest mobile handset market in the world after China. And it is expected to become even bigger with 208.4 million phones being shipped by 2016 at a CAGR of 11.4% between the period of 2010 – 2016.

For people who were wondering whether the 2G scam resulted in the destruction of small scale players, Frost and Sullivan thinks that, there would be a threefold increase in the number of telecom participants by next year. In short, as of last year India had about 68 mobile handset players, and if the report is to be believed it will go above 200 !

This would result in further competition and squeezing of profit margins; though I personally wonder on the survival ability of these operators without proper infrastructure and network towers. Operators like Etisalat, Videocon, Uninor have struggled in every way to stamp their authority in the Indian market.

Another interesting part of the survey is the increasing use of smartphones by the Indian consumer. While the revenues in the urban areas are reaching saturation point, many mobile manufacturers like Micromax, Karbonn etc. have started manufacturing phones for the rural and semi–urban areas too. These phones are replete with all the basic features along with special features like insect repellant’s etc.

As was thought and has been discussed threadbare, the proliferation of Web 2.0 and Internet surfing is expected to rise across the country with the increase in use of smartphones.

This is the reason the mobile handset market expects the revenue to rise from US $255 billion to US $350 billion. The smartphone market is expected to grow tenfold to 30 Million units by 2016 from just about Rs 2.9 million units currently.

Another important analysis of the survey is the fact that more than 70% of the Indian population still consumes only voice services. But with the onset of 3G and cheaper data usage options, this is expected to change in the near future.

desi languages get more users

Online ads in desi languages get more users: Survey

 

Online publicity seems to be going the desi way, with advertisements in Hindi, Tamil, Malayalam and other regional languages attracting more internet users than English ones, says a survey.

According to survey by Ozone Media, internet advertising network and online advertisements in regional languages such as Hindi, Tamil, Telugu and Malayalam outperform English creatives.

Moreover, resident Indians respond better to regional language ads as compared to English ads, by almost 30 per cent.

“Internet media, like Television and Radio is moving towards being a mass media. This is exhibited through the high response that language ads generate compared to English ads.

Consumption of regional language ad signifies the emerging trend in online marketing campaigns of the kind of spread and specific targeting brands adopt to reach their desired audience.

The survey titled - One Media Performance Users Study (OPUS) — noted that Tamil and Telugu in particular are driving conversions in language specific advertising across ad categories for performance campaigns.

The report reveals prolific usage of language ads by Banking, Finance, Services and Insurance (BFSI) and matrimony sectors.

For Matrimony category, non resident Indian’s (NRI) respond better to regional language ads whereas resident Indians respond better to English creatives.

In BFSI category however, the results are completely different from the matrimony category. NRIs’ prefer English language creatives over language based creatives as they would be most comfortable with English as a medium for addressing their financial needs.

The Survey said resident Indians feel more comfortable in one’s own language when it comes to simplifying any financial product that they wish to invest in or avail of. This trait possibly results in greater acceptance of language based ads for the BFSI category.

The survey is based on an analysis of close to 1,000 campaigns that were run on the Ozone Media network from January 2010 to December 2010. The sample includes responses from resident Indian and NRI across various ad categories.

Spice Popkorn

Spice Popkorn : Value for money projector phone!

The craze for projector phones is anything but over. If you are following world cup closely then you might have come across a strange yet good advertisement for a Spice phone. Called as Spice Popkorn, this phone provides a project option of which there are multiple use cases as shown in the advertisement. The least of it is project a flower on a girl. All the other use cases are bound to make your life a living hell. But there are some very good uses of the phone. Ad folks have to be creative to get paid. You just don’t have to be that creative.

Spice PopKorn TV Commercial

Spice M-9000 is a dual SIM phone with a in-built projector. It also comes with a analogous TV which will help you stream free-to-air channels, you know like the good old Doordarshan. There is a document viewer, in case you want to project a presentation on the side wall in the middle of a Christopher Nolan movie.

Spice M-9000 aka Popkorn, has a 3.2 megapixel camera, FM with recording, Bluetooth, video player and a 6 cm QVGA screen. All of this comes at a measly price of Rs. 6999.

