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A PRESENTATION ON MICROMAX MOBILE

Roll no. 05

Name of students Ashina Mohandas

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38 39 54
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Jalpesh Bavishi
Pradipsinh Jadeja Monali Jani Bharat Lalwani

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Manisha Sharma

Flow of Presentation
Industry Company

Overview
o Introduction o Market shares of major

Overview
o Introduction o Business Life Cycle o Products and PLC o Structure o Vision o SWOT o Porters Diamond Model o GE Matrix o Strategies o Value Chain Model o Financial Analysis o IPO and Objectives o Summery

players o Key features for growth of the market o ETOP o Porters Five forces model

Introduction to Industry

In the financial year 2009 10, the

market share of Nokia in India stood at 52.2%.11.8% fall from 64% in the last financial year. Samsung with its wide range of Corby and Star branded mobiles has caught the attention of young Indians that played its part in raising its Market share from 10% to 17.4%. LG stands third at 5.9% share.

On the other hand, the Indian handset makers,

whose combined market share was just lurking between 3 to 4% in the previous financial year has grown up to 14%. Micromax mobiles topped the chart (of Indian makers) with 4.1% share followed by Spice (3.9%) and Karbonn mobiles (3%). Recent entrants such as Lava mobile, Lemon mobiles and Max mobile too are hovering around that 1% market share. Its not rocket science that why these Indian handset makers saw that instant success. Its all thanks to the falling telecom calling prices and hence the need for Dual sim mobiles. These handset makers made huge money in very little time and were sponsoring events like crazy, including the BCCI cricketing events, which isnt a

Market Share in India

Spice 3.9% Micromax 4.1% LG 6%

Others 16%

Nokia 53%

Samsung 17%

Source: http://www.sriraj.org/

Key reasons for growth of the consumer markets


Population Growth
Favourable Demographics Rising Income Levels

Dramatic Shift of Income Pyramid


Increasing Consumption Increased Discretionary Spending

Communications Spending to Grow Fast


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The future is here (McKinsey report)


Income level will triple.

Emergence of the Indian middle

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class. Spending priorities have changed from basic necessities to luxuries. From 12th to 5th consumer market position.

Indian telecommunication services market


India is the second and the fastest growing

telecomm market in the world in terms of wireless connections (as per TRAI). The industry can be divided into three basic, mobile and internet services. With the implementation of the GoI's Broadband Policy in 2004, the number of broadband connections has increased to 8.77 million subscribers as of March 31, 2010, and according to TRAI, the President of India has 11 set a target of 100 million connections by

Mobile wireless services market

increased by 104% from 286 million subscribers in 2008 to 584 million in 2010.

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Indian mobile handset market


Handset market has grown by 30 %

from116 million handsets in 2008 to 151 million handsets in 2009. Major growth was driven by ASP(Average selling Price) devices (Rs.2000 to Rs.5000). Contribution of ASP about 45%.
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Data card and USB


The Indian mobile data card and

USB modem market stood at 2.02 million units in volume terms and 5,179.72 million in value terms for the twelve month period ended March 31, 2010. (Source: IDC India, 2010)
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Key growth drivers for telecomm/handset market


Economic growth -

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household incomes investment into entertainment. Indias changing demography. Growing need of mobility and connectivity. Infrastructure sharing reduce costs - affordable prices. Low mobile penetration

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Perfect competition-improved services.

Growth mostly due to replacement than

new users. More innovative and sophisticated products needed(music, e-mail, 3G).

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ETOP
Environmen Nature of tal sector impact Impact on handset market
Favorable demographic conditions, youngsters spends more on entertainment. India is the fastest growing telecomm market, 2nd in the world. Underpenetrated rural market. Big competition and big players available. in underdeveloped Opportunity countries. Corrupt politicians.

Economical

Market

International
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Environmenta Nature of impact l sector


Regulatory

Impact on handset market


Development of industry because of National Telecom Policy, 1999 to encourage the sector. Promotion for manufactures to export.

