Changing Business Environment in India- Group 9

8/2/2019 Changing Business Environment in India- Group 9

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THE CHANGINGBUSINESS

ENVIRONMENTOF INDIA

Presentationby:Sukeerat GillVijay Pal SinghViney SinghTushar Malhotra(Group 9)


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Part 1- What is Business Environment andits factors-

Sukeerat (1-20)

Part 2- Investing in the new India-Vijay Pal (21-62)

Part 3- Telecom Industry-Viney (63-81)

Part 4- Case Study- Airtel (changingbusiness environment)-Tushar (82-112)


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BASIC CONCEPT

Business environment refers to thetotal of all things external to firmsands industries which affect their

organization and operation. Business environment encompasses

the climate or set of conditions,economic, social, political, orinstitutional in which businessoperations are conducted.


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NATURE OF BUSINESS ENVIRONMENT

AGGREGATIVE- Business environment isthe totality of all the external forces whichinfluence the working and decision-making

of an enterprise. INTER-RELATED- Different elements of

business environment are closelyinterrelated and interdependent.

RELATIVE- Business environment is arelative concept. It differs from country tocountry even region to region.


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CONTD

INTER-TEMPORAL-Business environment isalso an inter-temporal concept as it changesover time.

UNCERTAIN- Business environment is largelyuncertain because it is very difficult toforecast the future environment.

CONTEXTUAL- Business environment

provides the macro framework within whichthe business firm operates.


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Types of Business Environment

ExternalInternal

Culture

Mission &

Objectives

Top Management

Structure

Power Structure

Company Image &

Brand Equity

Human & Other

Resources

Micro

Macro


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Customers

Competitors

Suppliers Marketing Intermediaries

Financiers

Publics

Elements of Micro Environment


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Political & Legal

Social & Cultural

Economic Financial

Technological & Physical

Natural Global

Elements of Macro Environment


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SIGNIFICANCE OF BUSINESS ENVIRONMENT

FIRST MOVER ADVANTAGE- Awareness ofenvironment helps an enterprise to takeadvantage of early opportunities instead oflosing them to competitors.

EARLY WARNING SIGNAL- Environmentalawareness makes a firm aware of impendingcrises so that the firm can take timely action.

CUSTOMER FOCUS- Environmental

understanding makes the managementsensitive to the changing needs andexpectations of customers.

STRATEGY FORMULATION- Environmentalmonitoring provides relevant information

which serves as basis for strategy making.


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CONTD

CHANGE AGENT- Business leaders acts asagents of change by understanding theaspiration of people and other environmentalforces through environmental scanning.

PUBLIC IMAGE- A business firm can improve itsimage by showing that it is sensitive to itsenvironment and responsive to the aspirationsof public.

CONTINUOS LEARNING- Environmentalanalysis serves as broad based and ongoingeducation for business executives.


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Environmental analysis is the processthrough which an organization monitorsand comprehends variousenvironmental forces so as todetermine the opportunities and threats

that lie ahead.

Environmental analysis will help youunderstand what is happening both

inside and outside your organizationand to increase the probability that theorganizational strategies you developwill appropriately reflect yourorganizational environment.

Environmental Analysis


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Process of BEA

Scanning Monitoring

ForecastingDiagnosis


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Linkage between environment andorganization

Threats and opportunities

Serves as warning signal

Organization equilibrium

Strategic decision making

Importance of BEA


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Based on assumptions

Not absolute truth

Time consuming Expensive

Limitations of BEA


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SWOT Analysis

PEST Analysis


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S : Strengths

W : Weaknesses

O : Opportunities T : Threats

SWOT analysis are undertaken bybusiness at the start of planning.


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A SWOT starts with an externalanalysis of the business environment,called a PEST Analysis.