There were two other projector phones launched. One by Intex and one by Techberry. Both the phones are priced in the 12K-16K range. At 7000 rupees,  Popkorn is the cheapest projector phone out there and looks like real value for money.

INDIA: Tourism and hospitality

Tourism and hospitality

As per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum, India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places on the list of the world's attractive destinations. It is ranked the 14th best tourist destination for its natural resources and 24th for its cultural resources, with many World Heritage sites, both natural and cultural, rich fauna, and strong creative industries in the country. India also bagged 37th rank for its air transport network. The India travel and tourism industry ranked 5th in the long-term (10-year) growth and is expected to be the second largest employer in the world by 2019.

Contribution to the economy

Combining unparalleled growth prospects and unlimited business potential, the industry is certainly on the foyer towards being a key player in the nation's changing face. Furthermore, banking on the government’s initiative of upgrading and expanding the country’s infrastructure like airports, national highways etc, the tourism and hospitality industry is bound to get a bounce in its growth.

The hotel and tourism industry’s contribution to the Indian economy by way of foreign direct investments (FDI) inflows were pegged at US$ 2.24 billion from April 2000 to November 2010, according to the Department of Industrial Policy and Promotion (DIPP).

India’s hotel pipeline is the second largest in the Asia-Pacific region according to Jan Smits, Regional Managing Director, InterContinental Hotels Group (IHG) Asia Australasia. He added that the Indian hospitality industry is projected to grow at a rate of 8.8 per cent during 2007-16, placing India as the second-fastest growing tourism market in the world. Initiatives like massive investment in hotel infrastructure and open-sky policies made by the government are all aimed at propelling growth in the hospitality sector.

Foreign Tourist Arrivals

Ministry of Tourism compiles monthly estimates of Foreign Tourist Arrivals (FTAs) in India and Foreign Exchange Earnings (FEE) from tourism on the basis of data received from major airports. Following are the important highlights, as regards these two important indicators of tourism sector for 2010 and December 2010.

• FTAs in India during 2010 were 5.58 million with a growth rate of 9.3 per cent as compared to the FTAs of 5.11 million during 2009.
• FTAs during the December 2010 was 6,55,000 as compared to FTAs of 6,46,000 in December 2009 and 5,34,000 in December 2008.
• FEE from tourism during 2010 were US$ 14,193 million as compared to US$ 11.39 billion during 2009 and US$ 11.74 billion during 2008. The growth rate in FEE in US$ terms during 2010 was 24.6 per cent.
• FEE from tourism during the month of December during 2010 were US$ 1.55 billion.

Government Initiatives/policy

According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of India, the government has allowed 100 per cent foreign investment under the automatic route in the hotel and tourism related industry. The terms hotel includes restaurants, beach resorts and other tourism complexes providing accommodation and /or catering and food facilities to tourists.

The term tourism related industry includes:

• Travel agencies, tour operating agencies and tourist transport operating agencies
• Units providing facilities for cultural, adventure and wildlife experience to tourists
• Surface, air and water transport facilities for tourists
• Convention/seminar units and organisations

T

he Government of India has announced a scheme of granting Tourist Visa on Arrival (T-VoA) for the citizens of Finland, Japan, Luxembourg, New Zealand and Singapore. The scheme is valid for citizens of the above mentioned countries planning to visit India on single entry strictly for the purpose of tourism and for a short period of up to a maximum of 30 days. During 2010, a total number of 6549 Visa on Arrivals (VoA) were issued under VoA Scheme.

The tourism master plan, the first for Karnataka, envisages initiatives to attract private investment ranging from US$ 2.2 billion to US$ 4.4 billion in the next three to five years. The plan is prepared based on the Vision 2020 document prepared and adopted by the Karnataka State Planning Board. The state government aims to generate 200,000 jobs in the tourism sector in the next five years. The master plan is aimed at making Karnataka the number one destination for tourism in the country by 2020.

As per the press release by Press Information Bureau (PIB) dated November 15, 2010, the Union Ministry of Tourism has included Medical Tourism under the Marketing Development Assistance (MDA) Scheme. The Ministry of Tourism has sanctioned US$ 27,742 as MDA to 10 Medical Tourism Service Providers during current year.

