doing business in india

DOINg business in india

Roma, 7 maggio 20141

About D&B Tangram

Our focus areas2Dun & Bradstreet (D&B) Tangram is a business advisory firm that provides solutions to its clientele to enable growth and facilitate business decision making.D&B Tangram provides solutions across:2

About D&B Tangram

Our Expertise3The five essential elements of our offerings:Market ResearchFinancial ResearchEconomic & Policy AdvisoryStrategic AdvisoryOperational Advisory

Access OpportunityUnderstand behaviourAssess ViabilityAssess Value CreationPartner Policy MakingDecipher Policy ImpactEnter, Consolidate and GrowDevelop Functional StrategiesImplement Plan Improve PerformanceResearch & Advisory Services3

India: A growing giant...

Strong Economic Growth & Potential4Source: IMF World Economic Outlook Database and D&B Tangram AnalysisIndia is expected to continue to be one of the fastest growing economies (~7% over 15 years) in the world.India is the 3rd largest world economy in terms of PPP GDP behind USA and China. It recently displaced Japan from the 3rd position

BY 2025, India is expected to become the 5th largest consumer market in the world, behind the USA, Japan, China and the UK.

Ranked 3rd in the world and 2nd amongst the developing economies on investment attractiveness in the World Investment prospects survey by UNCTAD at IMF meet 2012.

It has attracted FDI more than 195 billion EUR cumulatively between FY 2000-2012.

The country is expected to be the largest source of emerging market multinational enterprises (MNEs) by 2024.Key Points to Note4

India: A growing giant...

Backed by Sound Fundamentals5Source: Mckinsey Global Institute, A Never-Before World, Rama Bijapurkar

200520152025India is expected to continue to become more lucrative market for global players led by strong growth in consumption and favourable income pyramid.

Between 1992 and 2000, private final consumption expenditure in India grew 1.6 times from $179 billion to $297 billion.Between 2000 and 2012 it grew 3.8 times to $1.1 trillion5HH having (mn)SplitTelevision122Two-Wheeler42.5Refrigerator39.7Washing Machine14.2Four-Wheeler5.6PC5.4AC2.8UrbanRural475351496832821873278216937Table: Ownership of DurablesSource: Hansa Research, MRUC

India: Diversified Opportunity Areas...

Fuelled by Strong Drivers7Source: IBEF, Industry Reports and D&B Tangram Analysis Large MarketFavourable DemographicsQualified & less expensive LabourAbundant & Diversified Raw MaterialsStrong EcosystemStrong Structural Strength2nd most populous nation in the world with 1.2 bn population expected to grow to 1.4 bn by 2025.7th largest country by area in the world.Indian continues to urbanise at a strong pace driven by a combination of up-trending consumption, robust job creation and growing financial penetration.~2/3rd of Indias population is below 35 years of age, and will continue to hold this advantage with 55% of the population being under 35 by 2030.Indians in their 20s and early 30s constitute ~50% of total wage earning population.Largest democracy which is comparatively stable and functions in an open set-upStrong & reliable judiciary systemRobust financial markets and deep capital marketsMore than 735 mn population between age 15 and 59 in 2011 which is expected to grow at 2.5% p.a. over the next decade.India with literacy rate of 74%, large English-speaking workforce and having sound technical and research skills backed by well established education system has strong labour advantage.India is the second-largest producer of cement in the world, the fifth-largest producer of steel and the largest producer of direct reduced iron.India has abundant natural resources and is ranked among the top 10 globally for deposits in iron ore, coal and bauxite. The country also holds the leading position globally in mica, barytes (2nd), chromite (4th ), kaolin (4th), and manganese (7th).Strong supplier ecosystem in place due to multiple initiatives on various fronts like infrastructure development, cluster/economic zones/export zones development, technological progress, improved factors of production, etc.7

India: Diversified Opportunity Areas...

