INDIAN WATER PURIFIER INDIAN WATER PURIFIER INDUSTRYINDUSTRY

ByByAnshul GhiyaAnshul Ghiya

Vikas JainVikas JainShruti KhandelwalShruti Khandelwal

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Some Hard Some Hard facts:facts:

• 1 in every 10 diseases and 6% of all deaths globally 1 in every 10 diseases and 6% of all deaths globally are caused by lack of Sanitationare caused by lack of Sanitation

• In India In India –– 1.03 crore people die annually 1.03 crore people die annually 7.8 lakh (~7.5%) deaths are related to water, 7.8 lakh (~7.5%) deaths are related to water,

sanitation and hygienesanitation and hygiene

In the past 10 years diarrhea has killed more children In the past 10 years diarrhea has killed more children than all the people lost to armed conflict since World than all the people lost to armed conflict since World War II.War II.

Some 6,000 children die every day from diseases Some 6,000 children die every day from diseases associated with lack of access to safe drinking water, associated with lack of access to safe drinking water, inadequate sanitation and poor hygiene inadequate sanitation and poor hygiene –– equivalent equivalent to 20 jumbo jets crashing every dayto 20 jumbo jets crashing every day..

--WHO REPORT 2008WHO REPORT 2008

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Hard Facts Continued..Hard Facts Continued..

At any one time it is estimated that At any one time it is estimated that half of the worldhalf of the world’’s hospital beds are s hospital beds are occupied by patients suffering from occupied by patients suffering from water-borne diseases.water-borne diseases.

--The Economic TimesThe Economic Times

What is a water purifier?What is a water purifier?

• A water Purifier is a device that removes A water Purifier is a device that removes contaminants such as parasites, algae, viruses, contaminants such as parasites, algae, viruses, bacteria, minerals, fungi, toxic metals, and manmade bacteria, minerals, fungi, toxic metals, and manmade chemical pollutants from water. Water purifiers chemical pollutants from water. Water purifiers remove these contaminants from raw water to make remove these contaminants from raw water to make it pure and safe for human consumption. They also it pure and safe for human consumption. They also improve water odour, taste, and appearance.improve water odour, taste, and appearance.

           

• It is a large unit that usually stands beside the sink It is a large unit that usually stands beside the sink or under the counter and that is attached to the top or under the counter and that is attached to the top or the side of the tap by a hose.or the side of the tap by a hose.

Features of a Good Water Features of a Good Water Purifier:Purifier:• It should Retain natural quality of water.It should Retain natural quality of water.

• Absolutely safe for drinking purpose as per WHO Absolutely safe for drinking purpose as per WHO standards.standards.

• User friendly features.User friendly features.

• Long Life.Long Life.

• In-built storage tank.In-built storage tank.

• Avoids all contamination with last point purification.Avoids all contamination with last point purification.

• Low Maintenance.Low Maintenance.

TypesTypes of water purifiers of water purifiers

• Reverse OsmosisReverse Osmosis

• Carbon FiltersCarbon Filters

• Ion Exchange basedIon Exchange based

• UV basedUV based

• Integrated Integrated

PORTER’S FIVE FORCE PORTER’S FIVE FORCE MODEL FOR WATER MODEL FOR WATER PURIFIER INDUSTRYPURIFIER INDUSTRY

Threat of new Entrants- High

Market entry barrier is not High.

Brand Identity.

Low cost of capital imposes a Low entry barrier.

High R&D cost.

Market Exit Barrier are also not so high.

Intensity of Rivalry among existing Competitors- Very High• Customer loyalty is very capricious.

• Entry level Advertisement war in water purifiers.

• Low profit margins.

• Perceived lack of differentiation in technologies by customer.

Pressure From Substitute product - Medium• Packaged drinking water.

• Ground water / Municipal Supplies.

• Chemical distributed by government to clean water.

• Boiled water.

• Tablet Purifier

Bargaining power of Suppliers – --High

• Supplier's product is an important input to the buyer’s business.

• Number of suppliers are also few.

• Supplier to buyer ratio.

Bargaining power of Buyers

Customers are price sensitive.

Spreading towards rural areas with increased awareness and health consciousness.

Buyer switching suppliers based on prices and value

added services.

