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DOING BUSINESS IN EMERGING MARKETS

DOING BUSINESS IN EMERGING MARKETS. OCTOBER 1, 2014. DOING BUSINESS IN INDIA. Stacy Standley, MD, Sikand Standley Ent. Pvt. Ltd. THE ELEPHANT vs THE TIGER. 2013. Aug 2014 INDIA NO. 3. INDIA GDP/CAPITA (PPP).

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DOING BUSINESS IN EMERGING MARKETS

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  1. DOING BUSINESS IN EMERGING MARKETS OCTOBER 1, 2014

  2. DOING BUSINESS IN INDIA Stacy Standley, MD, Sikand Standley Ent. Pvt. Ltd.

  3. THE ELEPHANT vs THE TIGER

  4. 2013 Aug 2014 INDIA NO. 3

  5. INDIA GDP/CAPITA (PPP)

  6. GDP: Services-65%, Industry-18%, Agriculture-17% FOREX RESERVES: $319 Billion CURRENT EXCHANGE RATE: RS 60.47=$1.00 VALUE OF EXPORTS: JULY 2013-$25 Billion vs JULY 2014-$27 Billion(7.3%) MAJOR EXPORT PARTNERS: CHINA, US, GERMANY, JAPAN THAILAND TOP INVESTING COUNTRIES: MAURITIUS, S’PORE, UK, JAPAN, US, CYPRUS CUMULTIVE FDI INFLOWS 2000-2014 $11 Billion SECTORS WITH HIGHEST FDI: SERVICES, CONSTRUCTION, TELECOM, IT, DRUGS AND PHARMA, AUTOS, POWER, METALLURGICAL INDIA ECONOMY OVERVIEW

  7. INDIA LOOKS GOOD ON PAPER • English widely spoken-but 16 “sub-official languages” • English “official language of Gov’t of India • India Law patterned after British Law • India signatory to Paris Patent Convention-1998 PCT • India member of WTO-1995, (China-2001) • India second largest foreign student pool in US • India-US largest number of joint ventures

  8. PERCEPTION VS REALITY • COMPETITION ACT OF INDIA-2002 • FOREIGN CORRUPT PRACTISES ACT • CENTRAL BUREAU OF INVESTIGATION-CBI • Corruption Perceptions Index (CPI) INDIA 94:177 • World Bank Survey-Ease of Doing Business: India 132:185 • Grassroots anticorruption campaign • Rise in whistleblower complaints • Increase in social groups highlighting corruption • Corporations giving more focus to internal audits and • investigations to identify fraud and corruption

  9. = Rupee/Dollar Exchange Rate 2003-2013

  10. Challenges of Currency Fluctuations in Developing Markets • Soft Currencies-Exchange Rates Highly Unpredictable • Repatriation of Profits Can Be Difficult • Import and Export Values Unpredictable • Stable Pricing Difficult-or Risky • Hedging becomes Critical • Use of “Synthetic” Derivatives should be incorporated • Arbitrage-high risk-high reward

  11. ELEMENTS OF SUCCESS

  12. GET IT RIGHT! 1991 1998 1985 1996 1987 2002

  13. HISTORY OF AUTO INDUSTRY • GM Started Mfg in India in 1920s • TATA & Mercedes for Trucks 1940’s • HML starts mfg of Ambassador 1950 Morris • Suzuki-GOI start Maruti 1980 • Auto mfg grew to 14 brands by 2006

  14. AUTO INDUSTRY MARKET SCENARIO2002 SSEPL ENTERED MARKET WITH BG PRODUCTS, INC USA

  15. AUTOMOTIVE INDUSTRY-2002 • 1992-4 DOMESTIC MFG • 2002-12 DOMESTIC & FOREIGN MFG • 2002 ANNUAL PRODUCTION-700,000 • 2002 INDIA SIMILAR TO US 1955 MOST PURCHASERS-1ST TIME BUYERS MEN LOW AUTO SAVVY EASILY SOLD “SNAKE OIL”

  16. Automobile Production

  17. AUTOMOTIVE LUBRICANTS • FOREIGN PRODUCTS-STP, WYNNS, BARDHAL • DOMESTIC-SEVERAL NON DESCRIPT • PRODUCT CLAIMS • ADD HORSEPOWER • NEVER CHANGE OIL • LIFETIME WARRANTY • IMPROVE MILEAGE BY 20%

  18. SSEPL MARKET ANALYSIS • WAS INDIA READY FOR BG PRODUCTS? • COMPETITION OF FOREIGN PRODUCTS • COMPETITION OF DOMESTIC PRODUCTS • MARKET OPPORTUNITIES • AUTO VS TRUCK VS SCOOTER/MOTORCYCLE • MAJOR METROS VS SECONDARY MUNICIPALITIES • DEALERSHIP SERVICE CENTRES • QUICK LUBE CENTRES/INDEPENDENT CENTRES • PETROL SERVICE STATIONS