The Ministry of Tourism has sanctioned 781 projects in 34 States/ Union Territories (UTs) in the country amounting to US$ 511.82 million during the last three years up to June 2010, as per a press release dated October 18, 2010.

The Ministry of Tourism has won a PATA Grand Award and two PATA Gold Awards during the Pacific Asia Travel Association (PATA) Travel Mart 2010 in Macau. The PATA Grand Award was given under the Heritage category for the Rural Tourism Project at Hodka village in Kutch District of Gujarat.

Medical Tourism

As per a market research report ‘Booming Medical Tourism in India’ by RNCOS, India’s share in the global medical tourism industry will reach around 3 per cent by the end of 2013. Moreover, medical tourism is expected to generate revenue worth US$ 3 Billion by 2013, growing at a CAGR of around 26% per cent during 2011–2013. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to reach 1.3 Million by 2013.

Factors such as, low cost, scale and range of treatments provided by India differentiate it from other medical tourism destinations. The growth in India’s medical tourism market will be a boon for several associated industries, including hospital industry, medical equipments industry and pharmaceutical industry.

Domestic medical tourism in the country has also seen growth in the recent years. As per the report ‘Domestic Tourism in India, 2008-09’ released by the National Sample Survey Office (NSSO), trips for ‘health and medical’ purposes formed 7 per cent of overnight trips in the rural population and about 3.5 per cent in the urban population. ‘Health and medical’ purposes accounted for 17 per cent of same-day trips in rural India and 8 per cent in urban India. Expenditure on medical trips accounted for 30 per cent of all overnight trip expenditure for rural India and 15 per cent for urban.

R

ecently, the Union Ministry of Tourism has included Medical Tourism under the Marketing Development Assistance (MDA) Scheme. The Ministry of Tourism has sanctioned US$ 27,400 as MDA to 10 Medical Tourism Service Providers during 2010.

Hospitality

The current count of hotel rooms is 130,000, and the country is expected to require an additional 50,000 rooms over the next two to three years, according to World Travel and Tourism Committee (WTCC) estimates

• US-based hotel chain, Marriott International, plans to expand its network in India to 100 hotels over the next five-years, stated Arnie Sorenson, Chief Operating Officer, Marriott International. At present, the group operates 11 properties across the country.
• Roots Corporation, a subsidiary of Indian Hotels Company (IHC), plans to open 60 to 70 budget hotels, known as Ginger Hotel, in 23 locations across the country.
• ITC, the Kolkata-based cigarette major, also projected its plan to open 25 new hotels under the Fortune brand over the course of next 12-18 months (or by 2011).

The Road Ahead

The Indian hospitality sector is certainly the most apt replication of the belief 'Atithi devo bhava'- touch of tenderness, a helping hand and a welcoming visage.

According to the Tourism Satellite Accounting (TSA) research, released by World Travel and Tourism Council (WTTC) and its strategic partner Oxford Economics in March 2010:

• The contribution of travel and tourism to Gross Domestic Product (GDP) is expected to increase from 8.6 per cent (US$ 117.9 billion) in 2010 to 9.0 per cent (US$ 330.1 billion) by 2020.
• Export earnings from international visitors and tourism goods are expected to increase from US$ 11.1 billion in 2010 to US$ 33.6 billion in 2020.
• Travel and tourism investment is estimated at US$ 34.7 billion or 7.2 per cent of total investment in 2010. By 2020, this should reach US$ 109.3 billion or 7.7 per cent of total investment.

Ministry of Tourism aims to create a comprehensive and coordinated framework for promoting golf tourism in India, capitalising on the existing work that is being carried out, and building upon the strength of India’s position as the fastest growing free market economy.

Exchange rate used: 1 USD = 45.46 INR (as on January 2011)

Disclaimer: This information has been collected through secondary research

Coffee exports

Coffee Board takes steps to up exports

In order to encourage coffee exports from India to the various regions of the world, the Coffee Board of India has announced coffee exporters’ award for 2010 in Bangalore.

Coffee export awards will encourage exporters to not only go for high volume of exports, but also concentrate on value addition of Indian coffee.