P : Political

E : Economical

S : Socio-Culture T : Technological


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Taxation policy

Industrial policy

Privatization/ Deregulation Ruling partys rules and regulations


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Demographics

Changing values in society

Changes in consumer tastes andpreferences

Levels of education


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Alternative means of providingservices

Government and Industrialexpenditure on R & D

Changing communications technology

New production technology


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INVESTING IN THE NEW

INDIAA Different World

PRESENTED BY:-

VIJAY PAL SINGH


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Characteristics of the New India

1. Liberalized markets

2. Stable & low inflation

3. High & broad based economicgrowth

4. Internationally competitive

corporate sector5. Young and educated workforce

Ch i i f h N


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Characteristics of the NewIndia-Continued

6. A rapidly growing middle class

7. Rising foreign direct investments

8. Democracy and the rule of law9. New business opportunities

I di A C lli


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India A CompellingInvestment Story

3 key facts1. Economic liberalization has unleashed corporate

India Unleashed dynamic corporate culture after 40

years of state control New home grown companies fuelling export

boom2. Favorable demographics fueling growth

Sixty percent of India is working population Growth in middle class: 300 million strong

3. Domestic consumption boom is the engine drivinggrowth


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As A Result

India on a sustainable growth path, established bystrong economic indicators:

Worlds 4th largest economy, GDP of US $ 1 trillion 8-9% GDP growth over the last 5 years and is

expected to grow at 5.5-6% even during recession In the last decade --among the top 6 fastest growing

economies Now it is the second fastest growing economy in the

world Indian economy has doubled since 1991 Foreign exchange reserves in excess of US $ 240

billion


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A Strong Economy

India today is a much stronger economy with 67.5% ofGDP contributed by private consumption

Growing foreign exchange reserves (at $240 bn)

Longer term rupee is expected to strengthen India has the potential to become the 3rd largest

economy in the world by 2032 ( Goldman Sachs).

By 2050, expected to be the second largest economy in

the worldahead of the US

E i


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EconomicLiberalization

Balance of Payments crisis in 1991 forcedliberalization of economy

Reforms have decreased restrictions on FDI andopened competition in most industries

Improved the overall investment climate byliberalizing many restrictions on investment,including foreign investment, repatriation ofprofits, deregulating interest rates, and openingup the insurance sector to private sector

participation Declining Rates of Taxes and Import Tariffs

Rationalizing the tax regime, including loweringtariff barriers, simplifying the trade regime,reducing marginal tax rates, and simplifying tax

procedures


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Liberalization--continued

Deregulation of Industries Simplifying the process of setting up businesses. In

particular, the business licensing requirement has beenabolished for most industries.

Reducing the role of government in industry

Privatization is hesitant but deliberate and methodical to minimizedislocations

Developing the infrastructure sector by encouraging privateparticipation in power, telecom, ports, and roads, and reforming thepower sector to improve efficiencies.

Implementing labor reforms, including amendments to the

Industrial Disputes Act allowing easier closure and layoffs ofworkers in economically unviable companies, and changes in thewage ceilings set in the Payment and Wages Act


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Monetary Policy/Inflation Sound monetary policy has provided an

environment for real growth

Low money supply growth has provided

a stable inflationary and hence growthenvironment

Despite occasional spikes the general

trend in inflation has been down Inflation currently at around _% pa

Di ifi ti f


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Diversification ofEconomic Growth

Economic growth is increasinglydiversified across several sectors

Unlike the past, growth is not restricted to

just a few sectors Decreasing dependency on agriculture

India is rapidly becoming both, a

manufacturing and a services driveneconomy

E i G th Di ifi d


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Economic Growth Diversified-Continued

Growth in manufacturing = 12.3% pa

and services = 11% pa

Vibrant and dynamic private sector

While China has grown through FDI and a top-down approach, India has grown throughentrepreneurship.

Because India still has retained some capital

controls, the Indian economy is less susceptibleto international shocks than China


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Consistent Growth Consistent growth-- over 8% in the last 5 years

Greater consumer confidence has increased the willingnessto borrow.

However, consumer finance is still in nascent stages.

Due to low loan penetration, consumer lending has atremendous potential for growth

D hi K t


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DemographicsKey toGrowth

54% of Indian population under 25 years

80% under 45 years

25% of all people under 25 years in world are in

India Indias youth bulge and recent job creation is

leading to consumption driven growth

The younger generations habits differ greatly

from the previous generations, causing radicalshifts in consumption patterns


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Demographics--continued By 2013, net addition to the productive population (aged

25-44 years ) will be 91 million or 33% increase.

the share of the working age population (15-64 years) intotal population will grow from the current 59% to about

65%, translating into 882 million by year 2020. India also has a large number of young graduates with

strong technical and English language skills

A young highly skilled workforce is powering Indiashigh value industries

.


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Demographics--continued According to the Vision 2020 document of the

Planning Commission of India, the country willwitness continued urbanization.