  19. BG PRODUCTS, INC • COMPETITIVE ADVANTAGES • QUALITY VS PRICE • TEST RESULTS VS SALES CLAIMS • WIDE RANGE OF PRODUCTS -100+ • USED ONLY BE SERVICE PROFESSIONALS • SERVICE EQUIPMENT FOR PRODUCTS • TECHNICAL SUPPORT

  20. SSEPL’s COMPETIVE WEAKNESS • 100% IMPORTED IN FINISHED CONTAINER • 43% IMPORT DUTY • 90 DAYS FROM PO TO ICD-DELHI • COMPETITION-ESTABLISHED MARKETS • SPIFFS SELL PRODUCTS • NO CORPORATE MARKETING SUPPORT

  21. SSEPL’s ENTRY OPTIONS • JV WITH MAJOR OIL COMPANY-IOC,BP, SHELL • JV WITH AUTO AFTERMARKET PARTS SUPPLIER • BUY EXISTING DISTRIBUTION NETWORK • JV WITH COMPETITOR • BREAK BULK/REPACKAGE IN INDIA • GREENFIELD ENTRY-GO IT ALONE

  22. 2012 SSEPL wants to estabilesh BG brand each & every state Employee Strength: 379 Delhi Ghaziabad Chennai Hyderabad Ahemdabad Mumbai-1 Mumbai-2 Jaipur Guwahati Bangalore Pune Indore Dehradun Kolkota Kochi Patna Faridabad Employee Strength: 234 2011 Delhi Ghaziabad Chennai Hyderabad Ahemdabad Mumbai-1 Mumbai-2 Jaipur Indore Dehradun Guwahati Bangalore Pune Kolkota Continue opens offices in three more cities Employee Strength:210 2009 2010 Delhi Ghaziabad Chennai Hyderabad Ahemdabad Mumbai-1 Pune Indore Dehradun Mumbai-2 Kolkota Consolidates its presence in major Indian metros Employee Strength:136 2008 Delhi Ghaziabad Chennai Hyderabad Ahemdabad Mumbai-1 Kolkota Mumbai-2 SSEPL opens 2 offices in Mumbai to capture the mkt potential Employee Strength: 129 2007 Delhi Ghaziabad Chennai Hyderabad Ahemdabad Mumbai-1 Mumbai-2 SSEPL forward its journey by opening three offices in Major cites Employee Strength:34 2006 Delhi Ghaziabad Chennai Hyderabad Ahemdabad SSEPL opens its second office in NCR Employee Strength:18 2005 Delhi Ghaziabad SSEPL sets up India operations Employee Strength: 10 2002 Delhi

  23. Market Penetration 10% 10% 10% 30% 40% 60% No of Dealerships

  24. Bullish on India • Prime Minister Narendra Modi-Vision of the Future • GE chief Jeff Immelt “India is a great country and place to invest” • Indra Nooyi, PepsiCo's chief, “thrilled to be working with him” • IBM's CEO Virginia Rometty “interested to participate in the government's new initiatives”

  25. WHERE IS THE ACTION? SILICON INDIA • TOURISM: Hotels, airlines business, medical, sports and educational tourism • TEXTILES: 17% of Exports • AUTOMOBILES: Automotive parts and ancillaries-domestic/export • SOFTWARE: IT and BPO • ENGINEERING: Export of transport equipment, heavy machinery, fasteners and castings • FOOD PROCESSING: packaged foods, fast food production, cultivation, and marketing of fresh fruits and food grains. • ORGANIC FARMING: top 10 countries with maximum cultivable land under organic certification • 8. BIOTECHNOLOGY: in agriculture, horticulture, poultry, dairy farming • and fruit and vegetable production

  26. WHERE IS THE ACTION-ENTREPRENEURS? • SOCIAL VENTURES: Rural India huge potential • FRANCHISING: Small towns and rural India • EDUCATION AND TRAINNING: Online programs • AYURVEDIC MEDICINE: cosmetics, natural medicines and remedies • MEDIA: Television, advertising, print and digital media • PACKAGING: agriculture, automotive, consumer goods, healthcare infrastructure and packaging sectors for plastics. • FLORICULTURE: Export of flowers • TOYS: cost effective and safe toys for export • ENERGY SOLUTIONS: National Solar Mission • RECYCLING: E-waste management and disposal

  27. READY FOR THE ELEPHANT?

  28. A WORLD OF OPPORTUNITY SEIZE IT! THANK YOU

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