Social
Supplier Technology
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Demographic condition. Underserved rural area.


Less costly and quality material from China.

Automation in manufacturing, technology in supply chain.

Porters Five Forces Model

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Rivalry
Highly concentrated industry.
Diversity of competitors.

Product differentiation.

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Competition from Substitutes


No substitute in near future as

mobile itself is the substitute of the camera, i-pod and many other things.

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Threat of New Entrants


Govt. policy.

Raw material availability.


Underpenetrated market. Telecomm service providers comes with

cheap handsets to damage the utility handset market.

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Bargaining Power of Buyers


Availability of options

Unwanted differentiation in products(eg. Nokia have to go for dual sim phones) Second hand handset market.

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Bargaining Power of Supplier


Option are available.
Most of the companies goes for the

backward integration as reverse engineering is easy task to produce new components.

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Company Overview

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Incorporated as Micromax Informatics

Private Limited in March 2000. Entered the mobile handset market only in 2008. Micromax is the largest Indian domestic mobile handsets company in terms of units shipped during the quarter ended March 31, 2010 and the third largest mobile handset seller in India as on March 31, 2010.
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BUSINESS LIFE CYCLE

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Key Events
YEAR EVENTS

2000
2001

Incorporation
Software and e-commerce development business

2003

Developed digitally automated traffic information system for AAoI


Started M2M distribution for Nokia fixed terminals and modules Started self branded products under the name of Micromax Launched data card under its name and discontinued its software and e-commerce business

2005 2006 2007


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YEAR

EVENTS

2008

- Started assembling of fixed phones and terminals wireless - Started the mobile handset business - Tie up with BSNL for 3G data cards Tie up with Airtel for launching data cards -Tie up with MTNL and ONGC for supplying of data cards - Co-sponsored Apsara Awards (first such sponsorship) - Private equity investment by Wagner -Title Sponsor for IIFA Awards

2009 2010

2011

Purchase of 3,01,260 shares by Sequoia, Sandstone and Madison from the promoters

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Products
Universal remote control phone

3G mobile phones
Smart phones Gaming mobile phone Qwerty keypad mobile phones Long life battery mobile phones Dual reception mode handsets Gravity phones

Multimedia mobile phones


Utility phones
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Product Life cycle of Micromax Mobile product

Introduction
Universal remote control phone 3G mobile phones Dual reception mode handsets Gravity phones

Growth
Smart phones Gaming mobile phone Qwerty keypad mobile phones Long life battery mobile phones Multimedia mobile phones

Maturity Utility phones


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Decline CDMA

Key Personals
Name Mr. Rajesh Agarwal Mr. Rahul Sharma Mr. Sumit Kumar Mr. Vikas Jain
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Position Managing Director Executive Director Director & Chief technical officer Executive Director

All the promoters are engineers..

Companys focus on R&D, approx. 70

engineers working in the dept.

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Small Organization with 377 permanent

employees. Lesser hierarchy. Speedily communication, speedily decision making, reflected in speedily launch of the product.

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Vision
The company's vision is to develop path-breaking technologies and efficient processes that incubate newer markets, enliven customer aspirations and continue to make Micromax a trusted market leader amongst people. The Micromax ideology stems from its rooted belief in 'Innovation' and delivering "nothing short of the best".

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Comments..
No vision mission available on

official website Mission, vision necessary to motivate employees, build corporate culture and communication to external people.

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SWOT Analysis
Strength
Specialist expertise market New innovative products Cost advantage through priority know how

Weakness
High dependence on OEMs and distributors and after sales service providers Less experience first generation entrepreneurs Lack of manufacturing expertise

Opportunities
Growing telecommunication industry Increase in disposable income due to increasing income Dominance of young generation in Indian population Consumer preference for high quality at lower price

Threats
Logo not patented Pending legal suits Changing consumer preferences New entrants Counter strategies by established players

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Porters Diamond Model

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India and other developing countries- Diamond's Model

Government support for the industry.

