IIM KOZHIKODE

CASEBOOK 2022
Credits: Tripod, The Photography club of IIMK
 Acknowledgement

We are thankful to all those who have contributed to the journey that has culminated in developing this

comprehensive resource for preparation for Consulting. As enthusiasts of the field, it has been an

educational experience for us to put together this casebook and we hope it aids the preparation of future

batches.

We are deeply grateful for the continued support of our esteemed Director, Prof. Debashis Chatterjee.

We would like to thank the alumni batches of Konsult – the Consulting Interest Group at IIM Kozhikode,

for providing us with guidance and initiating the process of collating this casebook. We also wish to

acknowledge members of the current batches at IIM Kozhikode as well as our alumni who contributed to

the book by sharing their case experiences and helped us in capturing a realistic aspect of case interviews.

The process of developing this casebook was greatly facilitated by the constant support and

encouragement of our faculty coordinator, Professor Venkataraman S, and the college administration.

We thank our friends, alumni and batchmates for their rich feedback and reviews.

Regards,

Team Konsult – 2022-2023

© 2022, Konsult – Strategy & Consulting Interest Group, IIM Kozhikode. All rights reserved
 Meet the Team
Pratyush Singh | Pratik Bhandari | Aayush Kumar | Rahul Malhotra

Emy Thomas | Sneha Agarwal | Nidhi Khanna

Indian Institute of Management, Kozhikode

 Table of Contents

Particulars Page # Particulars Page #

Introduction to the Book 6 Market Entry

Frameworks 7 European Hotel Chain 49

Case Interviews 20 Luxury Car Company 51

Bhujia Sev Company 52

Autombiles 54

Telecom 56
Profitability
E-Cigarettes 58
Budget Hotels 22
E-Commerce 60
HR Service Provider 24
Food Delivery Services 61
InsureGo 26

IT Service Firm 27 Pricing

Business Process Outsourcing 29 Heli Taxi Services 63

Data Science company 31 Vistara Airways 65

Unconventional
Vision for Swiggy 66

Growth Employee Productivity at Public Sector Bank 67

Supermarket Chain 32 Reserves Accumulation at Energy Sector 69

Fibre Manufacturer 34 Inadequate Profits for Interest Payment 70

36 Steel Manufacturer 72
Skincare Company

Air Conditioning Manufacturer 38

Due Diligence
Pharma Drug Manufacturer 40
Robotics 73
Cab Service Provider 42
Cement Industry 74
Appliance Distributor 44
Airport 75
LPG Distributor 47
IT Services Company 77

Hand Tool Manufacturer 78

Indian Institute of Management, Kozhikode

 Table of Contents

Particulars Page # Particulars Page #

Guesstimates Logistics and Supply chain 108

Water Consumption in Kozhikode in a day 80 Energy 109

# of regular size Pizzas Domino’s sells in India/day 81 FMCG 111

Pizzas ordered in a day in India 82 Healthcare 113

Profit a typical Tea Stall makes in a day in Delhi 83 Hospitality 115

Sanitary Napkin use over a month in India 84 Fintech 117

How much a typical PVR Plaza make in a day 85

Number of deliveries done by swiggy in a day 86

Number of Ac’s sold in a year in India 87

Industry Analysis
Automotive 89

Aviation 91

Banking 93

-
E Commerce 95

Chemicals 97

Steel 99

Telecom 101

Technology 103

Media and Entertainment 105

Digital Payments 107

Indian Institute of Management, Kozhikode

 Introduction

It gives us great pleasure in bringing to you the IIM Kozhikode Case Book 2021. The objectives of preparing and publishing this book are as

follows:

• Provide a detailed view of the various frameworks

• Enable the students to capitalise on the interview experiences of the alumni with various firms.

• Detailed review on Guesstimates and Case questions

Some of the cases have detailed dialogue between the candidate and the interviewer. This has been done to provide a realistic transcript of an

actual case interview experience. For some cases, we have listed the main areas to be explored. As you can guess, due to varying levels of

interest and recollection, the case solutions have different depth.

We have also provided in-depth industry analyses for a thorough and concise review of the major trends across different industries as well as

for aiding in understanding the fundamentals of how organisations in these industries typically operate.

Case practice is an essential tool for cracking Consulting recruitment processes. Additionally, it also helps in the development of structured

thinking tools that aid in the general practice of Consulting as well as other management domains. Few tips before you start preparing for

consulting interview:

- Practice to absorb and not to memorise: It is very important to practice and one cannot undermine the learning it brings but refrain from

finding ‘the best answer for any type of problem’. Focus on sharpening your approach than the answer because as you all might know – a

thousand roads can lead to the same goal.

- Work in non-homogeneous groups: This is the best way to maximise your learning from the diverse experience everyone offers. Challenge

yourself to work with people you haven’t before; don’t spread your preparation time with a homogenous group because you might end up

risking the width and depth that a non- homogenous group can offer.

- Maintain individuality: Companies come to hire ‘individuals’ because they offer perspective that is not shared by everyone alike. Hence, it is

important to focus on how you as an individual fit best into a particular role, in a particular culture, rather than following a group and get into a

role that is not for you.

There are no right answers as far as cases are concerned. It is very much possible that you might think of different, more comprehensive or

even better ways of solving the cases that we were asked. Another point we want to convey is about the solutions given for the cases listed.

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 FRAMEWORKS

Case Interviews

Guesstimates

Industry Analysis

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 Solving a Case

Solving a c
ase ypically t 3 Analysis

Has Following our teps F S Develop a hypothesis for where the problem
might lie. Then ask questions and collect more
information to prove/ disprove it.

• Make it a collaborative process. Do not treat

it like an interview. It’s not meant to be that.
fi
De ning &S
coping

1
Treat it like a real project and that you’re

t P
he roblem
working with a colleague on the project.

• Ask for numerical data at every level of

structure before going deeper. This is required
until you figure out whether it’s a numerical

2 Segmentation &
problem or not.

Understand the company and its business. You

• Speak with conviction and bring creativity
should be able to create a mental image of the
company & its business, & figure out where it
Structuring into your solution.

is operating. What does the company do?

• In case of numbers, take your time. Do not

sacrifice accuracy for speed.
• Analyze EVERY WORD of the problem Segmentation is one of the most crucial and often
statement and ask clarifying questions w.r.t. overlooked steps. Always break the problem by company
that.

segments before applying any standard framework.

• Understand what caused the problem and

what has been the impact.

Understand which part of the business the problem lies

in. For example think along the below segments:

4 Synthesis/

Summary
• Keep the 3Cs (Customer, Company and A. Customer segments B. Product segments C. Geographic
Competition) and 2Ps (product and price) in segments D. Segments in terms of different parts of the
value chain E. Different channels of distribution

It is effectively an answer to the

mind at all times when solving a case.

Whenever you’re stuck, revisit these.

M
client’s problem. ake your recommen ation d
At this point, you should’ve a pretty good hold of defining d
an provi e d 2-3 strong supporting reasons
what the actual problem is. It helps to paraphrase or for it. Follow it up with considerations / risks
Think along basic cuts like:

A. Internal vs. external .

summarise the problem statement more tangibly at this O
that may be involved with the strategy. verall
point. Structuring is done as follows:

synthesis should not exceed a minute ideally

B. Short term vs. Long term .

C. Current state vs. desired state (desired state

can be understood through objectives/ goals/ 1. Build out a quick approach of what the key issues are that
motivations of the management we need to tackle, and what is the sequence you intend to
follow.

2. Communicate this approach to the interviewer.

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Indian Institute of Management, Kozhikode 3. Then build out a MECE structure.
 Profit or Profitability

Profit or Profitability cases operate on the basic framework where

Profit is taken as the difference between Revenue and Costs, while
Profitability is defined as the Profit per unit Revenue. A decline in
Revenues/Profits/Profitability often forms the basis of the most
common cases given in case interviews

CASE
Market Entry

For Market entry cases, there are two main questions to address- 1.
Should we enter this market? And if yes, 2. How should we enter?

FRAMEWORKS While the below framework determines the market attractiveness for
Question 1 in terms of an economic analysis, the entry agenda can
also be contingent to several other factors that may involve other
factors.