Porter’s 5 Forces - Water Purifier Industry

New Entrants

Substitutes

Industry

Competitiveness /

Market Share

Rs. 1500 crores

Supplier’s Customers

Rivalry among Existing Competitors: -Customer loyalty is very capricious.-Entry level Advertisement war.-Low profit margins.-Perceived lack of differentiation in technologies by customer

Suppliers:- Supplier's product is an important input to the buyer’s business-Number of suppliers are also few.-Supplier to buyer ratio.

Threat of New Entrants:-Market entry barrier is not High.-Brand Identity.-Low cost of capital imposes a Low entry barrier.-High R&D cost.-Market Exit Barrier are also not so high.

Technology

Customers: -Customers are price sensitive-Spreading towards rural areas with Increased awareness and health consciousness -Buyer switching suppliers based on prices and value added services

Technology: -Reverse OsmosisReverse Osmosis -Ozone Treatment-Ozone Treatment-Resin based-Resin based-UV based-UV based

Threat from Substitutes: -Packaged drinking water -Ground water / Municipal Supplies-Chemical distributed by government to clean water-Boiled water-Tablet Purifier

INDUSTRY INDUSTRY ATTRACTIVENESSATTRACTIVENESS

Why is the Water Purifier Business Why is the Water Purifier Business Attractive in the Current Market Attractive in the Current Market Scenario?Scenario?

• Water is a $400 billion global business.Water is a $400 billion global business.

• Demand for drinking water is expected to grow Demand for drinking water is expected to grow another 40% by 2025.another 40% by 2025.

• Global consumption of water is doubling every 20 Global consumption of water is doubling every 20 years, more than twice the rate of human population years, more than twice the rate of human population growth.growth.

• According to the United Nations, 1.3 billion people According to the United Nations, 1.3 billion people already lack access to already lack access to ““safesafe”” drinking water. drinking water.

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GLOBAL WATER MARKETGLOBAL WATER MARKET

• More than 97% of the More than 97% of the worldworld’’s water reserves are s water reserves are salt water, contained in the salt water, contained in the EarthEarth’’s oceans.s oceans.

• Just a small proportion of Just a small proportion of the 1.3 billion square the 1.3 billion square kilometers that make up kilometers that make up the worldthe world’’s water reserves s water reserves is fresh water.is fresh water.

• Only 0.4% of those Only 0.4% of those reserves is accessible.reserves is accessible.

Source: www.forestinfo.org

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Water ScarcityWater Scarcity

Among countries likely to run short of water in Among countries likely to run short of water in the next 25 years are Ethiopia, India, Kenya, the next 25 years are Ethiopia, India, Kenya, Nigeria, and Peru. Parts of other large countries, Nigeria, and Peru. Parts of other large countries, such as China, already face chronic water such as China, already face chronic water problems.problems.

The supply of available freshwater is effectively The supply of available freshwater is effectively shrinking because of pollution including shrinking because of pollution including municipal sewage, toxic industrial waste, and municipal sewage, toxic industrial waste, and harmful chemicals from agricultural activities.harmful chemicals from agricultural activities.

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Water ScarcityWater Scarcity

Penetration of household Penetration of household water purifiers in Indiawater purifiers in India

Source: R S Rajan, vice president, consumer marketing, Ion Exchange India Limited, Mumbai, personal Source: R S Rajan, vice president, consumer marketing, Ion Exchange India Limited, Mumbai, personal communications, February 20, 2008communications, February 20, 2008

Major players in INDIAN Major players in INDIAN MARKETMARKET

• Eureka ForbesEureka Forbes

• PhilipsPhilips

• KentKent

• TataTata

• JaipanJaipan

• KenstarKenstar

• WhirlpoolWhirlpool

• OthersOthers

Cost Wise Market Cost Wise Market SegmentationSegmentation

• Lower SegmentLower Segment

• Lower Middle SegmentLower Middle Segment

• Upper Middle SegmentUpper Middle Segment

• Upper SegmentUpper Segment

COST WISE DISTRIBUTIONCOST WISE DISTRIBUTIONCost of Filter Houses (%)

<1,000 131,000 to 2,500

9

2,500 to 5,000

28

>5,000 50

ANYANYQUERIESQUERIES

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