High competition source of innovation

cost leadership with differentiation. High demand for quality and innovation products at lower price. Growing numbers of service providers. Favorable condition of factors of productions.
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GE MATRIX
INDUSTRY (category) ATTRACTIVNESS

BUSINES S (Mobile handset)


STRENGTH

HIGH
HIGH

MEDIUM Invest to build Smart phones

LOW Selectively build Marathon battery phone Limited expansion for divest Gravity phones

Protect position 3G mobile phones

MEDIUM

Selectively Selectively build manage Qwerty phones Touch screen Re-focus Multimedia

LOW

Manage for Harvest / Divest earning CDMA Gaming phones Utility phones

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Corporate Level Strategy


Concentration

Market penetration
Market development Product development

Integration

Vertical

Expansion

Diversification

Related

Internationalization

Global With cost leadership

MICROMA X
Digitalization

With differentiation

Combination
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Simultaneous

COMPETITIVE STRENGTHS
Combination

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of technical expertise and understanding of Indian consumer behaviour. Strong product development capabilities. Efficient and speedy execution capability. Extensive nationwide distribution network. Nationwide after sales support. Diversified across products, geographies

STRATEGIES OF MICROMAX Continue to build Micromax as an innovation focused brand. Continue to expand the product portfolio and invest in product development. Expand distribution network and after sales services networks. Target high growth avenues for the mobile handset business. Developing subscription based applications for providing value added services . Pursue strategic acquisitions and investments in India and abroad. Establish own manufacturing facility in India.

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PORTERS GENERIC STRATEGY

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Value chain Model

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Primary Activities

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Inbound Logistics
Free delivery from Original Equipment

Suppliers (OES) of China In house logistic team take care of the Original Equipment Suppliers (OES)

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Operations
Using

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Surface Mount Technology (SMT) and testing line equipments, which will allow to mount components directly onto the surface of PCBs(printed circuit board), solder the components, annealing, assemble the various other components of the handset to the surface mounted PCB and finally test/ run quality control diagnostics on the product at various stages in the

The

manufacturing facility will have the capability of producing basic handset models as well as models with smart phone features. The proposed manufacturing facility will enable to manufacture up to 2.0 million handsets per month based on two, 10 hour shifts per day on an aggregate of nine SMT lines and a box-build assembly.

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Outbound Logistics
On the arrival of consignment at its distribution

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hub, an appointed customs house agent processes the consignment and arranges for the consignment to be transported to warehouse situated in the distribution hub. On arrival the consignment is checked, unpacked and packaged for onward distribution. Products from warehouses in Delhi and Dubai are transported to state and regional distributors and international distributors respectively through appointed third party transporters, who use a combination of air transport and road transport to deliver the products.

Logistics team also tracks and monitors the

delivery of the products on a real-time basis to ensure our products are delivered on a timely basis.

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Marketing

To Generate awareness Increase reach Outdoor & Digital Sign ages

Brand Ambassador to increase brand Image RadioContent integration with RJ Build Brand imageQuality and Reliability

TV National & Regional

Social Marketing Print innovations magazine & newspapers Functional Message

In Films & PR

Mall Activation Event sponsorship

Saliency for Micromax

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Sales
National sales Head

Zonal sales Managers


Area sales Managers Sales Officer

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After sales Service


370 After Sales Services(ASCs) managed by

third party including Srilanka, Dubai and Nepal. They are providing technical bulletins and process documentation online through a secured internet platform. Further, they also update their ASCs and modular (component) service centers at regular intervals on the technical specifications and other relevant information for new products to ensure that they are adequately equipped in time to be able to service all queries pertaining to new products.
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Supportive Activities

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Human Resource Management


Training to in-shop demonstrators and after sales

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service people for customer satisfaction and retention. Good incentive margins to distributors to motivate. Dedicated to the development of the expertise and know-how of the employees. Training need identification through survey. Buy in talent and recruitment of employees through empanelled consultants, online employment portals, campus recruitment and through referrals in line with cost leadership