Frameworks can act as useful tools to

structure thoughts during a case Growth Strategy

Growth Strategy cases require brainstorming in order to expand the

interview. Moreover, they ensure that scope of a company/client, keeping in mind their specific objective.
you ask the right questions and help This can be long-term/ short-term growth, increasing profits or
you reach the answer fast. By using market share etc. This growth can be achieved via organic or inorganic
frameworks, you will seldom miss methods

solutions to ‘standardised’ cases such

as Profitability, Market entry etc. Due Diligence

DD is an extensive process undertaken by an acquiring firm in order

to thoroughly and completely assess the target company's business,
assets, capabilities, and financial performance. There are several
aspects that are analysed for an actual Due Diligence analysis

Guesstimate

Guesstimates are quantitative in nature where an estimate for a

figure is to be arrived at using logical thinking to formulate
reasonable assumptions, and efficient calculations to arrive at the
solution in a time bound manner. A sanity check at each step is vital

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 Case Frameworks > Profit/Profitability

PROFIT

Premise

This problem is very vast and can come in various dimensions. It’s very important to

scope the problem in the beginning itself – so that you do not solve the wrong problem.

Definition

Please help me understand what exactly do you mean when you say that profit is

down¤

A The aggregate profit or profit margin¤

A {If interviewer says profit margin or Profitabilityœ

A Ask: Is it gross margin/operating margin or net margin which is facing the decline¤

A Product Mix: is the decline in profitability in all the products or specific products in

the mix?

Comparison
A Since when has this trend in low profits been visible and by how much¤

A How has the industry performance been over this time frame? – benchmarking Cost
A Anything particular which changed - did you launch some product/slash prices/

competitor did something/ macroeconomic aspect?

A Ask what % of unit cost is Variable vs. Fixed – this

would help you understand some key trendI

Define Success
y
A Sa : This is a broad based question- How would the client define success¤ A In a high fixed cost business there is very high
A What kind of increase in profit do you want to achieve- what will be ideal?

temptation of price warI

First Principle: The major components of Profit/Profitability are as follows-

Profit = Revenue – Cost

A Remember it can be a product specific problem or a
Profitability = (Revenue – Cost)/Revenue

product mix problem something such as that we are

selling more of higher cost product.

y
Sa : There are two drivers – Revenue and Cost. Which one would you want me
to start o ff first?
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 Case Frameworks > Profit > Value Chain Analysis

PROFIT A pertinent method to track down costs across the operations is to do a Value Chain Analysis:

Premise

Utilising the Value Chain Framework

Q Explore each head one by onO

Q What is the percentage split of costs across these different processesD
Q In case one particular head has highest % say 50% or more than you can ask the interviewer that you would want to look at this head to start with>
Q Many a times there might not be one major head and there could be two heads with 30%-30% split. In these cases, you’ll need to explore both heads
and also see that the profitability decline could be partly because of one and partly because of another Z
Q Broadly at any point there are two issueU
Q Price at which you operate or you get (vis a vis Competition1
Q Your efficiency (Any wastage due to efficiency problem in terms of people/process/technology)

BASIC VALUE CHAIN FRAMEWORK

Resolutions

- Better Negotiation/Bulk Order

- Time of Sourcing (Opportunistic) – order when cheap

Raw Material Cost 1 - Currency Hedging – Use forwards/futures if prices are

expected to rise. Also use call or put options for the variable
Q Start by asking type of good (Perishable/durable)D part of future demand.

Q Where does Competitor source from – does it get better pricesD - Substitution (Different Raw Material)

Q If says same price, ask about efficiency – conversion ratio/wastage/efficiency for then?Z - Value engineering (Use lesser Raw Material)

Q If the problem is higher price or higher overall procurement cost then? - Standardisation of Parts Backward Integration – ordering
more of same type of good

- Same supplier - bulk order/syndicated demand?

- Cheaper material - indigenisation/rationalisation?

- Cheaper supplier – From alternative geographies like China?

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 Case Frameworks > Profit > Value Chain Analysis

PROFIT

Inbound Logistics 2

^ Do you and your competitor use the same Mode of Transportation]

^ Do you incur the same rates and same overall cost]
^ Explore Distance Travelled – could be that the rates are same but your factory is further away from the supplier baseG
^ Are you ordering at the Economic Order Quantity (EOQ) – Trade off between Set up cost, holding cost and expected demand

After Sales 5 Outbound Logistics 4 3 Warehousing & Manufacturing

^ Same as inbound logistics

^ Installatio ^ Explore Labor cost and efficiency vis-a-vis competitor. •
^ Service or warranty cost? Inventory Cost (EOQ±
^ Overheads such as Electricity/Rent-same or higher]
^ Machine UtilisationÉ
^ % Downtime - High]
^ Machine broken? Maintenance/spare cost? Power outage]
Some Noteworthy instances and details to drill intC ^ Labor unavailability]
^ Total availability will be a function of % of time labor, % time,
Machine available, % Idle timÁ
^ Gross margin is same but Operating margin has reducedÉ
^ Resolution – additional dimensionsÉ
^ Marketing & Administration – SGN
^ OutsourcÁ
^ R&D cos
^ Economies of Scale/Learning curvÁ
^ Restructuring cos
^ Labor cost arbitrage
^ Licensing and regulatory cost7
^ If NOPAT (Net Operating Profit After Tax) is dow
^ Depreciation & Amortisatio
^ Interest ExpensÁ
^ Tax rates – which geographies (VAT) does our company operate in]
^ Inventory Write o
^ Gains/losses or external investment7
^ Loss due to some catastrophic event

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 Case Frameworks > Profit > Revenue

PROFIT Revenue

As per the basic framework, revenue is the product of price times

volume. Profits can be increased by increasing revenue, which in turn
is increased by increasing the prices, or volumes, or both.
Ansoff Matrix - Product Market Expansion
Explore Price and Volume and ask the interviewer for
preference to explore which one first
Market Product

Development
Development

Remember it could be that your Prices,total volume and total Reaching out to new Enhancing product to
cost everything is same but the revenues are down because Markets/Geographies charge premium &

NEWER MARKETS
you are selling more of the less priced product –
to get more customers increase profit Margin
Product/Marketing Mix problem
Market Diversification

Penetration
Extending Product line &
Revenue enhancement can be done by either increasing volumes, which can be exploring new markets
done by capturing more share in the existing market, or volumes can be increased Acquiring New Customers
in existing Market to enhance sales
by exploring new markets. It is also essential to analyze the competition to
understand newer opportunities that can be explored.

Prices can be increased by developing premium products, however it is essential

to increase the Contribution Margin from sales of the product rather than just
NEWER PRODUCT
revenue. Using a better product mix can also contribute to better margins per
unit sold. The adjacent Ansoff matrix displays several Product-market Expansion
opportunities

A good place to start is to use the Business Situation Framework to get an all
encompassing view of the problem statement. It is also essential to analyze the
external and internal factors impacting the revenue streams.

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 Case Frameworks > Profit > Revenue

PROFIT Revenue Segmentation

Segmentation according to different cuts or categories can also help in
determining where the root cause of weak performance lies and make
the solution more specific and actionable. Useful revenue segmentation
Business Situation Framework - 3CP includes:
A good place to start is to use the Business Situation Framework to get an
all encompassing view of the problem statement. It is also essential to
analvze the external and internal factors impacting the revenue streams.

Using the above major buckets to find the weak link in the interview,
proceed to dive deeper in the specitic segment (discovered from the
above segmentation cuts) and explore the opportunities to improve
revenue in terms of increasing volumes and improving pricing position

Sales can also be enhances by specific techniques like cross-selling

selling, bundling, loss leader/captive pricing, Improved promotion/
packaging, and enhancing customer awareness.
Pricing Strategy
Cost Based It is the practice of setting prices based on the cost of the goods
A company can use different of pricing strategies when selling a range of or services being sold. A Profit percentage or a fixed profit figure
their products or services. Arriving at the most officient pricing strategy Pricing isadded to the cost of an item, which results in the price at which
for the companv depends on developing segment-wise strategies for all it will be sold.
offering, identifying the company's pricing position, pricing segment,
pricing capability and their competitive pricing reaction strategy. It is a pricing strategy in which a company sets the price for its
Competition products after observing the competition. This strategy does not
Based pricing cover initial costs and only takes into account the selling price of
the rivals’ products.