India exported around 196,094 tonnes of coffee in 2009-10 with a value realisation of Rs 2,071.40 crore in Rupee terms. While there were 105 active exporters during this period, the unit value was Rs 105,634 per tonne. In the green coffee category, NKG Jayanti Coffee Pvt Ltd has bagged the gold award as the company had a 21 per cent share of coffee exported in this category. It also got two other awards for being the best exporter of coffee to Europe along with the specialty coffee category.

Similarly, Allanasons Ltd has received a gold award for being adjudged the best coffee exporter to West Asia and North Africa region. The company also bagged awards for its export contribution to the US and Canada region.

CCL Products (India) Ltd have received awards in the specialty coffee category.

The company has bagged the gold award as the best exporter of instant coffee with a 31 per cent share of instant coffee exports from India. The company has also received awards for its export contribution to Far East region and Russia along with CIS region.

Jubilant FoodWorks

Jubilant FoodWorks plans non-food vertical biz

Jubilant FoodWorks which operates Dominos Pizza in the country is planning to diversify into non-food business especially hotels and apparel verticals.

It is also planning to foray in the businesses of stationery products, fashion accessories, toys, gifts, DVDs, VCDs and home décor products.

Besides, it is also looking to operate hotels, restaurants, beach resorts, health resorts, cafes and motels.

Moreover, the company is planning to strengthen its supply chain with its own or hired cold storages ice plants, warehouses, freezing houses and room coolers for storing food products being dealt by the company as a part of its business in India.

Impact of Corruption on Indian Businesses

Impact of Corruption on Indian Businesses: Survey

Until a year ago, it was of common knowledge that corruption is deeply rooted in India. However, it was the scandalous year 2010 that established this perception into fact. All the major scams – be it Commonwealth games fiasco, 2G spectrum allocation scam or bribe for housing loan scandal – were unearthed during previous year.

Even equity markets crumbled by 15% as the year ended on a sagging note. Some analysts attributed this weakness in markets to uneven inflation-growth dynamics, while others blamed it on India’s lost credibility with regard to governance issues.

Having said above, the FIIs have still not yet fully discounted the negativity arising out of corruption issues. The theory that is still doing the rounds among the institutional investors is that the India is still on growth track irrespective of the recent scam instances.

However, the same optimistic sentiment has not been reflected when it comes to insight from corporate India – i.e. those who are directly involved in dealing with the challenges faced on account of corruption issues.

To keep a tab on what India Inc feels about corruption issues, KPMG India surveyed leading Indian companies to keep a tab on sentiment and perception of how corruption is corroding economy as well as corporate environment.

Key Highlights of the Corruption Survey:

Over 2/3^rd of the survey respondents perceive that India can touch 9% GDP growth if corruption is controlled. Otherwise, it would result in volatile political and economic environment.

Impact of corruption on India’s GDP growth

Half of those surveyed felt that India corruption may hit the investment sentiment and render India less attractive destination for foreign investment.

Respondents to the extent of whopping 90% felt that corruption would also translate into increased stock market volatility and prevent institutional investors from making long-term commitments.

99% of respondents opined that the biggest impact of corruption on business is its tendency to skew level playing field and attract organizations with lesser capability to execute projects. This could create inefficiencies in the system and hence increase the cost of operations.

Impact of corruption on business

Now, take this! Well, it’s a no shocker, but certainly a bit surprising. Almost 68% people attribute corruption to be induced by the private sector; even as wide majority of us put the blame on the government enterprises.

India has seen stupendous growth in mergers and acquisitions. But, here could be a small hump in the tale. Nearly 37% of respondents felt that corruption could impact the valuation of a company thereby denying shareholders a fair price.

eedless to say, real-estate industry has remained as the most corrupt industry, as told by 32% respondents, which is highest quantification going industry-wise.

Perception of most corrupt industries

So, any take on which industry is most corrupted after real-estate? Well, no points for guessing, its telecommunications sector – especially, after recent 2G spectrum allocation scam, 17% of those surveyed felt this sector is fraught with corruption issues.

Most significantly, when it comes to anti-corruption measures, a majority 84% of those surveyed opined that Indian government failed to effectively enforce anti-bribery and corruption laws.

How will corruption scenario in India change in the next 2 years?