Technology Development & Product Development


Idea inception Feature finalization
Customization and target customer pricing

Prototype batch and testing Packaging brand strategy Final prototype approved Pilot testing order launched Product feedback
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Overview of Value Chain model


Strong research and development

activities. High dependence on third party may cause a risk but planning for backward integration. Value addition can be there by creating corporate culture.
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Financial Analysis

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Shareholding pattern(before the IPO)


Category of shareholders Corporate bodies (TA Associates) % 15.00

Foreign Venture capitalists (Sandstone, Sequoia and Madison ) Individuals/HUF (promotersRahul Sharma, Rajesh Agarwal, Sumeet Kumar and Vikas Jain)
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05.77

79.33

GP Ratio
YEAR Mar 2010 Mar 2009 GP Ratio 20.94 14.17

Mar 2008
Mar 2007 Mar 2006
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15.37
7.96 4.89

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GP ratio

15

10

GP ratio

Mar2006

Mar2007 Mar2008 Mar2010

Mar2009

NP Ratio
YEAR Mar 2010 Mar 2009 Mar 2008 Mar 2007 Mar 2006
14 12 10 8

NP Ratio 12.79 10.16 13.06 5.21 3.15

NP ratio

6 4 2 0

Mar2006

Mar2007 Mar2008 Mar2010

Mar2009

Earning per share


YEAR Mar 2010 EPS 11.83

Mar 2009
Mar 2008 Mar 2007 Mar 2006
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1.41
0.89 0.29 0.05

Earning per share

12
10 8 6 EPS 4 2 0

Mar2006

Mar2007 Mar2008 Mar2010

Mar2009

capital
YEAR ROC

Mar 2010 Mar 2009


Mar 2008 Mar 2007 Mar 2006
80 70

74.46 37.62
31.48 39.57 36.25

Return on capital

60 50 40 ROC

30 20 10 0

Mar2006

Mar2007

Mar2008

Mar2009

Mar2010

Worth
YEAR RONW

Mar 2010 Mar 2009


Mar 2008 Mar 2007 Mar 2006
120

100.71 52.54
67.01 79.06 71.53

Return on net worth

100

80

60
RONW

40

20

Mar2006

Mar2007

Mar2008

Mar2009

Mar2010

Current ratio
YEAR Current ratio

Mar 2010 Mar 2009


Mar 2008 Mar 2007 Mar 2006
3.5 3

1.5 1.31
3.31 1.24 1.14

Current ratio

2.5 2 1.5 1 0.5 0

Mar2006

Mar2007 Mar2008 Mar2010

Mar2009

Quick Ratio
YEAR Mar 2010 Quick Ratio 1.22

Mar 2009 Mar 2008


Mar 2007 Mar 2006
3 2.5 2

1.06 2.66
0.97 1.09

Quick ratio

1.5 1 0.5 0

Mar2006

Mar2007 Mar2008 Mar2010

Mar2009

Debt-Equity Ratio
YEAR Mar 2010 D/E 0.24

Mar 2009
Mar 2008 Mar 2007 Mar 2006
1.8 1.6

0.66
1.34 0.721 1.60

Debt-equity ratio

1.4 1.2 1 0.8 0.6 0.4 0.2 0

Mar2006

Mar2007 Mar2008 Mar2010

Mar2009

The purposes of IPO


1) Rs.2260.39 - new handset plant with

capability of manufacturing 2mn sets a month. 2) Enhancement of the brand through advertisement and marketing. 3) Acquisitions and other strategic issues. 4) Funding expenditure for general business purposes.
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Summary
Strong competition among established

as well as small newer players. Micromax is growing very fast with technical expertise and insight in consumer behaviour. Micro player with Micro technology doing Max effect and impacting Max players

Bibliography
www.micromaxinfo.com www.ibef.org www.google.com www.valuebasemanagement.net www.wikipedia.com

www.spicemobile.com
www.nokia.com RED HERRING PROSPECTUS of Micromax

and Spice mobile Google News alerts


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