It is a pricing strategy which sets prices primarily, but not

Value Based exclusively, according to the perceived or the estimated value of
Pricing a product or service to the customer rather than according to
the cost of the product or historical prices.

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 Case Frameworks > Market Entry

MARKET ENTRY
Premise
For Market entry cases, there are two main questions to address:F
M 1. Should we enter this market? And if yes,F
M 2. How should we enter?

While the below framework determines the market attractiveness for Question 1 in terms of an economic analysis, the entry agenda can also be contingent to
several other factors that may involve factors like cultural attractiveness, technological opportunities, etc. These are also highly dependent of the timeframe of
entry. Using the previously discussed business situation framework should guide the perspectives of the different stakeholders while entering the new market.

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Indian Institute of Management, Kozhikode
 Case Frameworks > Market Entry

Market Entry

In order to determine several factors in considering entering the new market, proceed with the following line of questioning:

Ask if this fits the company’s mission/culture –

Evaluate market conditions

1 main reason for entry:

• Invest excess cash flow

• Increase market share

• Decline in existing market

3 • Size and growth rate of new target market

• Competitive profile/trends and likely competitive responses

• Barriers to entry (and how to overcome them)

• Regulatory and legal considerations

(shrinking sales, higher costs, lower margins)

Assess the firm’s resources and capabilities:

4 C onsider complements with current product/markets

• Potential issues of cannibalisation, and market cross-elasticities

2 • Economies of scope and scale

• Ability to leverage current value chain components

(infrastructure needed)

• Capital, labor, and capacity constraints

5
Analyze cost - benefit of new market entry

• Niche vs. large market share

• Consider methods of entry (e.g., JV, direct investment, acquisition)

Market share estimate can be made by utilising the 4P framework.

4 Ps OF

MARKETING
Product Price Place Promotion

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Indian Institute of Management, Kozhikode
 Case Frameworks > Growth Strategy

GROWTH STRATEGY
Premise
The below framework provides an outline to approach cases where the interviewee is asked to provide general growth strategy for
the organisation. Given the broad nature of this ask, it is essential to clarify the interviewer’s growth objectives and practice
effective segmentation to remove all options that are not of interest. Tools like the Multifactorial analysis Matrix and the Growth
Share Matrix are used to segregate the different products/services/business units of the company in terms of their market share
and market growth in order to identify focal points for developing the growth strategy.

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Indian Institute of Management, Kozhikode
 Case Frameworks > Due Diligence & Guesstimates
Due Diligence & Guesstimates
Premise
(DD) is an extensive process undertaken by an acquiring firm in order to thoroughly and completely assess the target company's
business, assets, capabilities, and financial performance. There are several aspects that are analysed for an actual Due Diligence
analysis. For cases on Due Diligence, the following framework can be taken as a base:

Typically. there are two ways any M&A can generate value

• Value of Control

• Value of Synergy

Synergy determination and risk analysis for a good fit are

very important and the following framework can be used:

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Indian Institute of Management, Kozhikode
 Case Frameworks > Due Diligence & Guesstimates
Guesstimates

Premise
Guesstimate questions in interviews ask the candidate to estimate a
number based on very limited information. Successfully answering
these questions relies on a combination of mental math, logical
thinking, problem-solving skills, and sound assumption-making.

It is essential to note that the final numeric answer is NOT important,

it is the approach taken to arrive at it that matters. However, a sense
check for the final answer is necessary to corroborate the answer.

Guesstimate problems can be solved through three methods

(with certain other variations):

1.Top Down Method

2. Bottom Up Method

3. Employing a proxy

A guesstimate can be asked in multiple ways, even while solving a

normal profitability case. Once you have completed the guesstimate
then try to include the following to make your analysis much richer:

1. Verification of data: Identify a few sources from where you can get
the right numbers to further refine your estimate

2. Sensitivity Analysis: Conduct a basic sensitivity analysis and

identify the most critical assumptions you made

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 Frameworks

CASE INTERVIEWS

Guesstimates

Industry Analysis

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Indian Institute of Management, Kozhikode
 Introduction to Case Interviews
Case interviews are tools used to estimate an interviewee’s ability to apply logical thinking in a familiar or unfamiliar situation in order to arrive
break down a problem statement to smaller, detailed components to asses the different possible solutions/sources of problem in the same,
and their ability to present the findings in a cohesive and structured fashion.

For example, a case interview can be initiated with a simple statement such as:

An international pharmaceutical company wants to enter the Indian Oncology market. Devise a strategy for them.

Do’s for case interviews:

• Active Listening: Focus on what the interviewer emphasises & build your strategy accordingly

• Confident communication: Speak with clarity & conviction to drive across points effectively

• Neat paperwork: Keep an A4 sheet handy to draw out your structure in a presentable manner

Don’ts for case interviews:

• Reckless assumptions: Do not discard aspects based on wide assumptions & personal biases

• Losing the forest for the trees: Always keep the big picture in mind even as you explore details

• Being mechanical: Introduce an individual flavour to you answer over the typical approach

• Panicking: Maintain a smile and keep your cool even irrespective of how the case is going!

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Indian Institute of Management, Kozhikode
 PROFIT
Budget Hotels
Question The marketing and service quality is comparable to the client’s competitors. But the
Our client is in the budget hotel business but does not own any occupancy of the hotel also depends upon the discretion of the reception manager, who
properties. The profits have been declining for the past few years. makes on the spot decisions about room pricing.
Figure out the cause and give a recommendation. Okay, so the prima facie, the issue seems to be that of the decisions made by the
reception manager regarding the price of our hotels. And that leaves us with the issue
with the way our client is training its staff. I want to understand the current training
Sure, sir. So, the key problem is that I need to focus on finding the issue with declining
methods used by our client and its competitors.
profits of our client which is into a budget hotel business. Is there any objective I need
to keep in mind? The competitors are holding on-the-job training for the staff and it has been observed
that the client is following classroom training for its employees.
No, please go ahead.
Alright, I think the classroom training is not as effective as on-the-job training and
I will start with some preliminary questions. How many hotels we have and is it spread leading to the decline in number of customers coming at our hotels. I would like to do a
out over all the properties? cost- benefit analysis on the same.
The number of hotels are irrelevant here but the problem is being faced by all our hotels. Good point. We can skip the cost-benefit analysis but can you please provide some
Is the problem being faced by our client only? Are the competitors located in that region suggestions to rectify it?
also facing the similar issues?
I can think of the following steps:

No, the problem is being faced by our client only. Provide on-the-job training to all the employees so as to enable them better understand
the needs of the customer and thereby assist them efficiently.

How much have the profits declined by? And for how long has the client been Set up a pricing system for the customers to avoid any confusion in the minds of
experiencing this decline? reception manager and facilitates the smooth functioning of our client’s hotels.

The decline is 25% and the issue is persistent for a year now. Thank you. These are reasonable recommendations.

Understood, since the issue is regarding the profitability, I would like to analyze the
trend of cost and revenue streams of our client over the last year.

Okay, the costs have grown at a steady rate but the revenues have declined at a higher rate.

Noted, I would like to analyze the revenue side first. The decline can happen because of
two reasons: increase in price or decrease in number of customers arriving at our
hotels. Can you also give me some information regarding the pricing structure of our
client vis-a- vis with other competitors?

The pricing structure is similar to competitors’ structure while our client has faced a decline
in number of customers but an increase in competitors.

Okay, now I would like to analyze the factors which can be responsible for such decline.
There can be some internal factors like marketing, quality of our services, occupancy
and pricing. Provided that these are budget hotels, there is not much differentiation
regarding the price structure. Can you please help me with the mentioned buckets?

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 PROFIT
Budget Hotels
Question
Our client is in the budget hotel business but does not own any properties. The profits have been declining for the past few years.
Figure out the cause and give a recommendation.