Glimpse of Opportunity Areas8Source: Industry Reports and D&B Tangram Analysis Past GrowthExpected Future Growth AreasNote: Services sector includes Financial, Banking, Insurance, Non-Financial / Business, Outsourcing, R&D, Courier, Tech. Testing and AnalysisRetail sector The retail sector is one of the fastest growing in India over the last few years. It contributed ~28% to the country GDP in 2012 & is expected to touch a US$ 782.23 billion by 201617, expanding at a compounded annual growth rate (CAGR) of 15 %. Major growth drivers: Online Retail, Food & Grocery, Apparel, Mobile

Telecommunications - India remains the fastest growing telecommunications market globally with GDP share expected to be ~15% by 2015 and contribute ~$400 bn to the countrys GDP by 2020. Major growth drivers: Data Services & Broadband, Rural Wireless

IT & ITes - India's IT-business process outsourcing (BPO) industry revenue is expected to cross US$ 225 billion mark by 2020,i.e. ~ 12-13% of GDP Indias total IT industrys (including hardware). Major growth drivers: BFSI, Manufacturing, Retail, Healthcare

Food Processing Industry Food processing sector is an important segment of economy growing at more than 10 per cent per annum & it is expected to contribute ~6.5% to the countrys GDP by 2015. Major growth drivers: Meat & Seafood, Ready to Eat Products

Healthcare The Indian health care sector is poised to touch US$ 100 billion by 2015 and US$ 275.6 billion by 2020. Major growth drivers: Medical Devices, Diagnostics, Hospitals

Engineering Sector - The engineering sector is the largest of the industrial sectors in India & has emerged as the largest contributor to the countrys total merchandise exports. Major growth drivers: Electrical Goods, Process Plant Equipment8Sector focus: FDI trendsFood ProcessingFlavors & FragrancesAdditivesEmulsifiers, Bakery, CerealsColors, powdersBotanical ExtractsNutrition Aromatic & Essential OilsSeedsDairy, & ProductsMachineryIndustrial machineryFood processing machineryTextile processing and manufacturing machineryAgriculture Implements & Hand-toolsMachine PartsChemicalsCrop Protection- Insecticides, Pesticide, Fungicide, HerbicideTextile- Dyes, Colors9Source: D&B Tangram analysisNote: The above is basis 10 year data of FDI inbound from Germany and France

India: Safe and Transparent Environment

Largest Democracy10Administrative StructureOverall Structure Sovereign Socialist Secular Democratic Republic with a parliamentary system of government and balanced distribution of powers.The legislative powers are divided into 3 lists to define powers between states and center namely:Union list - 100 items on which the parliament has exclusive power to legislate.State list - 61 items on which the state has exclusive power to legislate.Concurrent list 52 items 10


Policy & Regulatory Structure11State Level Ministries and Autonomous Bodies under them11


FDI Policy12Sectors where FDI is not allowed in India, both under the Automatic Route and the Government Route.Lottery Business including government/private lottery, online lotteries, etc. Gambling and Betting including casinos etc. Chit funds Nidhi company Trading in Transferable Development Rights (TDRs) Real Estate Business or Construction of Farm Houses Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems)Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities. Agriculture & Animal HusbandryMining of metal, non-metal ores, coal & lignitePetroleum & Natural GasAirportsAir Transport ServicesCourierConstruction: Townships, Housing, Built-up infrastructureIndustrial ParksCash & carry TradingE-commerceSingle Brand Product Retail TradingCommodity ExchangeCredit Information CompaniesInsuranceNBFCPharmaceuticals (Greenfield)Power Exchange

Tea PlantationMining of titaniumDefenceManufacturing of items reserved for MSEsBroadcasting content servicesPrint MediaSatellitesPrivate Security AgenciesMulti Brand Retail TradingPharmaceuticals (Brownfield)

