Welcome to India Welcome to India - A country with - A country with limitless limitless potentialpotential

TopicsTopics India – A Consuming EconomyIndia – A Consuming Economy Trends in office products business Trends in office products business Current distribution channel for office Current distribution channel for office

products products Current and future potential demand of Current and future potential demand of

office products office products Buying behavior in various corporate sectorsBuying behavior in various corporate sectors India, the future’s biggest market for office India, the future’s biggest market for office

productsproducts

Why India – A Consuming Why India – A Consuming Economy ?Economy ?

Rising GDP growthRising GDP growth

0

1

2

3

4

5

6

7

8

1900-1950 1950-1980 1980-2002 2002-2006

Sources: 1900-1990: Angus Madison (1995), Sources: 1900-1990: Angus Madison (1995), Monitoring the World Economy, Monitoring the World Economy, 1990-2000:Census of 1990-2000:Census of India (2001), 2000-2005 Finance MinistryIndia (2001), 2000-2005 Finance Ministry

%

%

ag

eag

e

Slowdown in Population growth Slowdown in Population growth

0

0.5

1

1.5

2

2.5

1951-1980 1981-1990 1991-2000 2001-2010

Sources: 1900-1990: Angus Madison (1995), Sources: 1900-1990: Angus Madison (1995), Monitoring the World Economy, Monitoring the World Economy, 1990-2000:Census of India (2001)1990-2000:Census of India (2001)

%

%

ag

eag

e

Growing LiteracyGrowing Literacy

0

10

20

30

40

50

60

70

80

1950 1990 2000 2010(proj.)

%

%

ag

eag

e

Source: Census of India (2001)Source: Census of India (2001)

Exploding Middle ClassExploding Middle Class

0

50

100

150

200

250

300

350

400

1980 2000 2010(proj)Source: Source: The Consuming ClassThe Consuming Class, National Council of Applied Economic Research, 2002 , National Council of Applied Economic Research, 2002

Mil

lion

Mil

lion

Poverty DeclinePoverty Decline

05

101520253035404550

1980 2000 2010

%

%

ag

eag

e

Growing Per Capita IncomeGrowing Per Capita Income

0

1000

2000

3000

4000

5000

6000

1980 2000 2020*

Source: World Bank * MGI Source: World Bank * MGI

EU

R p

er

an

nu

mE

UR

per

an

nu

m

Growing ProductivityGrowing Productivity

High Growth in Service sector, IT, High Growth in Service sector, IT, ITES, Bio Technology, Telecom, ITES, Bio Technology, Telecom, RetailRetail

Annual salaries across the board Annual salaries across the board growing at 15% YoYgrowing at 15% YoY

The Shape of the The Shape of the EconomyEconomy

Service

Agriculture

Industry

GDP: 443 billion EUR (2005-06)GDP: 443 billion EUR (2005-06)GDP: 642 Billion EUR (2010-11)GDP: 642 Billion EUR (2010-11)

54%54% 56.6%56.6%

20%20% 15.3%15.3%

26%-26%- 28.1%28.1%

SourceSource – Planning Commission report – Planning Commission report

ServiceServiceServiceService

AgricultAgricult

ureure

AgricultureAgriculture

IndustryIndustry IndustryIndustry

A Billion Buyers A Billion Buyers MarketplaceMarketplace

Trends In OP BusinessTrends In OP Business Office Supplies market estimated to be Office Supplies market estimated to be

huge in India (6.4bn EUR)huge in India (6.4bn EUR)

95 % market is unorganized growing at a 95 % market is unorganized growing at a

pace of 10%pace of 10%

5 % market is organized growing at a pace 5 % market is organized growing at a pace

of 40% per annumof 40% per annum

Major global brands have entered Indian Major global brands have entered Indian

market market

Unorganized 95 %Unorganized 95 %

Organized Stores 5%Organized Stores 5%

Industry estimates the over all market to grow by Industry estimates the over all market to grow by

15% approx.15% approx. Certain categories are growing at the rate of 30% Certain categories are growing at the rate of 30%

such as office furniture, ribbon, toner, cartridges, such as office furniture, ribbon, toner, cartridges,

electronics, Computer hardware'selectronics, Computer hardware's Average per employee per annum consumption is Average per employee per annum consumption is

around 84 EUR of office stationeryaround 84 EUR of office stationery Dependence on multiple suppliers in current systemDependence on multiple suppliers in current system