The urban population is expected to rise from

28% cent to 40% of total population by 2020. Future growth is likely to be concentrated in and

around 60 -- 70 large cities having a populationof one million or more

A whole new consumer class A rapidly growing middle-class


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A Vibrant Middle Class

Key driver for investment opportunities isthe growth of the middle class

Increased from 10% to 22% ofpopulation from 1990-2008

Expected to grow from 22 % to 48%from 2008-2015

India is China with a 5 to10 year lag.

A Rapidly Growing Middle


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A Rapidly Growing MiddleClass

Over the years, spending power hassteadily increased in India.

Over the next five-seven years, 180 million

people are expected to move into theconsuming and very rich classes. (= 2/3 ofUS population)

On average, 30-40 million people arejoining the middle class every year


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Education A Driving Force Government spending on education has doubled in the

past three decades

The number of universities has more than trebled overthe same period

Education is driving the development of advancedindustries such as Information technology, engineering and pharmaceuticals

The availability of a skilled workforce is encouragingforeign companies to set up research and developmentfacilities in India

As well as call centers and other outsourced services


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Policy Reversals?

Policy reversals highly unlikely

India will continue on currentliberalization path

It is expected that the Indian economy willgrow by at least 6-7% a year for the next10 years ?

More than twice as fast as the US, the UKor Europe.


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What Does All This Mean? Higher savings, higher investment, higher growth and

higher profits in the next decade Represents huge consumption spending in terms of the

demand for mobile phones, televisions, scooters, cars,and other consumer goods

A consumption pattern associated with rising incomes Growth is not constrained by future liabilities associated

with supporting an ageing population as in manydeveloped countries

Tremendous investment opportunities to earn highreturns on capital by participating in the growthmomentum that exists in India


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Implications of Changes These changes in the Indian business scenario coupled

with broad-based economic growth, have resulted ininvestment opportunities across a variety of industriesand across various stages of company growth cycles

Factors such as high productivity, high quality systems

and processes, as well as the significant labor-costarbitrage, form the long-term basis of Indiascompetitive advantage.

Recent reforms will accelerate growth in these areas andoffer attractive opportunities for investments from the

US.

Changing Face of Indian


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Changing Face of IndianCompanies

India is now among the lowest cost producers ofseveral commodities (e.g. steel, aluminum, cement,autos, auto ancillaries, pharmaceuticals)

Indian IT has shown how it can become globally

competitive. Corporate India acquiring companies globally in

order to scale up. Tata Corus steel; many otherexamples

Corporate earnings growth of 20% +

Which industries? Where Are


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Which industries? Where Arethe Opportunities?

Indian industry is rapidly becoming a keyoutsourcing partner to global companiesin areas such as

business services

pharmaceutical research and development

design and manufacture of original

automotive parts.


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Opportunities-Continued

Originally, these partnerships because of lowlabor costs, but increasingly Indian firms arebeing tapped for their expertise in various high-

end disciplines including IT system architecture Product design

Process re-engineering

Financial analysis Specialized engineering

O t iti i I t ti ll


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Opportunities in Internationally

Competitive Industries

Industries that have the greatest potential to beIndias most internationally competitiveindustries: Technology

Engineering

Telecommunication products

Automobiles and automobile ancillaries

Textiles

Semiconductor design, and

Life sciences (pharmaceuticals; biotech)


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Foreign Direct Investments

As a result of all the various changesmentioned, foreign direct investment(FDI) in India amounted to over $ 247.292bn(March23 ,2009) .


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FDI by Sectors--Opportunities Sectors that have attracted the highest FDI flows are:

Services sector

Electrical equipment

Telecommunications

Transportation Power +Oil refineries

Chemicals

Construction

Drugs & Pharmaceuticals

Food Processing Housing & Real estate

Is Political Uncertainty a Problem?


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Is Political Uncertainty a Problem?No

Several (five?) coalition Governments since economicreforms started in 1991.