Both Government & AutomaticBroadcasting carriage servicesTelecomAsset Reconstruction CompaniesBankingSource: DIPP(Department of Industrial Policy & Promotion) and D&B Tangram Analysis 12


Example : Approval Process13Approval JurisdictionApproval/RegistrationUnionEstate duty in respect of property other than agricultural landDuties for succession to property (if required)Filing for Government Approval before RBI/FIPB for Foreigners and NRI'sExport/Import LicensesTax Account Number for income taxes deducted at source from the Assessing Office in the Income Tax Department StateRegister for value added tax (VAT) Taxes on Land & BuildingRegister for Profession taxRegister under Shops and Establishment ActElectricity & Water RegistrationCompany IncorporationConcurrentTransfer of PropertyRegistration of deeds & documentsContracts including partnership, agency, contracts of carriage, and other special forms of contractsStamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty.13


Modes of Entry14Source: DIPP(Department of Industrial Policy & Promotion) and D&B Tangram Analysis Design, Manufacture & SellDesign & ManufactureManufacture & SellImport & SellFranchiseLicencePartnership14


Doing Business in India15Source: Doing Business Database 2014

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Doing Business in India16Source: Doing Business Database 2014

Strength of Investor ProtectionEase of Trading across BordersEased trade by introducing ICEGATE -- an EDI system that enabled to lodge customs declarations via the internet, ~ 170 operational Special Economic Zones and additional 630+ approved by Government of India providing liberal economic and tax regimes for investors.Duty exemption schemes enable duty free import of inputs required for export production.Creation of new Export Promotion Industrial Parks and augmenting facilities in the existing ones.

Bilateral Investment Promotion and Protection Agreement between India & Italy to prevent interests of foreign investments from Italy into IndiaAs a signatory to the TRIPs Agreement and keeping in line with Indias obligations, amendments have been made in the existing legislations for compliance like copyright protection for computer programs and protection for service marks16

India: Destination of Many EU Companies

Success Stories17Source: D&B Tangram AnalysisPerfetti Van Melle IndiaPerfetti Van Melle India (PVMI), a 100 per cent subsidiary of the global conglomerate, started operations in India in 1994 with the setting up of its factory.With more than 15 hugely popular brands of chewing gums and candies; the company now enjoys around 25% market share in the Indian confectionery market.Key success factors:Innovative products : Perfetti Van Melle has introduced several innovative products such as Center Shock, Alpenliebe Swirl and Happydent GumStrong brand building : The company has focused on diligently building its brands through effective advertising and promotions. Constant re-invention of brands: The brand Cofitos was relaunched at a lower price because of the market demands. Variants of Alpenliebe were also launched in the year 2002 to take the brand forward and to create excitement in the marketStrong distribution presence : PVMI has a network of ~ 4,000 distributors across 1,500 urban towns and covers 7,000 towns through its extended network of ~10,000 sub-stockists.Holcim IndiaHolcim entered India by getting into a strategic alliance with Gujarat Ambuja Cements and making a public purchase offer to the shareholders of The Associated Cement Companies (ACC) and Ambuja Cement Eastern.Currently Holcim India (ACC and Ambuja cement ) is the 2nd largest player in the country with more than 45 million tonne capacity and nationwide presence.Key success factors:Large scaleWell dispersed grinding and clinkerisation units across the countryStrong raw material linkageWell spread distribution networkHigh brand equity in channel partnersDiversified product portfolio including multiple grades of cement, ready mix concreteVery strong brandPan India presence giving price arbitrageMulti modal logistics network17


Success Stories18Source: D&B Tangram Analysis3M3M entered India in 1991, however it has witnessed maximum growth in last 5-8 years. By 2015, at a CAGR of 30% between 2010 and 2015, 3M is targeting a turnover of US$ 1 billion in IndiaWith more than 7000 products in India for different industries like healthcare, infrastructure, power, automobile, consumer safety and security, 3M is one of the market leaders known for continuous innovation in products and services.Key success factors:In India for India strategyLocalization of global products (to bring down costs)Local product development for tier 2 marketsInnovative products suited to the market requirements (Already has 14 patents out of India)Huge investments in Research & Development with focus on domestic R&D clusters rather than global R&D centersLarge product portfolio across several price points and industries

