Market Research Report : Mobile Commerce Market in India 2012

Mobile Commerce Market in India

March 2012

Executive Summary

Drivers:

Market

Drivers &

Challenges

�M-commerce market in India will generate around INR x1 bn revenue per annum by 20--

�M-payment services in India are served largely via IVR, SMS-based solutions and mobile apps

�Volume of Mobile banking or m-banking transactions has increased by roughly x2% over 20--,

to reach x3 mn in 20--

Challenges:

� Low Penetration of Advanced Mobile

Devices in Rural Areas

� Low Awareness and Lack of Interest

� Security and Privacy Concern

�Rising Mobile Device Adoption and

Colossal Wireless Subscriber Base

� Increase in Disposable Income and

Economic Advancement

2MOBILE COMMERCE MARKET IN INDIA 2012.PPT

Market Trends

M-Commerce

Player Profile

�Mobile Wallet

�Utility Services

� Financial Services for Rural Consumers

Major Players

CanvasM Technologies Ltd. Geodesic Ltd. JiGrahak Mobility Solutions

One97 Communications Ltd. OnMobile Global Ltd. Oxigen Services Pvt. Ltd.

� Security and Privacy ConcernEconomic Advancement

� Introduction and Availability of Next

Generation Cellular Networks

� Increasing Availability of Credit

•Introduction

•Mobile Commerce Overview

•Drivers & Challenges

•Market Opportunity


�Vendor Opportunities

•Market Trends

•M-Commerce Player Profiles

•Strategic Recommendations

•Appendix

Introduction

Mobile Commerce (M-Commerce) Overview

•Mobile Commerce is the activity of commencing commercial transactions between both B2C and B2B

entities via mobile devices

� It is a part of the broader, e-commerce market which accommodates any commercial transaction via internet

•Increasing tendency to save time and energy, especially amongst the working population will further

intensify the e-Commerce market by a large extent

�Mobile Commerce (m-Commerce) is a segment of Mobile Value Added Services (MVAS)

•MVAS are the services provided by telecom operators directly or indirectly, beyond standard voice calls

Essential Features of M-Commerce System


Source:

Essential Features of M-Commerce System

Mobile Commerce

Feature1

• Ideal_charecteristic1





Feature3






Feature2






Retail Ecosystem with M-Commerce

Traditional Retail Supply Chain Modern Retail Supply Chain

Company/

Manufacturer

Company/

Manufacturer

Ba

ck E

nd

Mobile Retail Supply Chain

Company/

Manufacturer

5

Source:

•Traditional retail supply chain comprised of various intermediaries due to which costs increased at every level

•Modern retail supply chain eliminates intermediaries, increases profitability for producers and reduces costs for consumers

•Mobile retail supply chain uses m-commerce company as intermediary with optional role of intermediary1; the product and

services are served to the consumers via platform1, platform2 or platform3

Fro

nt

En

d

ConsumersConsumers

Consumers

MOBILE COMMERCE MARKET IN INDIA 2012.PPT

… m-payment and m-banking have shown significant growth

over the last few years in the domestic market

• Volume of Mobile banking or m-banking transactions has increased by roughly x1% over 20--, to reach x2 mn in 20--

• Penetration of mobile devices running on wireless network in rural areas of the country is still low, standing at around x3-x4% as in the end of 20--

• M-commerce companies are optimistic regarding its growth in India following Reserve Bank of India revising restriction on daily transaction via m-commerce

� Daily mobile transactions limit were increased from INR x5 to INR x6 for money transfers, whereas the limit was raised from INR x7 to INR x8 for goods and services

• Still around x9% of consumers are not aware of the mobile transactions facilities available while z1% consumers, who are aware of m-commerce services, have serious concerns about the security offered by such solutions

• M-commerce is largely leveraging on e-commerce demand across the nation and hence revenue generated by the two

Market Overview – India (-/-)


• M-commerce is largely leveraging on e-commerce demand across the nation and hence revenue generated by the two are often calculated collaboratively

� Market size of e-Commerce is estimated to grow at a dynamic growth rate of z2% to reach INR z3 tr in 20-- from INR z4 tr in 20--

Source:

