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Industry-wise

India Market Environment & Risk AnalysisAn Overview

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MAJOR INDUSTRIES

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RealEstate

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REAL ESTATE

BusinessEnvironmentandKeyRisks:Market and Competition: Early information to attractive parcel of land to competitors, withdrawal of restriction on FDIInvestment, lowentrybarriersandentryof newglobal players, smallbuildersandcontractors increase theoverall business

competitionenvironment.

LandReserves: Fragmentationoforiginaltitleoflandorincapabilityinacquiringownershiptitleoverlargecontiguousparcel

of

land

in

strategic

locations

may

hamper

the

growth

prospects.

FraudulenttransferofLand: Lackofduediligencereviewinacquisitionofattorneyanddevelopmentrightswhichmayeffecttheownershiptitleinrespectofthatland.

Timeconsuming Approval: Time consuming and circuitous procedures to obtain approvals from multiple agencies leads toprojectdelaysandaffectsmarketabilityofprojects.

ProjectExecutionandCompletion: Dependentonthirdpartyentitiestosourceland,providemarketresearch,andtodesign,constructandsaleofprojectsmaydelaytheprojectexecutionandadverseimpactonoverallprofitabilityandreputation.

EconomyandRegulatoryEnvironment: Increaseininflationrates,economicdepressioninconsumerdisposableincomes,landceilingregulation,amendmentor introductionof revenue laws likePropertyTax,ServiceTax, FBT onconstruction contract

may

add

to

overall

compliance

cost.

ConsumerInvestmentCapacity: Increaseinbankratesforhousingloanandcommercialproperty wouldreducethedemandofresidentialandcommercialprojects.

LocationAnalysis: Ignoranceofthefactorsliketastesandpreferenceofcustomers,economicdevelopmentofthelocation,theproximity of the land to civic amenities and urban infrastructure, the availability and competence of third parties such as

architects, surveyors, engineers and contractors before initiating project in any region may effect the profitability of the

project.

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Insurance

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INSURANCE

BusinessEnvironmentandKeyRisks:Investment Market and Economy: Downturns or disruptions in the amount invested due to volatility of domestic and

internationalfinancial,bondandstockmarketsandextensivegovernmentalregulationmayerodeorganizationprofitability.

Equityandeconomyresearch: Exposureofslowaccumulationoffundsforpolicyholdersduetoinefficientequityresearchof

potentialeconomyandcompaniesforinvestments.

TerroristAttackandNaturecalamities: Anykindofsuchactivitymayrequiresthecompanytomakesignificantpaymenttothe

policyholderanddistortthefinancialsolvency.

Regulatory Environment: Change in regulatory environment like taxability of the amount received under life insurance,

restriction

on

investment

of

funds

in

to

equity

market

and

allocation

of

profits

in

to

bonus

for

policy

holders

may

influence

the

overalloperationsandprofitability.

Unorganized and Backward region market: Long gestation period in obtaining customer faith and footfalls in the market

penetratedintheunorganizedandbackwardregionwhereinthecustomeraremoreobsessedforinvestmentinthePSUlike

LICofIndia.

Estimation of future prospects: Incorrect estimation of the future prospects of the portfolio client, death rate, liquidity of

investments, interestrate, inflationmay result in tounderorovercalculationof the premium andcause aseriousharm to

financialsolvencyandreputation.

Introduction of new product: Possibility of lesser profitability in design, development and offer of new products where in

companymayhavenopriorexperience.

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Retail

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Pharma

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PHARMACEUTICALS

BusinessEnvironmentandKeyRisks:Regulatory and Certification in overseas market: Certification of manufacturing facilities from domestic and international

medical authority to drive export in to the North America, Europe and Japan being the three largest market for

pharmaceuticals.

Expansion in developing economy: Free entry and exit makes competition in this industry very intensive and strict price

controlregulationonessentialdrugsdecreasethelowermargin.

Cost effective chemical synthesis: Development of cost beneficial chemical synthesis for various drug molecules is

indispensable toprovidesawidevarietyofbulkdrugsandexportssophisticatedbulkdrugs.

Produce diversification development: Produces bulk drugs belonging to all major therapeutic groups under excellent good

manufacturingpractices (GMP)compliantfacilitiesfortheproductionofdifferentdosageforms iscrucialto increasemarket

share.

ResearchandDevelopment: Low investments in innovativeR&Dand lackofresourcestocompetewithMNCs forNewDrug

DiscoveryResearchandtocommercializemoleculesonaworldwide basismaydisruptthegrowthstrategy.

Qualitycontrolsandtesting: Productionofspuriousandlowqualitydrugstarnishestheimageofindustryathomeandabroad.

ProcessorProductPatenting: Delayinapplyingofprocessorproductpatentingmayexposein todevelopmentofproductor

processbycompetitorsanddisrupttheoperationsandprofitability.