But no difference to continuation of economic reforms Debate now on the speed of economic liberalization, not

the direction Reforms can always be faster, but.learn to live with

political reality Political uncertainty mostly a problem for the politicians. Rapid economic growth will continue


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Politics--Continued

Unlikely that India will have single partyrule in the near future

Current government a coalition betweenCongress Party and the othersmaller/regional parties

Coalition politics not necessarily a minus -

a long term reality

R lti i A M h B tt


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Resulting in A Much BetterInvestment Environment

Indian saver is a huge under-investor in Indianequities only 3 million investors, but over 30million individuals file income tax returns

Equities is a better place to invest; because Better tax environment

Short term capital gains tax reduced to 10%

Valuations are not cheap but are fair comparedto the earnings growth

Opportunities in the Equity


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Opportunities in the EquityMarkets

Infrastructure-- Critical to the continued success of India Opportunities in power, cement and construction Consumer Goods-- Compelling demographics Opportunities in tea, sugar, retail, real estate, hotels

IT stable companies with steady growth in mandates Engineered products low labor plus high skilled

workforce Pharma world class companies with compelling cost

advantage


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In Summary

Markets may have run up, but India story far fromover

Economic growth to sustain over 10 year time horizon Valuations are keeping pace with growth Indian markets more stable compared to other

emerging markets Markets in the short term could be volatile and could

correct further Every correction an opportunity to build a long term

portfolio


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Infrastructure Investments

Critical sector for Indias economic growth

Infrastructure investment will further raisegrowth

Investments of $ 400+ Billion over next few years Critical to removing bottle necks which are

constraining growth

Stimulate economy further by spreading growth

to underserved rural areas Rural roads critical for agriculture growth


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Benefits of Investments

Several benefits associated with infrastructureinvestments in India.

Specific tax exemptions and concessionsavailable

Prolonged Income Tax Holidays and otherdirect and indirect tax concessions

Automatic permission is available forinvestments and repatriation.


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Benefits (Continued) Sustained liberalization of investment policy . Availability of domestic capital, both debt and

equity.

Unprecedented allocations by the CentralGovernment from the budget for Infrastructuresector

Resulting in major initiatives by prominent

global players from US, Europe, Japan, Korea,Taiwan in infrastructure projects

Attractive Business


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Attractive BusinessOpportunities In-

Oil and Gas Midstream & downstream Refineries Pipelines

Telecoms Wireless/mobile telephony Email/internet Videoconferencing

Power Generation/transmission/distribution Renewable energy (solar, wind, biomass)

Airports Construction/operation/upgrading of existing airports New airports

Attractive Business


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Attractive BusinessOpportunitiesCont.

Ports Leasing of existing assets Construction/operation terminals, cargo berths, storage facilities

Roads Expressways Widening existing roads

Bridges Toll roads

Railways Equipment manufacture Construction Operation & management

Real estate Integrated townships Commercial malls Hotelsparticularly 3 star

What Can Go Wrong?


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What Can Go Wrong?

Infrastructure bottlenecks could put brake on growth Potential for political instability: coalition government, tensions

with Pakistan Stronger currencies in US and EU could impact emerging market

inflows Foreign investor outflow would hurt valuations and liquidity Corporate governance and transparency need to improve Interest rates have risen and bear watching Economic benefits and better education need to filter down to the

lower income citizens and rural poor Spread of HIV virus

Looming water shortages

Considerations for Doing


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Considerations for DoingBusiness in India

1. Local Presence is critical Choose a local partner to help you through all problems Experience in navigating the complexities and intricacies of the

Indian markets Ability to identify attractive opportunities

Access to high quality management Assist in getting myriad of government permits and licenses, -even now, after all the liberalization

2. Strong network important Who you know is very importantprovide key insights into

political and economic matters

Will enable you to identify tomorrows opportunities


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Considerations(Contd)3. Understand that things just take longer to transact even

when permissions are there. Indians act on their owntime schedule

4. Be prepared for a culture shock--the sheer size andenormity of India's social problems should not put you

off-- solving these may actually be a long term businessopportunity5. Yes does not always mean yes and no does not

always mean noand a no headshake means yes6. Important to maintain sensitivity to local sensibilities

e.g. religion, caste, and particularly Indian paranoiaabout being spoken "down" to by the West (a colonialhangover)


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Considerations(Contd)

7. Power/infrastructure bottlenecks

8. Corruption

9. Strong labor unions/boisterousworkforce

10. Democracy can be a source of delays too


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Make the breakthrough

But once you can break through the Indianbarriers, the opportunities to make profitsare enormous - higher than in China.

India is a real value creator for investors


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TELECOM INDUSTRY

Presented by- Viney Singh


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Telecom in the real sense means transfer of informationbetween two distant points in space

Telecom is a huge and varied fastness of technologies,

companies, servicesthat is truly global in nature

Telecom stands as one of the most essential elements of the

business world in terms of Connecting the World

Introduction


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History of Telecom Industries


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Cont..