Approach/Framework

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 PROFIT
HR Service Provider
Question There were no changes in the revenue side. Lots of projects were ending and new
A back end HR service provider has a dip in profitability. You have been projects were starting but the total costs were going up.
approached to find the problem and suggest changes. Salaries, IT set up costs and data storage cost are the major cost buckets; whether these
costs have increased recently?
As I understand, our client needs to determine the reason behind a dip in profitability
What do you think how these costs behave in the project lifespan of 5-7 years?
and would like some suggestions on the same. I have some preliminary questions, first
what kind of activities are they involved in? The salary goes down as productivity improves (due to learning curve) in such back end
Large corporates outsource their back end HR activities like Attendance, Leaves, operations leading to lesser man power per project. Also set up costs are for the first
Reimbursements, etc. to such players. Recruitment and performance management is time and not later. And data storage costs keep increasing as the volume of data stored
obviously not outsourced and is done internally cumulatively keeps increasing.
Set-up Costs and Salaries are high initially and they drop over the life of the project. The
Who are our typical clients?
revenue per employee is increasing due to inflation and data storage cost is increasing.
Banking, Financial Service players, consulting firms, etc. Salaries is the major cost head – 70% of the project
Is the problem being faced by our client only? Are the competitors located in that region Revenue and cost are connected. Lot of new projects getting launched and large old
also facing the similar issues? projects are in their final stage is the problem. As the profitability in a year is a weighted
No, the problem is being faced by our client only. average of individual projects with their respective profitability curves, the proportion of
new projects with low profitability is greater than the number of old projects with high
Are these services offered for the long term? Are there any other differentiated profitability leading to an overall drop in profitability in the current year.
solutions that we offer?
Yes, that’s correct. Can you provide some reasonable recommendations on the same?
Yes, typically for 5-7 years and solutions are the same across clients.
What do we mean by Profitability? Is it Profits/Sales or Profits? Also, what is the 1. Separate KPIs for new and old projects

quantum by which the drop has taken place? 2. The client should look for extending all the projects which are in the last year since
profitability is highest in the final year of the project. And the extension would ensure
It is Profits/Sales and has dropped from 28% to 22% high profitability from the same project.
Is this drop in profitability across all projects or in specific verticals? Sounds good. That’s all about the case.
It is measured as an aggregate.
Are competitors facing a similar problem?
There are few players in the industry and only we are facing this issue.
What is the pricing mechanism?
Price per employee basis @ INR 400 for a year and a yearly increase which matches the
inflation rate.
Okay. Given with this information, I would like to split the profits into Revenue and Cost.
Revenue: #Clients X #Employee per Client X Revenue per Employee

And Cost :

Fixed Cost – Salaries, IT set up cost, Data storage cost, Maintenance cost, other indirect
costs

Variable cost – Processing cost

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 PROFIT
HR Service Provider
Question
A back end HR service provider has a dip in profitability. You have been approached to find the problem and suggest changes.

Problem Approach/Framework

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 PROFITABILITY | COST REDUCTION
InsureGo
Question That looks good. Can you summarise your recommendations
Your client is InsureGo, an Insurance company primarily operating in 1. Offshoring can be considered as a possible alternative to reduce costs from the
the US Market. Their Annual Net income is $6 Billion which is 2% less offices in high-rent areas

than last year. They have all kinds of insurance within their portfolio. 2. The company can make use of Automation to quickly perform some of the tasks
You need to analyse the reason for the decline. which are repetitive

3. Higher executives can manage more juniors and they can be transferred to teams
Okay. Is the decline only in this year or has it been the case for previous years too? where more decision-making is required

The decline is since the last 5 years. Thank you. All the best for further rounds.

Is there a similar trend being observed in the industry as well?

No, in fact, the trend in the industry is the opposite of what is being observed in case of
our client. Approach/Framework
Okay, since there is a decline in income it could be a Revenue or a cost problem. I’ll first
start with the Revenue side. Is that okay?
The Top line is improving. You can start looking at the Cost side to identify the problem
We’ll divide the Costs into Fixed and Variable buckets. The Fixed Costs include Rent and
other infrastructure-related costs. The major cost drives in case of Variable costs would
include Human Capital, Insurance Pay-outs, marketing costs. Is there any particular
aspect that you like me to explore?
Are there any other fixed costs that you would like to explore?
I cannot think of any other fixed costs at this moment.
Okay. So, one of the issues here lies with the human resources part of the company. Can
you think in that direction?
So some of the possible avenues in this case can be their salaries, commissions (since
it’s an insurance company), their working hours/ efficiency.
So I’ll present you a chart with this data and you can then give me your possible solutions.
Excel sheet: 1. Data related to the working hours of employees and the number of
employees managed by their superior 2. Rent costs for some of the teams (Finance,
Marketing, Admin) and offices
So we can see that in Team A & B, the employee-supervisor ratio is extremely high i.e.,
there are too many supervisors per employee. We can reengage some of the higher-
level employees to other teams and thus reduce the costs for these teams. Further,
some of these offices are based out of some of the densely populated cities which cost a
lot in terms of rent. We can use offshoring as a possible situation for some of these
cases which would help in reducing the Rent costs. Some of the teams like Sales and
Marketing have a more on field job and hence they would need to be near client
locations but other teams like finance with majorly backend work can stay in offshore
locations where the Rents costs are lower. Automation of some menial work can also be
considered as a plausible solution.
26
Indian Institute of Management, Kozhikode
 P FIT
IT Service Firm RO

Question What are the percentages for the following questions: 1) Employees on bench 2) No. of
billable employees 3) Working in admin 4) Working in internal functions
An IT services firm has been losing its margins in the recent past.
Identify the problem and provide recommendations. The bench strength is 5%. You can ignore employees working in admin and internal
functions.
What are the geographies the firm operates from?
I guess 5% seems to be a required number for the incoming projects and is this the
They have o ces in
ffi USA, Europe India and Japan.
,
industry standard?
Yes. No. of billable employees is not the correct bucket. You need to think more.
What is the split of the clients they have?
80 % of the clients are from USA and 2 % are from oW. ut
0 R B 90 % of the work is done Okay. I d like to replace it with no. of projects and divide projects into billable and
’

from India ce.

Offi
nonbillable employees. Is this okay?
What are the services they offer? Yes. Now identify the non billable employees.
-

There are three broad categories: implementation development and digital strategies.
,
There ll be ubject matter e perts senior management and client relationship team
’ S x ,

What is the revenue split between these categories and margins earned respectively? You ve identified the problem. Now provide your recommendations.
’

Development generates most revenue and Digital strategies generate more margins. ut
The client can hire E on contract basis or getting E billable by negotiating with the
B

revenue from digital strategies is the least

SM SM

clients. They can hireSM Es that need to contact the clients less frequently based out of
What are the growth opportunities in digital strategies and the market outlook? India to lower the costs. lso they can merge enior
A S Management and lient
C

R elationship team. They can come up with a metric which would compare the revenue
The market outlook is really great.
generated in a project v s the number of senior management tagged to the project
/

using industry standards and their historical data) for optimise allocation of senior
Just wanted to clarify whether you meant profits when you said the firm is losing its
( –

management.
margins?
Yes.

O kay. s the problem lies with margins we can look at the revenue and costs. The firm
A ,

is making biggest margins from least revenue stream so I wanted to look at costs. Is
that okay?
Yes. ounds good. Please go ahead.
S

I d like to list the following cost heads: abour Infrastructure and oftware icensing
’ L , S L

Which one amongst these costs do you think would be the highest contributor?

A s it is a services firm labour costs will be the highest.

,

What info do you require in labour costs?

S o the abour costs will have two branches no. of employees and cost per employee.
L –

U nder ost per employee we ll have fi ed salaries variable component and overheads.
C , ’ x ,

I would like to start with no. of employees

You can focus only on this as the other arm is optimised.
27
Indian Institute of Management, Kozhikode
 IT Service Firm PROFIT

Question
An IT services firm has been losing its margins in the recent past. Identify the problem and provide recommendations.