Pricing Controls: Drug Price Control Order puts unrealistic ceilings on product prices and profitability and prevents

pharmaceuticalcompaniesfromgeneratinginvestiblesurplus.

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Financial

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Telecom

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TELECOM

BusinessEnvironmentandKeyRisks:ExtensiveGovernmentRegulation: Telecombusinessissubjecttoextensivegovernmentregulationthroughvariousregulation

authority,whichcouldhaveanadverseeffect.

TechnicalFailureandNaturalDisaster: Technical failureandnaturaldisastercoulddamagethetelecommunicationnetwork

resultingintofinanciallosstothecompany.

ExtensiveCompetition: TelecomsectorisalargecompetitiveindustryinIndia.

Change inTechnology: Inordertoremaincompetitivetelecomcompanies introducesophisticatednewtechnologies. Ifnew

technologyfailstobecosteffectiveandacceptedbycustomersabilitytoremaincompetitivecouldbeeffected.

HireandRetentionofskilledmanpower: Manpowerisakeystrengthtowardsthegrowthoftelecomcompanies.

Billingtocustomers: Customers(Users)oftelecomcompaniesisbilledaccordingtotheiruses.Itisverycriticaltomakecorrect

billingtothecorrectuser,otherwiseitcanaffectthegoodwillofthecompany.

Infrastructureavailabilityandnationalreach: Identificationandacquisitionoftelecomtowers inrequired location iscrucial

requisiteforincreasingconsumerbaseandbrandmarketing.

Customer Complaint Resolution: Due to high number of customer base it is necessary to create large infrastructure to

understandandresolvecustomerscomplaint.

EffectiveAdvertisement: Duetoheavycompetitionitsverynecessarytoselectsuitableandeffectiveadvertisementmodetoadvertisecompanybusiness.

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OilandGas

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OIL & GAS

BusinessEnvironmentandKeyRisks:Decline in InternationalPrices forCrudeOil: Declines incrudeoilpricesmayadverselyaffectourrevenuesandprofits,and

substantialorextendeddeclineswillhaveamaterialadverseeffectoncompanysresultsofoperations,financialconditionand

liquidity,includingabilitytofinanceplannedcapitalexpenditure.

Government Controlled Prices: Gas Prices are controlled by the Government of India, which limits the profitability of the

business.

DevelopmentofNewProject: Developmentofnewprojectcontainsvariousriskwhichcaneffectprofitabilityofthecompany.

Fewrisksareasfollows: Delayincommencementofproduction/extraction,Substantialincreaseinprojectcostetc.

DependencyonOthers: Companiesareoutsourcingmostofthefielddevelopmentworkto thedifferentcontractors,andthey

aredependentontheperformanceofthecontractorsandotherserviceproviders.

Competition: Theoilandgasindustryisextremelycompetitive.

ExplorationandProductionActivitiesareHazardous: ExplorationofOil&Gasinvolvesahighdegreeofriskwhich,evenwitha

combinationofexperience,knowledge,andcarefulevaluation,we maynotbeabletoaddress.

ShortageofOffshoreRigs: TheoilandgasexplorationandproductionindustryinIndiahasfacedashortageofoffshorerigsin

therecentpastwhichadverselyaffectthebusiness,financialconditionandresultsofoperations.

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Auto

AUTOMOBILE

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AUTOMOBILE

BusinessEnvironmentandKeyRisks:ClimateChangeDuetoGlobalWarming: Theincreasingenvironmentalpollutionhasbecomeaconcernfor manufacturersand

allassociatedwiththeindustry.Allofthemarestrugglinghardtocomeupwithaholisticandintegratedapproachtoreduce

carbondioxideemission.

Nurturing

Talented

Manpower: The

major

challenge

which

the

Indian

automotive

industry

is

facing

today

is

in

attracting

and

nurturingtalentedmanpowernotonlyforthecreationofbetterandreliableproductsbutalsoforservicingandmaintenance

throughoutthelifecycleoftheproduct.

CostOptimizationPressures: Tosustaininthehighcompetitiveautomobileindustriescompaniesarefacingveryhighpressure

on

cost

optimization

of

their

products.

Non

optimization

of

product

cost

may

effect

the

market

share

of

the

company.

IncreasingCustomerDemands: AutomobileproductsdemandinIndianeconomyisveryhigh.Companiesarefacingproblemin

fulfillingthecustomersdemandwithregularchangeinthespecification.

increased focus on customer satisfaction: To face the high competitive automobile companies are required to be more

concernedoncustomersatisfaction.

FlexibilityofProducts: Duetotheregularchange incustomersdemanddevelopmentofproductshastobemoreflexible in

termsofupgradation.

Needs

to

have

a

good

R&D: Regular

change

in

demand

and

high

competition

requires

a

high

class

R&D

Department.

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