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Overview of Telecom Industies

Indian Telecom sector, like any other industrialsector in the country, has gone through manyphases of growth and diversification. Startingfrom telegraphic and telephonic systems in the19th century, the field of telephoniccommunication has now expanded to make use ofadvanced technologies like GSM, CDMA, and WLLto the great 3G Technology in mobile phones. Day

by day, both the Public Players and the PrivatePlayers are putting in their resources and effortsto improve the telecommunication technology soas to give the maximum to their customers.


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The Indian telecom sector can be broadly classified into

Fixed Line Telephony and mobile telephony. The major

players of the telecom sector are experiencing a fierce

competition in both the segments. The major players like

BSNL, MTNL, VSNL in the fixed line and Airtel,

Vodafone, Idea, Tata, Reliance in the mobile segment are

coming up with new tariffs and discount schemes to gain

the competitive advantage. The Public Players and the

Private Players share the fixed line and the mobile

segments. Currently the Public Players have more than

70% of the market share.


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India India has a 700 million people living in 638,000

villages

per-capita income of $ 0.40 per day)

As per DoT statistics 500,000 villages have

telephone access.


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Growth of Telecom in India



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1994 National Telecom Policy 1994 announced

Aug 1995 Kolkata became the

first metro to have a cellularnetwork

1997 Telecom RegulatoryAuthority of India was setup

March 1999 National TelecomPolicy 99 announced



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2000 TRAI Act amended & separatetribunal

proposed

Jan 2001 TDSAT startedfunctioning

Jan 2001 Limited mobility allowed

to Basic Services(CDMA spectrum allotted to

Basic Service

Operators)



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Oct-2002 BSNL entered in to GSM

cellular operationw.e.f 19th October, 2002.

Made incoming

call free & initiated tariffequalization process

Tariff for GSM cellular mobilesreduced


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Teledensity-Rural & Urban

Teledensity

0.52 0.68 0.93 1.21 1.49 1.57 1.73 1.86

5.887.96.94 8.36

10.3712.2

14.32

20.74

26.88

39.45

48.52

60.04

2.32 2.86 3.584.29 5.11

7.028.95

12.74

18.31

23.21

0

10

20

30

40

50

60

70

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

2007(Nov

)

Year

Rural Urban Total


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Mobile Services : Fuelling the growth

Nov-06

40.35

22%

143.11

78%

Fixed Line

Wireless

Nov-07

39.31

15%

225.46

85%

Fixed Line

Wireless

Total telephone connections as on November 2006:

183.46 million

November 2007: 264.77 million


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Role Of TRAI & TDSATin Indian Telecom Growth

TRAI

Setup in 1997

Protection of Consumer Interest

Nurture Conditions for Growth of Telecom inIndia

Major Activities

Reduced levies on Operators.

Reduced upper limit in tariff (Local, STD &ISD) and other Inter-operators tariffs.

Policy guidelines on new services like 3G,WiMAX, Internet Telephony.


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Role Of TRAI & TDSATin Indian Telecom Growth

TDSAT An integrated & comprehensive dispute

settlement mechanism.

Set up on 29th May 2000 & started hearing w.e.f.Jan 2001

83% cases disposed off from 2001 till 2007

TRAI & TDSAT provided healthy atmospherefor healthygrowth of Telecom sector (Teledensity from

1.57 in 1997to 24 in December 2007)


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Opportunities

Rural tele-density is less than 10%. Overall tele-density is only 24%.

Broadband penetration is just 0.25%,hence vast scope.

As globalization is increasing, morepercentage of global business forIndian telecom.

Technologies like 3G, WiMAX, willopen up new frontier of business.

Challenges


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Challenges

No. of operators are increasing percircle: hence more competition

Cost/ Customer is very high in rural

areas Spectrum a scare commodity

Availability of Contents in local language

Telecom Manufacturing in India.


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Network expansion 250 million by 2007 - Already achieved

600 million by 2012

Rural connectivity

100 million by 2010 200 million by 2012

Broadband 20 million broadband connections and 40 million internet connections to

provide by 2010

Broadband connections to provide on demand across the country by 2012

Growth- the way ahead


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BHARTI AIRTEL

Presented by- Tushar


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AIRTELEstablished in 1995 by Sunil Mittal,Airtel is the largest telecom serviceprovider in Indian telecom sector. With

market capitalization of over Rs. 1,360billion, Airtel has 31% of total marketshare of GSM service providers.