Approach/Framework

28
Indian Institute of Management, Kozhikode
 PROFIT
Business Process Outsourcing
Question
Your client is a small BPS (Business Process Outsourcing) firm, that is

facing losses due to missed SLAs (Service Level Agreements). You have
been consulted to analyse the feasibility of adopting an automated
software that would reduce the missed SLAs.

Can you please explain in detail in which operations the SLAs are missed?

Also, please give a flow of the process.

So the client is responsible to take care of handling tickets raised by the customer. The
flow of the operation is:

1. Ticket is raised

2. a draft is created

3. the draft is categorised

4. Based on categorization, the draft is sent to different departments so that the issue
can be addressed.

The categorization team consists of very few people and hence maximum delay takes
place in this step.

Okay, let us start by doing a cost benefit analysis. How will the adoption of the software
increase the expenses? Also, is the software licensed and subject to renewal?

The installation and purchase cost are very high. It is a one time cost. There is no
information on the renewal part.

If the software is to be implemented, the employees have to undergo training. Do you

want me to consider this under the cost head?
Yes, training costs are significant and I want you to consider it while giving your
recommendation.

Even with the high cost, if the software is implemented, by what percentage will the
missed SLA be reduced?

You can assume a logical number by yourself.

Let's assume that on an average 500 tickets move past the categorization phase. For
every ticket raised and closed, the firm gets money, so if the total tickets were 1000,
there is an untapped 50% of revenue due to missed SLAs.

You can now go ahead with the recommendations.

The firm should go ahead with the solution. Even though the one-time cost is high, it will
be offset by the increase in revenue.

29
Indian Institute of Management, Kozhikode
 PROFIT
Business Process Outsourcing
Question
Your client is a small BPS (Business Process Outsourcing) firm, that is facing losses due to missed SLAs (Service Level Agreements).

You have been consulted to analyse the feasibility of adopting an automated software that would reduce the missed SLAs.

30
Indian Institute of Management, Kozhikode
 ROFIT
Data Science company P

Question
A leading Data Science company wants to increase their profitability.
What major factors should they look for?

What exactly does the company do?

So the company has a good client base and collects projects from the clients. It helps
the clients in managing their entire end-to-end data processes. They create statistical,
network, path, and big data methodologies for predictive fraud propensity models and
use those to create alerts that help ensure timely responses when unusual data is
recognized.

Okay, has the company been facing a decline in profits and hence wants to revive and
increase the profit share?

The company, explicitly, is doing good and is having a stable profit throughout. But now,
it wants to increase the profits.

Got it. So since the company wants to increase the profits, it can either do it by
increasing the revenue or decreasing the cost using the different revenue and cost
drivers.

For Increasing Revenue, it can look forward to the following drivers:

1. Approach new clients and projects through marketing their services

2. Retain existing clients for more projects

For decreasing cost, it can cater to the following drivers:

Infrastructure Cost - pertaining to both Hardware and Software

Administrative Cost

HR and Customer Service Cost

So what should I go ahead with?

You are correct in identifying the buckets. Lets now focus on the HR and Customer
Service Cost.

So, the HR costs can be subdivided into Seniority, Location (Onshore or Offshore) and
Skills.
Right, the client is facing a location and skills issue. Recently, the client had hired for a
lot of senior positions which led to an increase in the expense. Regarding Location, the
company is facing huge rental problems in popular locations.

31
Indian Institute of Management, Kozhikode
 Growth
Supermarket Chain
Question In order to cater to the changing preferences of the consumers, our client can do a few
Your client is a supermarket chain and their ice cream department has things:

been experiencing a drop in revenue over the past year. They have On the product front, they can stock more non-fat/low-fat ice creams.

On the placement front, small ice cream fridges can be kept near the check-out counter
hired your firm to determine the cause of the decline and recommend
so that people can look at them while they wait in line.

ways to reverse this trend.

Apart from these ice creams, the client can also stock various substitutes of ice creams
such as frozen yogurt, frozen fruits, popsicles, etc.

That’s an interesting case. To begin with, I would like to get clarity on a few things. Could
you tell me a little more about the supermarket chain? Where do they operate? Great! What can our client do with the existing stock of super-premium ice creams?

The super market chain operates throughout India and has multiple stores in multiple So, I can think of a few measures our client can take:

cities. 1.Discounting: Our client can offer surplus stock at a discounted price. They can
strategically run flash sales to instill a sense of urgency among the consumers.

Alright, what is our share in the Indian market? Has the competitive landscape changed 2.Bundling: They can bundle complementary flavors and sell them at a slightly lower
in the past year? price or run BOGO schemes.

Freebies: Our client can also sell small SKUs of these ice-cremes for free with other high-
Our client is a leading supermarket chain in the country, and the competitive landscape value products.
has not changed in the past year.
Thank you. These are reasonable recommendations.
Alright, is the revenue decline specific to the ice cream department only, or are the
other departments facing a decline as well? Also, is this decline specific to particular
locations?
The revenue decline is specific to the ice cream department only. No, the decline is
prevalent in all stores.

In that case, I’d like to classify ice creams under 4 categories: non-fat/low-fat, regular,
premium and super-premium. Is there any particular category that is facing a decline?

Actually, only the super-premium category is facing a decline.

Okay, so in my opinion, this decline can be attributed to 2 things. First, there could be a
shift in consumer preferences. Another reason could be that the consumers have
become more price-conscious, moving from super-premium ice creams to less
expensive ice creams.
Let’s focus on what could have changed in consumers’ preferences.

The consumers’ preferences could be shifting towards healthier options such as non-fat/
low-fat ice creams. Moreover, if the population is becoming more health conscious, they
might substitute ice creams with other healthier options such as frozen yogurts.

Alright. Now considering that this decline is due to a shift in consumers’ preferences, what
would you recommend to our client?

32
Indian Institute of Management, Kozhikode
 Growth
Supermarket Chain
Question
Your client is a supermarket chain and their ice cream department has been experiencing a drop in revenue over the past year. They have hired your firm
to determine the cause of the decline and recommend ways to reverse this trend.

Approach/Framework

33
Indian Institute of Management, Kozhikode
 Growth
Fibre Manufacturer

Question
Okay. So, it looks like the market for wood pulp-based fibre in Europe is decreasing as

the competitors are also making losses, and Asian markets are doing decent. The client
Your client is a wood pulp-based fibre manufacturer and has been
cannot do much in the existing markets, so they can consider expanding into the
running into losses. The operations are majorly in Europe and Asia
Chinese market. They could do this in 2 ways:

(India and Vietnam). The client wants you to find the cause for losses
Organically: They could start exporting to the Chinese market. If the sales are good, they
and provide recommendations.
could then think about setting up manufacturing in China.

Inorganically: This can be done by acquisition or by a joint venture. I would recommend

Okay. I want to know if our client also distributes the product. If yes, who are the a joint venture as it will allow the client to tap into the existing infrastructure of the

customers? company, which makes the market entry a little easy.

Thank you. That will be all. All the best for further rounds.
Yes, the client supplies to the customers who are cloth manufacturers. The fibre is

majorly used to make shirts.

Okay. So, I want to divide the possible factors into two categories: External and Internal.

Sure, go ahead.

Firstly, I wanted to know if there are any substitutes available in the market.

Yes, most cloth manufacturers use polyester and other better-quality fibres.

Okay, it looks like the substitutes dominate the market. How is the competition in

Europe and Asia? Are they making losses too?

The client has three major competitors in Europe and two in Asia. European competitors are

also experiencing losses in recent years. Our major competitors in Asia are doing okay.

Okay. This looks like an industry-wide problem in Europe. Are there any new

government regulations that led to the losses in Europe? Also, how’s the Asian market

doing overall?

No. There weren’t any new regulations. The Asian market overall is doing okay, but the

Chinese market has been growing for the past few years.

Now I want to look at internal factors:õ

Ûß Is the pricing done rightä

Øß How good is their marketing team and their effortsä

×ß How is the service quality?

The client has competitive pricing, and they have good marketing campaigns. But

irrespective of that, they couldn’t push the sales. There are no issues on this front.

Okay. Give me a moment to gather my thoughts.

You are on the right path. Summarise whatever you’ve gathered till now and provide

recommendations, if any.