E-Commerce - Market Size and Growth

0

1

2

3

INR tr

+y2%

Transactions via M-Banking – Growth

0

1,000

2,000+y1%

Major MVAS Delivery Platforms for M-Commerce Services

Delivery PlatformApproximate

CostTrends Applications

XXINR xx/unit

• X% of MVAS services are via Y

• Caters to a wide audience as

services are available even on low-

end handsets

• AAAAAAAAAAAAAAAAAAAAAAA

YY INR X/min

• Strong growth expected due to

mass appeal and ease of usage

• Available in various XX

• BBBBBBBBBBBBBBBBBBBBBBBBBBBBB


ZZINR A/month for

usage

• Directed towards consumers using

technologically advanced handsets

• Growth in X mobile phones is

expected to boost demand

• CCCCCCCCCCCCCCCCCCCCCCCCCCCCCC

AA INR B/ month

• Platform where interaction is in the

form of a continuous session as

opposed to an X

• DDDDDDDDDDDDDDDDDDDDDDD

Source:

• XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Mobile Commerce Value Chain

AAA BBB CCCC


Source:

FFFF

SDDD

EEE

IIII

GGG

WWW

HHHH

A comparison between the demand and supply side of

m-commerce system

M-Commerce

Platform

M-Commerce Consumers

(Demand Side)

Objectives

M-Commerce Service Providers

(Supply Side)

Objectives

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Platform

Source:

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Requirements

• AAAAAARequirements

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SWOT Analysis of M-Commerce Market in India

SWOT

Strengths

• Strength1

• Strength2

• Strength3

• Strength4

Weaknesses

• Weakness1

• Weakness2

• Weakness3

• Weakness4

10

SWOT

Analysis

Opportunities

• Opportunity1

• Opportunity2

• Opportunity3

• Opportunity4

Threats

• Threat1

• Threat2

• Threat3

• Threat4

Source:


Drivers & Challenges – Summary

Drivers

Rising Mobile Device Adoption and

Colossal Wireless Subscriber Base

Increase in Disposable Income and

Economic Advancement

Introduction and Availability of Next

Generation Cellular Networks

Increasing Availability of Credit

Challenges

Low Penetration of Advanced Mobile

Devices in Rural Areas


Increasing Availability of Credit

Soaring Enterprise Mobility

Changing Demographics and

Consumer Behaviour

Growing Demand for Rich Digital

Contents

Low Awareness and Lack of Interest

Security and Privacy Concern

Market Opportunity - Potential Verticals (-/-)

• Sector1 consists of segmentx1, segmentx2, segmentx3, segmentx4 and segmentx5

• Market size of the sector can be presented in the combined form of INR x1 tr and x2 mn unit consumption per

annum as of 20--

• MVAS can be implemented by processx1, benefitx1, usagex1 and applicationx1

• Mobile commerce can cater to various services of different verticals

• M-commerce not only ensures enhanced exposure for variety of products but also maximum reach

due to the presence of mammoth wireless subscriber base in the country

Sector1


• Sector1 consists of segmenty1, segmenty2, segmenty3, segmenty4 and segmenty5

• Market size of the sector can be presented in the combined form of INR y1 tr and y2 mn unit consumption per

annum as of 20--

• MVAS can be implemented by processy1, benefity1, usagey1 and applicationy1

• Sector1 consists of segmentz1, segmentz2, segmentz3, segmentz4 and segmentz5

• Market size of the sector can be presented in the combined form of INR z1 tr and z mn unit consumption per

annum as of 20--

• MVAS can be implemented by processz1, benefitz1, usagez1 and applicationz1

Source:

Sector2

Sector3

Vendor Opportunities – Prospective Areas (-/-)

• Area1 hold the third largest share in 20-- as it was worth INR x1 bn and accounted for x2% of the overall e-Commerce

market in India but is predicted to have higher share when it comes to m-commerce

• Advancement in the BFSI sector has resulted in rapid computerization and immense involvement of IT infrastructure

� Modernization and technological development in the sector has led to the emergence of net banking and other online transaction

concepts tremendously

� Currently, all financial organizations and institutions in India support and encourages the use of internet for their day to day operations

� Majority of the nationalized banks in India currently supports online banking which in turn further fuels growth in the market

• The segment is expected to attain a CAGR of x3% to reach INR x4 bn in 20-- from INR x5 bn in 20--

Area1


Source:

0

10

20

30

INR bn

+y1%

Area1 -Growth Area1 -Segments

Area1

Market Trends

Introduction of

Biometrics in

Education

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Introduction of

Biometrics in

Education

Trend1

Biometric ID Cards

for Public

Transportation




Biometric ID Cards

for Public

Transportation

Trend2

14

Source:

Trend4




Biometrics

Application in

Customs




Trend3


Public: Domestic Company – Company1 (-/-)

Company Information Offices and Centres – India

Corporate Address

Adress line1

Adress line2

City. Country

Tel No. +91- --- - -----

Fax No. ++91- --- - -----

Website www.------.com

Year of Incorporation 19--

Ticker Symbol ------

City Name

Head Office

15

Key People

Products and Services

Stock Exchange Exchange1

Category Products/Services

MVAS Products

• Utility VAS Solution

• M-Commerce Solution

• Mobile App development

• Digital Asset Management

Name Designation

Mr. X Chief Executive Officer

Mr. Y Chief Financial Officer

Mr. Z Chief Operating Officer

Head Office

Source:


• The company incurred a net profit of INR a1 mn in FY 20--, as


Financial Snapshot Key Ratios

Financial Summary

Net Profit/LossTotal Income

0

50

100

150

0

2

4

6

8

Profit

INR mn

Revenue

INR mn

20--

c4

20--

c3

20--

c2

20--

c1

Particulars y-o-y change

(2011-10)2011 2010 2009 2008

Profitability Ratios

Operating Margin 2.23 0.74% -1.49% -9.59% -10.70%

Net Margin -34.74 -35.26% -0.51% 1.00% -37.12%

Profit Before Tax Margin -53.05 -53.57% -0.51% -25.32% -12.44%

Return on Equity -10.93 -11.06% -0.14% 0.21% -5.79%

Return on Capital Employed 0.18 0.06% -0.12% -0.55% -0.48%

Return on Working Capital 78.72 77.98% -0.74% 0.18% -3.99%

Return on Assets -2.26 -2.29% -0.04% 0.05% -1.56%

Return on Fixed Assets -2.88 -2.94% -0.06% 0.09% -2.98%

Cost Ratios

Operating costs (% of Sales) -2.95 99.22% 102.16% 112.14% 113.76%

16

• The company incurred a net profit of INR a1 mn in FY 20--, as

compared to net profit of INR a2 mn in FY 20--

• The company reported total income of INR a3 mn in FY 20--,

registering an increase of a4 per cent over FY 20--

• The company earned an operating margin of a5 per cent in FY 20--,

an decrease of a6 percentage points over FY 20--

• The company reported debt to equity ratio of a7 in FY 20--, an

increase of a8 per cent over FY 20--

Key Financial Performance Indicators

Indicators Value (--/--/20--)

Market Capitalization (INR mn) 10,985

Total Enterprise Value (INR mn) 87,544

EPS (INR) 48.39

PE Ratio (Absolute) 66.9

Improved DeclineSource:

Operating costs (% of Sales) -2.95 99.22% 102.16% 112.14% 113.76%

Administration costs (% of

Sales)1.04 18.03% 17.00% 15.75% 18.00%

Interest costs (% of Sales) 20.57 63.33% 42.77% 45.59% 29.69%

Liquidity Ratios

Current Ratio -54.82% 0.82 1.81 4.42 7.13

Cash Ratio -96.41% 0.19 5.34 2.99 5.66

Leverage Ratios

Debt to Equity Ratio 45.86% 3.82 2.62 2.92 2.72

Debt to Capital Ratio 6.85% 0.75 0.70 0.72 0.71

Interest Coverage Ratio 124.52% 0.01 -0.05 -0.27 -0.46

Efficiency Ratios

Fixed Asset Turnover -9.25% 0.08 0.09 0.07 0.06

Asset Turnover 18.69% 0.06 0.05 0.04 0.03

Current Asset Turnover 5.19% 0.47 0.45 0.11 0.07

Working Capital Turnover -308.15% -2.08 1.00 0.14 0.08

Capital Employed Turnover 58.09% 0.29 0.19 0.16 0.12



Key Business Segments Key Geographic Segments

0%

50%

100%

20-- 20-- 20--20--

0%

50%

100%

20-- 20--20--20--

Product1 Product2 Product3 India Outside India

17

Key Information

Description Details

Overview

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Extended Product

Portfolio

• It offers products in the areas of m-commerce, entertainment, media portals and interactive television

programming, mobile marketing, user-generated content and social networking, mobile utility, data and

3G, and information and network through mobile access channels, such as voice, SMS, WAP, USSD, voice,

video, on-device portal, and Web

• Music products comprising Ring Back Tones (RBT), M-radio, reverse RBTs, devotional songs

Source:


Private: Domestic Company – Company2 (-/-)