LOrealLOreal entered into India around 15 years back, but followed a classic hockey stick type growth and profit curve very slow in initial years but steadily accelerating over time, to a revenue growth of 30% per annumCurrently LOreal is managing a turnover of INR 16 billion but aims to hit a turnover of Rs 63 billion by end of year 2020.Key success factors:Adapting global strategy to local market conditions and localizing the implementationAdapting organization and business processes to the business demands and institutional contexts of emerging market like India Innovative & localized products targeting middle class segment of the societyInvestments in education of trade partners (hair dressing education and training)Strong channel presence with one of the largest salon base in the countryWell spread distribution network with ~40,000 small beauty parlors already covered.High brand equity in channel partners18


Success Stories19Source: D&B Tangram AnalysisMetro Cash & CarryMetro Cash & Carry, a division of German company Metro AG, has been an effective wholesaler in many emerging markets entered India in 2003 with its first store opened in Bangalore. Currently the company has 16 stores spanned across 12 major cities in India.

Due to several oppositions faced by local authorities, traders etc. , Metro had to face a bumpy ride in India, but still its has been able to carve out a pace for itself and has been running successfully for a decade now.

Key success factors:Streamlined supply chain with direct linkages with farmers/producers etc.Providing one-stop shopping for buyers and one-stop store front for suppliersProduct QualityCreating a differentiation : Serving as a transaction facilitator through its stores, connecting sellers of produce with food buyers (restaurants, hotels, and other businesses etc.)Providing market information to farmers 19

Snapshot of D&B Tangram Teams work Ministries/Government Bodies & Industry Associations20Formulation of a Comprehensive National Fibre Policy with a view to enhance the growth of T&G industry in the long term, enabling it to increase its global market shareMinistry of TextilesFormulation of business plan to work as center for development of Food Processing cluster in Maharashtra

National Agriculture & Food Analysis & Research Institute (NAFARI)Report on market structure, consumption trends, distribution system & organised retail of the Indian Apparel Fashion Industry

The Japan External Trade Organization (JETRO)Innovative interventions required to enhance global competitiveness and formulation of framework for promotion of innovation in select manufacturing sectors

Department of Science & Industrial ResearchStudy on Credit Gaps & Potential in Services Sector in India and 13-MSME clusters across IndiaSmall Industries Development Bank of India (SIDBI)Study on constraints & Prospects in Non-Alcoholic Beverages Industry in IndiaIndian Council for Research and International Economic Relations (ICRIER)DPR & B-plan for Marketing of Organic fruits, Vegetables, & Mushroom in 3-districts of BiharCOMFEDDiagnostic study of SME clusters across various locations to identify & establish key factors that would aid in assessing credit risk emanating from the clusterSMERA Ratings Limited (SMERA)Evaluation Of Design Mentorship Activation Programme conducted by NCDPD in various clustersNational Center for Design and Product Development (NCDPD)Study on Technical Feasibility for setting up an integrated common facility-cum-training center for Export Promotion Council for HandicraftsExport Promotion Council for Handicrafts Examine the case for extending the power cost reimbursement under Industrial Investment Promotion Policy of the Andhra Pradesh (AP) Govt.A.P. Spinning Mills AssociationFeasibility study for setting up a multi modal logistics park in Khatuwas, NeemranaContainer Corporation of India Ltd. (CONCOR)Consultancy Development CentreMapping of credit demand & supply status, assessment of satisfaction levels and impact on growth, competitiveness & responsible business behaviour of MSMEGerman Agency for Development Co-operation (GTZ) Developing Models, Mechanism, and Framework for monitoring and quality assessment of services provided by ConsultantsConsultancy Development Centre (CDC)