Interestingly, when asked as to how will corruption scenario in India change in the next 2 years – 46% felt that corruption is here to stay in the system, while 15% opined that corruption shall continue to thrive and increase irrespective of the legislation.

Certainly, we cannot take the above survey findings with a pinch of salt. There is lots of reality behind above survey outcome. Can India come out winner out of such trying circumstances?

Indian E-commerce market

Indian E-commerce market at 47k cr by 2011 – Online Travel Bookings dominate!

The internet reach has grown beyond being an enabling communication medium. E-commerce has been a new buzz word over the last decade and is likely to grow exponentially year on year in an under-penetrated country like India.

In fact, e-commerce is expected to fast catch-up with the growth in overall trade market. This can be gauged from the fact that e-commerce penetration is still quite lower even amongst active internet users who look for information regarding products.

So, gradually, the conversion ratio of these users – which currently stands at around 40% – from being mere on-lookers to having brought any product over internet, could only rise from here.

Net Commerce Market Size from 2007 to 2011

Surprisingly, the IAMAI report on online commerce indicates that almost 80% market share of current online commerce industry is dominated by travel business and remaining 20% share is constituted of non-travel businesses such as eTailing (electronic retailing), digital download, paid content subscription, financial services, online classifieds, etc.

Take this! The above ratio of e-commerce market share has been skewed not just recently. It’s almost the same since last 5 years. The survey also indicates that there won’t be any drastic changes in the trend until the end of the year. However, online users in India have exhibited willingness to make purchases over the internet, which is evident from the increasing awareness and growth of net commerce industry.

The online travel industry has grown smartly from Rs.6250 crore in 2007 to Rs.25258 crore until Dec 2010 on the back of conveniences of paying online. Currently, domestic air travel segment constitutes 63% of online travel industry followed by 28% share from online Railway tickets.

E-tailing – which comprises buying consumer items including electronic products, Home appliances, personal products such as apparels and jewellery and other accessories – is currently worth Rs.2050 crore, and is expected to grow by 32% to Rs.2700 crore by next year.

Another segment that could witness humungous growth opportunity is online financial services including Net Banking, utility bills payment, insurance and other services. The financial service segment is estimated to be worth Rs.2000 crore currently, but is expected to log 34% growth by Dec 2011.

Lastly, India has witnessed breathtaking growth in the mobile segment thanks to low-cost smartphones. The digital download segment has grown at the fastest pace of over 50% year on year growth since Dec 2008. Majority of the mobile transactions through Ringtone / Wallpapers / Pictures downloads is said to be worth Rs.140 crore.

To the same extent as mobile downloads, even mobile recharge for pre-paid connections or paying post-paid bills forms a significant 34% market share of current digital downloads market size of Rs.680 crore.

MTS 'a step ahead'

MTS: targeting the next generation consumers

                        

Sistema Shyam TeleServices (SSTL), which deals in telecommunication services under the brand name MTS, has unveiled a new identity designed to further establish the brand MTS, targetting the next generation consumers with the new tagline, 'A Step Ahead'.

The re-branding and repositioning comes on the eve of MTS crossing the 10-million subscriber mark in India since its Indian launch in March, 2009.

MTS has incorporated the new tagline, 'A Step Ahead,' in the same red box as its logo. The symbol of a white egg with the word MTS is still there. Earlier, it used to be two red boxes side-by-side, with a white egg symbol in one, and the word MTS in the next one. The white egg symbolises simplicity and genius. In a bid to fit the new tagline, the egg, and the MTS logo, the size of the red rectangle has been slightly stretched.

In 2006, MTS changed its logo as part of a re-branding campaign carried out by its parent company JSFC Sistema. In 2010, MTS announced the acquisition of Sistema Telecom, owners of the MTS egg logo, thus

MTS is to be more consumer-centric with the new positioning, with the aim to give satisfaction to its customers.

MTS will also have extensive communication-centric activities. They will be launching a new integrated and disruptive brand communication programme, including a new television commercial. Above-the-line (ATL) communication will also be backed by digital activities, and a range of on-ground initiatives across all key markets, especially across malls and colleges in the country.

For the record, MTS's creative duties are being handled by Rediffusion Y&R. Its media duties are handled by Media Planning Group (MPG) India, the media-buying arm of Havas Media.