34
Indian Institute of Management, Kozhikode
 Growth
Fibre Manufacturer

Question

Your client is a wood pulp-based fibre manufacturer and has been running into losses. The operations are majorly in Europe and Asia (India and Vietnam).

The client wants you to find the cause for losses and provide recommendations.

Approach/Framework

35
Indian Institute of Management, Kozhikode
 Growth
Skincare Company
Question We can increase sales if customers find additional value in our products. This can be
Your client is a U.S. based skincare company. They are considered to be done in the following ways:

a high-end/luxury brand but sell products at a reasonably affordable 1.Introduction of a loyalty program with points for every purchase that can be reused in
the next purchase.

price, and they primarily serve women between the age group 20-65.
2.Personalizing the shopping experience by providing accurate recommendations to the
They have hired you to help them devise a strategy to grow profits.
customers based on their past purchases.

3.Sending personalized digital messages to customers who haven’t made a purchase

Alright, where do our client sell their products? Also, how do they sell their products? within a certain amount of time.

Online or offline or both? 4.Sending “cart reminders” to those who add something to the shopping cart but don’t
purchase it.
Currently, they manufacture and sell all products in the U.S. only, but they are open to
expanding abroad. All products are currently sold exclusively online. Those are some great points. Now, given that the natural skincare segment is growing,
consider that our client wants to introduce a new product in this segment. What could
Okay, what does the industry landscape look like? be the potential issues associated with introducing a new natural skincare product?

The skincare industry is currently experiencing growth, especially in the natural skincare Introducing a new product in this segment could involve these risks:

segment. 1.Consumer’s lack of trust in the product since it’s a new offering by the company in this
segment.

Alright. So, I would like to look at growth from the following 2 broad buckets:
2.New product cannibalizing the sales of existing products.

1.Internal growth
3.Lack of R&D and expertise in developing a natural skincare product.

a.Price: We can either increase the price of products (if our customer segment can 4.Natural products usually are priced higher due to the high cost of production. The new
afford a higher price) or decrease the price (if we are planning to increase the reach of product could experience fewer sales if the market is not ready to pay such high prices.

our products and thus sell higher volumes)

5.Higher competition in the segment could limit the success of the product.
b.Programs: We can aim to get additional purchases from our existing customer base
through reward and loyalty programs.
Those are some good points. Thank you. All the best for further rounds.
c.Product: We can introduce a new product depending on the market needs and trends.

2.External growth

a.Acquisition: We can either acquire a new product or a skincare company.

b.Geographical expansion: Since the awareness and popularity of skincare products are
growing abroad, we can look for expansion in those markets.

c.Channel expansion: Instead of just selling online, we can create an omnichannel model
by setting up our own offline stores or by selling at existing beauty stores such as
Sephora and Ulta.

Great! How can we encourage additional purchases of existing products from the existing
customer base?

36
Indian Institute of Management, Kozhikode
 Growth
Skincare Company
Question
Your client is a U.S. based skincare company. They are considered to be a high-end/luxury brand but sell products at a reasonably affordable price, and they
primarily serve women between the age group 20-65. They have hired you to help them devise a strategy to grow profits.

Approach/Framework

37
Indian Institute of Management, Kozhikode
 rowth
Air Conditioning Manufacturer G

Question
Okay, if the client enters the new segment (i.e., premium segment), what can be the
Your client is an air conditioning unit manufacturer that is currently potential concerns?
operating in India. The growth rate for the client is 10-15%, and they ntering a new segment could involve 3 risks_
E
want to grow 5 times in 5 years. Recommend a growth strategy for the A@ Difficulty in creating a renewed and premium brand image for the premium
client. segment.H
9@ Decline in sales from the current customers as they now perceive the brand to be

expensive@
Okay. To understand our client’s objective better, I would like to ask a few questions.
l@ Threat from existing competitors in this space@
First, are we talking about growth in terms of volume or profits?
r@ Additional costs due to value-added services.

In terms of volume.
Okay, now move on to new business ideas.
Okay. Can you tell me who are the customers and competitors are and in what regions
The client can consider options such as geographical expansion, increasing product
does the client operate?
lines, diversifying into a new business, or acquiring/merging with a new company.
The client has operations throughout India. They have no strong competitor as of now.
List down the points which can help the client to decide on a new product launch in the
90% of the customers are in the residential sector, and 10% of the customers are in the
market.
commercial sector.
The client can check these 3 criteria while deciding to launch a new product_
Can you briefly tell me about the value chain?
A@ Whether the existing market can be exploited?H

So, the client manufactures the air conditioners and supplies them to its distributors, 9@ Whether the introduction of a new product would cannibalize the sales of existing

who then sell them to customers. products¬

l@ Whether additional costs in terms of human resources, manufacturing units, and

So typically, a company can grow through its existing business or through new business. distribution strategies can be justified?
First, I’d like to analyse options in the existing business. Is that okay?
G reat, that will be all. Thank you!
Sure, go ahead.

In the existing business, the client can look at increasing the number of customers or
increasing the basket size. So, I wanted to know a little more about the customer base.
Is there any specific class to which the client caters?

The client majorly caters to the middle-class segment.

Since the client is currently catering to the middle-class segment, they can try to enter
into a new segment, i.e., the premium segment. Targeting the premium segment would
also allow them to price their products higher.

Sounds good. But how do you propose to increase the price?

There are two options in which it can be possible:H

A@ Adding value-added services like free delivery and installation services@

9@ Providing after-sales service.

38
Indian Institute of Management, Kozhikode
 Growth
Air Conditioning Manufacturer

Question
Your client is an air conditioning unit manufacturer that is currently operating in India. The growth rate for the client is 10-15%, and they want to grow 5
times in 5 years. Recommend a growth strategy for the client.

Approach/Framework

39
Indian Institute of Management, Kozhikode
 Growth
Pharma Drug Manufacturer

Question
Sure, give me a few minutes. Approximately, the market size would be 168 Bn annually.
Your client is a pharma company, and they want you to help them That’s about right, the market is around 170 Bn, and our client is a market leader with
increase their top line. 60% share. We are essentially looking to grow the whole market. I would like you to look
at the factors we used in the above exercise and tell me if there are any levers we can
Alright, could you tell me a little more about the company? Where does it operate? What work with.
does it produce?
I would like to evaluate each of the factors in the above equation with the following 3
It is an MNC that operates globally and has a robust business in India. For the purpose
criteria¤
of this case, we would focus on the Indian market. As for products, our client produces
a[ Can this factor be increased?5
drugs for 2 ailments:

^[ If yes, then what are the drivers that influence this number¸
1.Diabetes

¿[ What actions can be taken to influence the drivers to increase the factor?
2.Haemophilia
Sounds good. Go ahead.
Okay, so what is the revenue contribution of both these drugs?
I would remove the population and age group from our analysis as they cannot be
Great question! 80% of our revenue comes from the diabetes market, and our current
impacted by our actions. Our primary focus should be on the diagnosis rate. This
focus is to increase the top line of the diabetes drug.
number would be impacted largely by the availability of healthcare facilities, and as we
Sure, let's focus on the diabetes market. Could you tell me a little more about the know, the healthcare facilities in India have lower penetration in rural areas. We can
disease and treatment methods? My understanding is limited to the fact that it’s an focus on increasing that. The way to go forward would be through a partnership with
ailment of reduction in insulin levels. the government. Together, we can set up health care infrastructure, provide testing
support and run diabetes check-up camps.
Right, so diabetes is of two types: Type 1 and Type 2. It’s not curable, and it is a condition
that has to be managed. The management usually involves two methods:5 Absolutely right, that’s something that can be looked into. Let’s move on to the next
a[ Pillh factor.
^[ Insulin Injection.
Sure, next is the prescription rate, so as we discussed earlier that this could be managed
Our client produces insulin.
through either pills or insulin. I would first like to understand what mode is prescribed
Alright, to understand how we can increase the top line, I would like to start by when there is a medical premise.
understanding the market and deriving the market size.
Right, as you know, in India, injecting yourself is considered a stigma, and hence pills are
Sure, go ahead and form an equation for market size. Feel free to ask for input on numbers. preferred as a mode of treatment; however, scientifically, insulin injection is considered
to be a better mode of managing the disease.
Okay, so the equation can be –

Market Size: Population x % Target Age Group x Diagnosis Rate x Prescription Rate x So, this looks like an awareness issue. We have two stakeholders: patients and doctors.