Company Information Offices and Centres – India

Corporate Address

Adress line1

Adress line2

City. Country

Tel No. +91- --- - -----

Fax No. ++91- --- - -----

Website www.------.com

Year of Incorporation 19--

Ticker Symbol ------

City Name

Head Office

18

Key People

Products and Services

Stock Exchange Exchange1

Category Products/Services

MVAS Products

• Infotainment Services

• Mobile Media Contents

• Mobile Voice Solutions

• Call Management Solutions

Head Office

Source:

Name Designation

Mr. XChief Executive Officer and Chief

Operations Officer

Mr. Y President of Sales and Marketing


Financial Snapshot Key Ratios


Particulars y-o-y change

(2010-09)2011 2010 2009 2008

Profitability Ratios

Operating Margin -5.75 59.76% 65.51% 75.51% 84.64%

Net Margin -0.65 20.94% 21.58% 35.03% 43.42%

Profit Before Tax Margin 4.60 27.02% 22.41% 37.00% 46.07%

Return on Equity -0.44 16.63% 17.07% 44.01% 30.53%

Return on Capital Employed -3.04 57.06% 60.09% 121.39% 108.12%

Return on Working Capital -12.19 22.76% 34.95% 62.37% 51.28%

Return on Assets -0.41 16.59% 16.99% 43.60% 30.45%

Return on Fixed Assets 14.16 93.08% 78.92% 166.10% 98.92%

Cost Ratios

Operating costs (% of Sales) 5.58 36.86% 31.28% 22.96% 11.18%

Profit / Loss

Revenue

2,248,457.8

1,865,274.2

2,467,384.5

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

0

200,000

400,000

600,000

800,000

1,000,000

20102009

Profit

INR mn

Revenue

INR mn

20112008

770,874.4

19

Financial Summary

• The company incurred a net profit of INR 470,723 mn in

FY 2011, as compared to net profit of INR 402,544 mn in

FY 2010

• The company reported total income of INR 2,248,458 mn

in FY 2011, registering an increase of 20.5 per cent over

FY 2010

• The company earned an operating margin of 59.8 per

cent in FY 2011, a decrease of 5.8 percentage points over

FY 2010

Operating costs (% of Sales) 5.58 36.86% 31.28% 22.96% 11.18%

Administration costs (% of

Sales)-3.68 14.87% 18.56% 18.79% 21.10%

Interest costs (% of Sales) -0.01 0.04% 0.05% 0.00% 0.18%

Liquidity Ratios

Current Ratio 19.05% 5.28 4.44 4.10 2.32

Cash Ratio -19.59% 2.29 2.85 1.75 1.04

Leverage Ratios

Debt to Equity Ratio N.A. N.A. N.A. N.A. N.A.

Debt to Capital Ratio N.A. N.A. N.A. N.A. N.A.

Interest Coverage Ratio 25.57% 1791.20 1426.42 #DIV/0! 488.03

Efficiency Ratios

Fixed Asset Turnover 20.70% 4.21 3.49 4.65 2.17

Asset Turnover -0.12% 0.75 0.75 1.22 0.67

Current Asset Turnover -30.24% 0.83 1.20 1.32 0.64

Working Capital Turnover -33.35% 1.03 1.54 1.75 1.13

Capital Employed Turnover -0.31% 0.75 0.75 1.23 0.67

Improved Decline

20102009 20112008

Source:



Key Information

Description Details

Overview

• Company2 is a mobile media company which offers solutions for discovery, branding and

revenue generation on the mobile platform

• It caters to content destination management, mobile content creation, aggregation and

mobile marketing

20

Extended Product

Portfolio

• It offers M-commerce solutions via SMS including contests, notifications, special offers,

alerts, WAP links, WAP portal development, mobile advertising, and content management

and distribution

• Its MVAS consultancy and support services include concept and ideation for brand

awareness, higher reach, lead generation, engagement, sales, interactivity, targeted

reach, and content delivery

• It also offers mobile online and offline games as direct consumer MVAS product

Source:


Strategic Recommendations (-/-)

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• bbbbbbbbbbbbbbbbbbbbb

Strategic Recommendation1

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• ccccccccc

21

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Strategic Recommendation2

• aaaaaaaaaa

• bbbbbbbb

• ccccccccc

Source:


Thank you for the attentionThe Mobile Commerce Market in India report is a part of Netscribes’ Telecommunication Series. For more detailed information or customized research requirements please contact:

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