Assessment of Export Potential of Consultancy Services from India to various African, SE Asian & CIS countries20

Snapshot of D&B Tangram Teams work 21Market Feasibility, Market Sizing & Business Strategy for a meat based retail concept for a North East India based group

Meat based Retail ConceptDevelop strategy and 5 year roll out plan for the exclusive brand shops Franchise modelInternational Consumer Durables BrandMarket Assessment of Indian caf market & provide Business Strategy & Implementation Assistance for openings stores through master franchise modelBar & Caf Chain Expansion Strategy for Indian market for one of the worlds largest cement company Cement CompanyDevelop and lay roadmap for Go-To Market Strategy for the AC businessInternational Consumer Durables BrandNeed assessment, feasibility study and action plan for setting up common facility-cum-training centreIntegrated common facility-cum-training centre Market Assessment & Entry Strategy for Snack Food Products in India

Snack Food ProductsDemand assessment, feasibility study & business plan for Commodity market instituteInstitute specializing in commodity marketsMarket assessment & Expansion Strategy for one of the pioneers of stem cell bankingconcept in IndiaStem Cell BankMarket Assessment & Sizing of the Indian denim market for a premium high fashion international denim brand (Apparel)

International denim brand Growth Strategy for an interior infrastructure companyBuilding Materials/ Interior InfrastructureMarket Assessment, Business Strategy & Implementation Assistance for an International QSR chain International QSR ChainProduct and Pricing Strategy for an international casual wear brandInternational Casual WearEntry Strategy for getting into a new business for one of the largest business conglomerates of QatarBusiness Conglomerate of QatarExtensive experience in the areas of Market Sizing, Market Entry Strategy, Growth Strategy, Product & Pricing Strategy and Business PlanLeading Information Services company Market Assessment & growth opportunity planning for a leading provider of credit information services in India

2122Extensive experience in the areas of Launch Assistance, Project Management, Functional Strategy, Performance Improvement, and Organization Development People, Process & SystemEntry Strategy, Financial Planning, ProcessImplementation (Operations, Marketing, HR, Supply chain etc.) for auto accessories retailBusiness group with interests in AutomotiveEntry Strategy, Financial Planning, ProcessImplementation for food & grocery retailSouth India dairy and related products companyBusiness Strategy, Financial Planning,Process Implementation (Operations,Marketing, HR, Sales Planning) for steel retailBusiness House with interests in Steel, Oil & Gas, Telecom etc.Business Audit, Process Diagnostic, andPerformance ImprovementSouth Indias largest consumer durables retail chainsEntry strategy for the new retail chainOne of the Indias largest paper & stationery companiesStandard Operating Procedures Development for leading Zinc manufacturer in IndiaIndias biggest Zinc manufacturerChannel Performance Enhancement Strategy for one of the largest FMCG companies in IndiaFMCG CompanyPerformance Improvement through Process Development for all the functions such as HR, Procurement, Sales, Finance etc. New telecom Services ProviderPrivate label strategy formulation for their new multi category, multi format pan India retail businessOne of the Indias largest business housesEnterprise Risk Management manual and formulation risk mitigation strategySolar Cell ManufacturingBusiness plan and concept strategy development for their new mallOne of South Indias Infrastructure companyLaunch assistance & Project Management for post-paid services for a new telecom operator in 4 circles

Telecom Player with PAN India OperationsPerformance Improvement for Brand Realignment project Logistics network, dealership network, organization structure etc.South India based Cement companyAudit of existing stores and developing strategy for fresh roll out. - Merchandising & category strategy, inventory planning, location analysis, staff efficiency, etc.Hospitals & Pharmacy chainsProject Implementation & Management for one of Indias largest auto ancillary playerOEM Auto Manufacturer

Snapshot of D&B Tangram Teams work Thank you23

doing business in india

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