Dosage Frequency x Price. For doctors, we would have a direct channel through our sales persons. We can start a
Good, that’s almost perfect. I will give you the numbers so that you can compute the campaign to get doctors to switch from pills to insulin injections and also get them to
market size.5 make patients aware of the benefits of an insulin injection over pills. For patients, we
Population: 1.3B can run awareness campaigns on both mass media and social media. We can also place
%Age: 55% (20+ year olds flyers and posters that list the benefits of insulin injection over pills at major clinics and
Diagnosis Rate: 11%5 medical centres.
Prescription Rate: 7
Dosage: 0.15 units per day per kg weigh1 Great points. That is all from our end. All the best for further rounds.
Average weight: 70 K
Cost: ₹8

40
Indian Institute of Management, Kozhikode
 Growth
Pharma Drug Manufacturer

Question
Your client is a pharma company, and they want you to help them increase their top line.

Approach/Framework

41
Indian Institute of Management, Kozhikode
 Growth
Cab Service Provider
Question Yes, in general, our customers have to face double the waiting time as compared to our
competitor’s customers. Other parameters are not an issue as our app and customer
You are the operations head of a leading cab service provider company
services are top-notch.
and want to beat your competitor in terms of market share.
Interesting! I would like to further break this problem into four parts{
Alright, can you throw some light on the current market scenario for our company and yz Fleet siz™
our competitor? vz Area of operatio
uz Request routing mechanismp
So, the market has only two big players- Our company and the competitor. Our ‘z Driver response

competitor holds 60% of the market share, and we hold 40% of the market share. Do we know how we fare against our competitor in these aspects?
Are we talking about the market share in terms of dollar value or no. of customers? Yes, so our fleet size is small compared to our competitor. Also, we have seen this
problem in some specific locations. The other two parameters are not an issue. How do
We are talking about market share in terms of the total no. of trips.
you think we can increase our fleet size?
Do we have any target geography or target timeline in mind for achieving our growth
I would like to suggest 4 options to increase the fleet size. The priority/order of
target?
execution of these solutions can be determined with the help of the time-effort matrixz
Yes, we want to achieve our target in 1 year, and we are particularly interested in Lucknow, yz Purchase fleet (high time, high effortM
India. vz Acquire a local transport agency (low time, medium effortM
uz Incentivise individual drivers to come to our company (high time, high effortM
Lastly, I would like to understand the services we currently offer in Lucknow. ‘z Scheme for people to rent out their vehicle to us when not in use (high time, high
effort).
We only operate cabs in the region. For the purpose of this case, we can ignore the share
cabs market. That makes sense. Why don’t we focus on the low hanging fruit, i.e., option 2. How do
Alright. We can achieve our growth target either organically or inorganically. Organically, you think we can assess the number of additional cars we might need to add to our fleet
we can modify our current business model (introducing new services like autos, etc.) or to achieve our target?
increase penetration through our current business model. Inorganically, we can get into I think we should identify the bottleneck area and bottleneck time to estimate the
a JV or acquire another firm. However, since we have a 1-year target, we should focus on maximum fleet size we need to acquire. This bottleneck can be identified on the basis of
exploring organic growth as JV or M&A can be a time-consuming process. Do you think two metrics
this is fair? yz % booking leading to “No Cab” statu
Yes, you are right. We can focus on organic growth. Specifically, we are looking to increase vz % booking resulting in cancelation from the customer because of large waiting time

penetration using our current business model.

After finding out bottleneck areas, we can estimate footfall in those locations -> Divide
Sure! For that, we can either focus on increasing the number of customers or increasing into upper, middle- and low-income people (Low-income people will opt for public
trips per customer. transport, upper middle- and high-income people will opt for cabs). We get an estimate
of the maximum bookings that can be made. Since we need to capture at least 50%
Let’s focus on increasing the number of customers. market share, we can consider half of that demand and estimate the number of cabs
To increase customers, I would like to look at the customer journey when they use our that will be required and compare it with the current number of cabs in the region.
service and benchmark it against our competitor to see where we are lacking.

I will divide the customer journey into three parts –p That was very insightful. That is all from our end. All the best for your next rounds.
Q Pre-ride experience (app usability, waiting time)p
Q During-ride experience (cab condition, driver’s behaviourM
Q Post-ride experience (complaint redressals)

Do we have any data on where we stand against our competitor on these fronts?
42
Indian Institute of Management, Kozhikode
 Growth
Cab Service Provider
Question
You are the operations head of a leading cab service provider company and want to beat your competitor in terms of market share.

Approach/Framework

43
Indian Institute of Management, Kozhikode
 Growth
Appliance Distributor
Question Sure. Please give me a minute to put the structure in place. To increase profits, we can
look at increasing revenue, decreasing costs, or both.
Your client is a premium appliance distributor in India. The client wants
to increase profits by $300mn in 3 years. No problem on the cost front – already efficient. Please focus on revenue.
Sure – revenue can be increased either through existing business or new business.
Alright, I want to get some clarification around the objective of our client. Has our client Within the existing business network, we can look at increasing penetration of the
been facing any decline in profits, stagnation, or in general, has a growth objective? Also, existing product mix. Within new businesses, we can explore new products, new
what is our current base of revenue and profits? geographies, new channels, and new customers. As for the existing market, we can
increase the volume intake by retailers or increase price subject to price elasticity.
The client is already a market leader and has been growing at a constant rate. The
current revenue is $1,500mn and profits of $500mn. How can you increase volume?

Understood. We are trying to increase profits by 60% over the current base and revenue Volume is a function of the number of retailers*average ticket size*frequency in a
by $900mn, assuming the rate of profitability. Do we have any supply constraints? Are year. A push strategy needs to be employed. More incentives need to be provided by
we growing at the pace of the industry or slower, and what is our market share? tweaking one or more of the following – type, level, or specificity. Better inventory
management, as well as access to working capital, can also be looked into.
No constraints on supply. We do not have data on growth. How would you calculate
that? Let’s say our competitors can fulfil, on average 65% of the needs of their retailers while
we can fulfil only 50% of our retailer’s needs. If we improve the incentive structure, we
There could be three broad ways of computing growth by looking at the following, of could match the performance level of our competitors. How much of our objective will
course, making some assumptions on similar inventory levels:
be met through this?
1.Sales data of premium appliances to customers tracked by retailers

2.Sales of competitors
Thank you for the information. Given that 80% of our business is driven by premium
3.Sales by manufacturers of premium appliances – exclude any sales made directly appliances, the revenue share of such products would be $1200mn. Increase in revenue
through owned stores would be $360mn (1200/0.5*0.65-1200). Profits equate to one-third of revenue, and
therefore increase in overall profits would be $120mn. So, we’ll still need $180mn to
Assume growth is in line with the industry or a little more, perhaps. Why do you ask about reach our target of $300mn.
the market share?
You mentioned about geographical expansion. How do we go about that in India?
In order for us to grow by 60% over the next 3 years, we need to understand whether Sure. Perhaps, we could divide the regions into 5 – North, East, West, South, and
there is scope to increase by that amount. If we already hold, say, 80% market share, Central and look at our penetration rate.
increasing revenue within the same line of business would be difficult unless the base
also increases. Also, what does the competitive landscape look like? We have 150 branches overall and no presence in the South. It is a complete white
space for us to enter. How many branches would be required to fulfil our objective?
That shouldn’t be a problem. Don’t worry about the competitors. There are, say, two
competitors, A and B, with similar market share. Looking at our existing operations, we are earning almost $10mn through each branch
Could I get some visibility on revenue streams – Are we only selling premium
(including fixtures - $1500/150). We need to fulfil the remaining objective of earning
another $180mn of profits or $540mn of revenue. Therefore, on average, 54 similar
appliances? My understanding of the value chain is that we procure appliances from
branches would be required.
manufacturers and distribute them to retailers.