Gap between MRP and net landing to retailer is Gap between MRP and net landing to retailer is

as high as 30 to 40 %as high as 30 to 40 %

Market operating price keeps fluctuating Market operating price keeps fluctuating

Pressure on margins is on the risePressure on margins is on the rise

Imports are on the rise in key categories Imports are on the rise in key categories

Major Indian manufacturers are entering into Major Indian manufacturers are entering into

organized retail organized retail

High brand loyaltyHigh brand loyalty

9 tier 1 cities are having 70 to 80 % 9 tier 1 cities are having 70 to 80 % consumption of office products, Greater consumption of office products, Greater Mumbai, Delhi NCR, Banglore, Mumbai, Delhi NCR, Banglore, Chennai, Hyderabad, Kolkata, Chennai, Hyderabad, Kolkata, Ahmedabad, Pune, ChandigarhAhmedabad, Pune, Chandigarh

Organized suppliers are offering proper Organized suppliers are offering proper replacement policy to satisfy customers replacement policy to satisfy customers

Key to success in OP business is strong Key to success in OP business is strong supply chain management supply chain management

Distribution Channel In OPDistribution Channel In OP

Complex Complex ManufacturerManufacturer ImporterImporter Large Format Retail ChainLarge Format Retail Chain Regional Distributor Regional Distributor Town DistributorTown Distributor WholesalerWholesaler Retailer Retailer

MNC/IND MNC/IND MfgMfg

Town Distributor 8%

Retailer 30%

Distributor8%

Retail Chain 50%

Office ProductsOffice Products

ImportersImporters

Regional Distributor

4%

End Consumer

Traditional Trade

Modern Trade

Retailer 30%

Whole Saler8%

Large Retail Chain 40 to

50%

* Margin in percentage of MRP

Wholesaler8%

Current & Future Potential Current & Future Potential DemandDemand

Current OP market is estimated to be 6.4 Current OP market is estimated to be 6.4 billion EURbillion EUR

Current Growth 15%Current Growth 15%

Broad categoriesBroad categories Office stationaryOffice stationary ElectronicsElectronics Office furnitureOffice furniture Business service Business service

Sub categories & Sub categories & contributioncontributionCopy Paper 20%

Paper Products 6%

Office Furniture 15%

Ribbon,Toner,Cartridge 6%

PC Hardwares 8%

Electronics 15%

Writing Instruments 5%

Adhesive 3%

Filing Supplies 5%

Visual Presentation 2%

Desk Accessories2%

Packaging Supplies 2%

Secretarial Supplies 2%

Forms 1%

Envelops 2%

Business Services 2%

Pantry Food 1%

Leather & Canvass Product 3%

Notebook PC market growing much faster then Notebook PC market growing much faster then

desktopdesktop SOHO sector contributing to notebook growth SOHO sector contributing to notebook growth Portability rather then mobility number 1 reason Portability rather then mobility number 1 reason

for sustained growthfor sustained growth Desktop future growth likely to come from SMB Desktop future growth likely to come from SMB

enterprises enterprises HP is the market leader with 21.6% market share HP is the market leader with 21.6% market share

followed by HCL at 12.3% & Lenovo at 10.3%followed by HCL at 12.3% & Lenovo at 10.3%

PC HardwarePC Hardware

Market estimate 0.38bn EURMarket estimate 0.38bn EUR Year on year growth 30 % Year on year growth 30 % HP has the highest market shareHP has the highest market share HP has 1000 original cartridge storesHP has 1000 original cartridge stores Remanufacturing and Recycling Remanufacturing and Recycling

industry largely unorganized and industry largely unorganized and fragmented fragmented

Cartridge world has entered the Cartridge world has entered the market market

Toners, Ribbon & Ink Toners, Ribbon & Ink CartridgesCartridges

Office Furniture Office Furniture Market estimate 1bn EUR Market estimate 1bn EUR

(approx)(approx)

YoY growth – 30%YoY growth – 30%

India tops in furniture imports India tops in furniture imports

Import duty rationalized Import duty rationalized

Growing demand of office space Growing demand of office space

OP market future OP market future projections projections

0

2

4

6

8

10

12

14

2007 2008 2009 2010 2011 2012

Bil

lion

EU

RB

illi

on

EU

R

Office Products Buying Office Products Buying BehaviorBehavior

Buying Behavior

Small Organization Medium organization Large Organization

Macro ParametersMacro Parameters

Rate Contract/ RatesRate Contract/ Rates Method of buyingMethod of buying Levels in decision makingLevels in decision making Storage spaceStorage space Personal relationshipPersonal relationship ServiceService Add on benefitsAdd on benefits Strength of the vendorStrength of the vendor

FactorsFactors Small Org.Small Org. Medium Org.Medium Org. Large Org.Large Org.