Providing GSM services in all the 23circles, Airtel was the first private playerin telecom sector to connect all statesof India. Also, Airtel is the first mobile

service provider to introduce the


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Success Story of BHARTI

Bharti Enterprises has successfully focused its strategy on telecom while

straddling diverse fields of business

It all began as a Small Industry

Bharti Tele-Ventures is today acknowledged as one of India's finest

companies, and its flagship brand 'Airtel', has over 12 million customers

across India

Recently, Bharti has successfully launched an international venture withEL Rothschild Group owned ELRO Holdings India Ltd., to export fresh

Agri- products exclusively to markets in Europe and USA


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Market Strategy of Airtel

We positioned Airtel as an inspirational andlifestyle brand, in a way that trivialized the

price in the mind of the consumer. It waspitched not merely as a mobile service, butas something that gave him a badge value.

Airtel strategy is to be a leader in

-Innovations

-network

-offers and services

Competitive Analysis (Positioning Strategy)


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Competitive Analysis (Positioning Strategy)

Vodafone has

veered towardswarmth andemotions.

Vodafone usedthe powerfulvisual imagery ofa dog.

Airtel is focused

on functionallyand efficiency.

Airtel choose to

use music, whichis not nearly aseffective.


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Competitive Analysis (Target Audience)

They are targeting

middle class personas their target

audience.

It can be justified by

their product likechota recharge.

A group or class

of personsenjoying superiorintellectual orsocial or economic

status

Up market

professionals


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Vision 2010

By 2010 Airtel will be the mostadmired brand in India:

Loved by more customers

Targeted by top talentBenchmarked by more businesses


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Vision 2020

To build India's finest businessconglomerate by 2020

Supporting education of

underprivileged children throughBharti Foundation

Strategic Intent:

To create a conglomerate of the futureby bringing about Big Transformationsthrough Brave Actions.


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Mission

We at Airtel always think in freshand innovative ways about the needsof our customers and how we want

them to feel. We deliver what wepromise and go out of our way todelight the customer with a little bit

more


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Company History 1995 mobile service brand in Delhi and

HP and BT acquires a stake.

1996-97 Formed Bharti BT VSAT Ltd.

2001-02 Launches IndiaOne , 8 newlicenses in the East, becomes largestoperator, launches Airtel tune

2003-04 Association with Ericsson, IBM.

2006-07 Forays into Sri Lanka and US,tie up with Google and Microsoft


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Subsidiary Companies

Bharti HexacomBharti Comtel

Bharti Aquanet

Bharti Broadband

Bharti Infratel

Bharti TelemediaBharti Airtel(UK,US,Canada,Hongkong, USA, Lanka)


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Share Capital Rs 8,340.15 million raised through the IPO 2002 Went Public Shares in issue

1,898,101,604 as at September 30,

2008 Market Capitilization

Approx. Rs. 1,371 billion P/E

19.98 EPS

36.16


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Some Key highlights

Income

Statement(Sep '08) (Mar '08)

Quarterly Annual

Net Sales 8274.37 25703.51

Other

Income28.43 235.86

PBDIT 3151.06 10736.89

Net Profit 1604.78 6244.20

Balance SheetAmount in Rs.

Cr

Total Share

Capital1897.91

Net Worth 20241.49Total Debt 6570.34

Investments 10952.85

Net CurrentAssets

-5922.94

Total Assets 26811.84


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Subscriber GrowthGroup Company wise % market share - Nov'2008

Sr, No.Name of

Company

Total Sub

Figures% Market Share

1 Bharti Airtel 8,29,20,593 33.25%

2 Vodafone Essar 5,87,64,164 23.57%3 BSNL 4,04,87,511 16.24%

4 IDEA 3,28,09,720 13.16%

5 Aircel 1,53,75,258 6.17%

6

Reliance

Telecom 95,82,695 3.84%

7 Spice 37,05,894 1.49%

8 MTNL 38,21,277 1.53%

9 BPL 18,82,324 0.75%

All India 24,93,49,436 100.00%


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Customer Growth across the years

Year

Overall Subscriber

Base

Airtel Subscriber

Base

Market

Share

Mar-04 2,61,54,405 42,16,317 16.12087

Mar-05 4,10,25,940 1,04,78,585 25.54136

Mar-06 6,91,93,321 1,95,79,208 28.29638

Mar-07 12,14,31,166 3,71,41,210 30.58623

Mar-08 18,44,13,702 6,19,84,721 33.61178


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Income and Expenditure(Rs. Cr)

63.15

6,446.06

11,272.22

17,987.30

25,874.20

35.76

5,156.34

7206.71

10621.14

15107.75

0

5000

10000

15000

20000

25000

30000

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

Total Income (Rs. Cr.)