Mode of Mode of OrderingOrdering

Via PhoneVia Phone Phone/Mail/FaxPhone/Mail/Fax Mail/Fax/Mail/Fax/WebWeb

Inventory Inventory NormsNorms

No InventoryNo Inventory Backup StocksBackup Stocks Backup Backup StocksStocks

Frequency of Frequency of OrdersOrders

As & whenAs & when

required required Twice in a Twice in a monthmonth

Once in a Once in a monthmonth

Delivery TimeDelivery Time 1 hour1 hour 24 hours24 hours 2 to 3 days2 to 3 days

PricingPricing CompetitiveCompetitive CompetitiveCompetitive Very Very CompetitiveCompetitive

OwnershipOwnership Self interestSelf interest Self as well as Self as well as employemploy

Company Company interest interest prime prime

Brand LoyaltyBrand Loyalty Very highVery high HighHigh High also High also open for open for new new productsproducts

Levels in Levels in decision decision

makingmaking

SingleSingle TwoTwo Various Various levelslevels

Quantum of Quantum of buyingbuying

Small quantities Small quantities Small quantities Small quantities Bulk Bulk quantities quantities

Payment TermsPayment Terms 7 days Needs to 7 days Needs to be reminded be reminded

Adhere to Adhere to credit period 15 credit period 15 to 20 daysto 20 days

Adhere to Adhere to credit period credit period 30 to 45 days30 to 45 days

Vendor Vendor StrengthStrength

---- ---- Strong vendors Strong vendors with warehousewith warehouse

Very strong Very strong vendors with vendors with warehousewarehouse

ServiceService Expect fast Expect fast serviceservice

Expect Expect excellent excellent serviceservice

Expect Expect excellent excellent serviceservice

Rate ContractRate Contract -------- 6 months 6 months 1 year 1 year contract contract

FactorsFactors Small Org.Small Org. Medium Org.Medium Org. Large Org.Large Org.

Why India Will be the Why India Will be the Biggest OP Market ?Biggest OP Market ?

1.12 bn population1.12 bn population Youngest nation in the world over 890 Youngest nation in the world over 890

million people below 45 yearsmillion people below 45 years Remains young nation beyond 2050Remains young nation beyond 2050

< 20 years population 442mn currently < 20 years population 442mn currently

< 20 years population 479mn by 2050 < 20 years population 479mn by 2050 10 million finishing school, 6 lakhs 10 million finishing school, 6 lakhs

engineers 3 million graduates per engineers 3 million graduates per annum annum

Literacy likely to hits 100 % in coming yearsLiteracy likely to hits 100 % in coming years English speaking population more then whole English speaking population more then whole

EuropeEurope Highest working populationHighest working population India ranked 1India ranked 1st st in global retail development in global retail development

indexindex

India is rated among the top 10 FDI India is rated among the top 10 FDI

destinations destinations

Middle class likely to be 600mn by 2025 Middle class likely to be 600mn by 2025

(MGI)(MGI)

One of the fastest growing economy in One of the fastest growing economy in

the world the world

India projected GDP by 2050 is 44 India projected GDP by 2050 is 44

Trillion EURTrillion EUR

Key sectors contributing to extra Key sectors contributing to extra

ordinary growth will be – Telecom, IT, ordinary growth will be – Telecom, IT,

ITES, Biotechnology, Health, Education, ITES, Biotechnology, Health, Education,

Insurance, Banking & RetailInsurance, Banking & Retail

Sizeable presence of MNC’S Intel, IBM, Sizeable presence of MNC’S Intel, IBM,

Cisco, Motorola, Nokia, Samsung, LG etc.Cisco, Motorola, Nokia, Samsung, LG etc.

Come.. explore.. be a Come.. explore.. be a part of the great Indian part of the great Indian

opportunity!opportunity!

Thank you!Thank you!