Total Expenses (Rs. Cr.)

BigMargin

O i P fi (R C )


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98

Operating Profit (Rs. Cr.)

27.22

2997.674038.57

7260.54

10662.41

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

Operating Profit (Rs. Cr.)


99/112

99

For the current year

Customer GrowthRate86%

Increase in

Revenue58% Increase in EBITDA79%

Growth in Profit100%


100/112

100

TARGETING

Elite

Up market professionals

Entrepreneur with business plans

Low income mass category

Youth

Women and senior citizens by postpaid connection


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101

Express Yourself In 2003, Airtel repositioned its brandwith Express yourself campaign

Changed its logo to give more

energetic and younger look Highlight capability of Airtelsperformance and network coverage

Launched in regional language

THE FIRST MOVERADVANTAGE


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ADVANTAGE

Electronic recharge

Hello tunes

Airtel Live!

Portfolio manager

Song catcher

Easy music

Black berry handsets

Competitor Anal sis


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103

Competitor Analysis

0.00%5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

Bharti Rcom IDEA MTNL

Competitor Analysis

OP Margin Net Margin

Company Sep-07 Sep-08 Sep-07 Sep-08

Bharti 43.00% 38.00% 26.40% 19.30%

Rcom 37.90% 31.60% 23.90% 13.20%

IDEA 32.80% 26.60% 14.10% 6.50%

MTNL 23.70% 22.90% 7.00% 6.80%

Best OP Margins& Net Profit

Margins among

Peers

Source: CMIE November 2008


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Threat of New Entrants

Low Because

Huge License Fees to be paid upfront

& High gestation period Spectrum Availability & RegulatoryIssues

Infrastructure Setup Cost - High Rapidly changing technology Previously

Low, NowHigh

Th f N E


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Threat of New Entrants

High Because

Entry through 3G

New Entrants are ready to enter withHuge Capital Considering theattractiveness of the market

New Entrants from Non telecomcompanies with the ease ofOutsourcing

PreviouslyLow, Now

High

SWOT


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106

SWOT

Strengths Weakness

Largest Telecom Playerin India - ~80Mn,

22.6% Market Leader Strong Leadership

Sunil Bharti Mittal Recognized Globally Strong Financials Focus on Core

Activities Outsourcethe rest

Strong Brand Image

Marketing Team

Outsourcing of CoreSystems

Little bit expensive

SWOT


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SWOT

Opportunities Threats Bharti Infratel

Cutting Down cost inRural area

Current Tele-Density 30.6 is still lowamong developingcountries

Low BroadbandPenetration, RuralTelephoney

India centric Majorrevenues from India

Intense Competition& Shortage ofBandwidth

New Players coming

in India Uncertain Economic

conditions

S


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Strategy

Partner with leading players intelecommunication across the globe.

Managed to work with the best of

domain specialists globally andemerge as a world class entity.

Operational contracts with strategic

investors ranging from private equityinvestors to global telecom giants.

O t i d l i 2004


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Outsourcing deals in 2004

Ericsson was given the mandate toprovide, manage and maintain theequipment as well as provide quality

assurance in Airtels then 13 mobilecircles.

IBM was given the mandate to

handle the back office requirementsof Airtels presence in India

P f till d t


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Performance till date

Bharti Airtel has enjoyed an excellentrun ever since the telecom sectoropened.

It has managed to hold on to itsleadership position inspite of thepresence of other players with deep

pockets Ambanis, Tatas, Birlasand Vodafone.

Has coped well with regulatory

chan es

Future Strategies


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Future Strategies

Translate its expertise in Indian markets toother emerging economies.

This could call for acquisitions globally.

Technology leadership is a must Airtelmust ensure that its reliance on GSMtechnology does not render it obsolete.

Indian market inspite of being the worlds

largest is still not matured. Opportunitiesabound in the hinterland which must beexploited.


112/112

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Changing Business Environment in India- Group 9

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