Yes, it is a traditional distribution business. There are two product lines – premium Would you be able to earn this amount of revenue by opening 54 branches within three
appliances (80%) and fixtures (20%). Focus on premium appliances for this case, given years?
they earn higher profits.

44
Indian Institute of Management, Kozhikode
 Growth
Appliance Distributor
Immediately, no. This was a ballpark number, but several variables need to be
evaluated. First, are the consumption patterns in the South similar to an average region
in which we operate in terms of income level (this will dictate whether people can afford
premium appliances or not)? Second, if this is a white space, why have other
competitors not entered, and how are end consumers accessing premium appliances
otherwise – offline manufacturer-owned stores or online? Third, are there any supply
chain/operational constraints in the region that affect the feasibility of opening
branches?

How would you evaluate how much would an average branch earn?

I could analyse the demand side from end customer consumption patterns and evaluate
how much revenue can be earned by a particular branch in a particular area.

Alright, why don’t you make assumptions on the supply side and proceed?

From the supply side, we could assume capturing market share on the basis of previous
data on which regions we have entered and how much market share we have been able
to capture, or if this is not available, any data on entry by a player in the same industry.

Okay, make your own assumptions and proceed.

Initially, in the first year, we could gain, say, 10% of the market share. With stable
operations and greater incentives, we could double the share to 20% in the second year.
The growth would stabilize in the following years – say reach 25% in the third year.

Thank you. That would be all.

45
Indian Institute of Management, Kozhikode
 Growth
Appliance Ditributor
Question
Your client is a premium appliance distributor in India. The client wants to increase profits by $300mn in 3 years.

Approach/Framework

46
Indian Institute of Management, Kozhikode
 Growth
LPG Distributor

Question
2. Investment to enter new markets/ businesses k
Our client is in the business of providing LPG to households. They have $ Investment in new markets – The client can consider investing in new geographies to
an annual profit of INR 500 crores. Over the years, the money has supply liquified gas. Since the client already has capability in that area and the
liquified gas supply industry is in its nascent stage, the client can become very big in
accumulated, and we have been hired to suggest how the client can put
this money to use.
this sector. Given the excess cash, the client can look at directly acquiring an existing
player or can aggressively bid for new tenders—

That’s interesting. Where does our client lie in the overall value chain? $ Investment in new businesses – Since there is a lot of talk about green energy and
reduction in carbon footprint, our client is in a good position to enter some new
Our client sources liquified gas from market players and supplies it to households. The business and build capabilities over time to ensure that their future position is
client owns the entire infrastructure required for operations. secured .

Why has the client been accumulating so much money? Is it a public sector entity? 3. Financial investments: The client can hire an investment management company to
manage its excess cash by investing in capital markets and can then look for
Yes. It is a public sector entity. Initially, they were funding their infrastructure needs
through their profits, but since the required infrastructural investments are practically
investments in the future .

nil, they have been amassing this wealth for some time. As to why exactly they haven’t Okay. Let’s say that the client has 4 projects as options across these buckets. How would
thought of putting it to use before is unknown to us. you go about selecting and recommending a project?

Okay. What are the aspirations of the client from this excess cash? Do they have any I would consider the following parameters to decide on which project should the client
specific target/outcome that they want to achieve? choose:¤
–— Criticality of the project to the business (sustainability, immediate requirement, etc.
Not really. The issue is that they don’t know what to do with this money. We can practically
®— Initial investment required and our current cash positio
explore anything under the sun.
— NPV of the projects
I shall look at 2 investment avenues for the client:¤
Let's say all the projects have positive NPV. Also, the client has enough cash to fund any
of these projects initially. All the projects also have similar criticality for the business.
–— Investment to grow existing business¤
(Data given: Project-wise initial cash requirements, their NPVs, and existing excess cash)
®— Investment to enter new markets/ businesses
As I can observe from the data, the client is not in a position to fund all the projects
There is one avenue that is missing. Can you think of which one? simultaneously but can start with any of the projects. I would look at the timings of the

Financial investments?
future cash flows to suggest a specific sequence of projects to the client.
How would you do that?
Yes, go ahead. Tell me, what all types of projects would you consider in each of these
options? I will estimate the future cash flows of the projects. Post that, I shall start with the
I would consider the following:¤
project with the highest NPV. Since it also has the highest cash outflow and no other
project can be funded simultaneously, I will look at cash flows and see when the next
best project can be funded or at what sequence will the NPV for the client would be
–— Investment to grow existing businesses:¤
highest. In general, also called Capital Budgeting.
$ Investments to improve operational e fficiency – The client can consider investing in
improving operational e fficiency, which would lead to even higher profits in the Great, you can also choose to call it an excel optimization problem.

future, which we can find ways to put use— I think we can close the case here. Thank you!
$ Expanding within Mumbai – The client can consider investing in developing its
infrastructure in and around Mumbai to expand its customer base, again leading to
even higher profits for future use.

47
Indian Institute of Management, Kozhikode
 Growth
LPG Ditributor
Question
Your client is in the business of providing LPG to households. They have an annual profit of INR 500 crores. Over the years, the money has accumulated, and
they have been hired you to suggest how the client can put this money to use.

Approach/Framework

48
Indian Institute of Management, Kozhikode
 European Hotel Chain Market Entry

Question In feasibility, I’ll look at financial feasibility and operational feasibility. In financial
Your client is a European hotel chain (say, Intercontinental Group) – feasibility, I’ll consider factors like revenue, profitability, break-even etc. In operational
operating 4-star and 5-star hotels under several brands. They have feasibility, I’ll look at the possibility of setting up of operations in 2 ways – organically
achieved tremendous growth in China (2,000+ hotels) and have 13 setting up hotels or inorganically acquiring/partnering with other players in the market.

hotels in India as of now. They have approached you to advise them

whether they should grow in India in a small time. Am I missing anything specific here that I should consider?

Thanks a lot for the case. I would like to reiterate the case statement to make sure that I
No, this looks comprehensive. Currently, the company’s significant growth comes from
corporate segment, constituting 80% of overall number. What do you think the client
didn’t miss anything (Reiterates). I would like to understand a bit more context about should do in order to win in this segment in India?
the client and the objective. Can I go ahead?
Sure. The client can focus on forging strategic partnerships with big corporate houses,
providing them with space for official visits, meetings, off-sites etc. They can also
What is the decision metric that the client is looking at to decide whether to grow or consider tying up with existing players. In order to attract small companies, they can
not? Also, what is the time horizon? offer discounted deals, bulk discounts etc.
The client wants to achieve profitable growth in 1-2 years. Can you try to think of all the things that the client should do to win in this segment?
Take your time.
How is the performance of the 13 hotels in India?
The performance has been considerably good. I would like to consider 3 broad buckets which the client should focus on to win in this
segment:Ï
How is the performance of the industry and other players in India? How many players µ AcquisitionÏ
are there and do we have any data regarding their offerings and market share? µ EngagementÏ
µ Retention

The industry varies based on multiple factors. We don’t have enough information on that In acquisition, we can look at winning the trust of executives through various offerings
yet. like pilot stays at the properties etc. We can have a dedicated relationship manager to
I would consider 2 major factors to evaluate whether the client should grow in India or manage the dealings with a particular corporate client. We can look at establishing the
not:Ï process of wishing and/or sending gifts to clients on achievement of certain milestones
µ Market attractivenessÏ or on special occasions. Loyalty programs can help us in retaining the clients.
µ Feasibility
Well, these are some good points. We can also focus on individual travelers who are the
In market attractiveness, I would like to evaluate the attractiveness of the country and employees of these clients and can provide them with freebies, free airport pickups etc.
the luxury side of hospitality industry. I would consider 5 broad factors in country
attractiveness:Ï Yeah, concierge services etc. too. We can focus on individual employees, especially the
µ Geographical and Geo-political considerationsÏ key ones to win the corporate client.
µ Economic environmentÏ
µ Social factorsÏ Exactly. Thank you so much. We can end the case here.
µ Regulatory environmentÏ
µ Infrastructure

I would consider 3 broad factors in industry attractiveness:Ï

µ CustomersÏ
µ CompetitorsÏ
µ Barriers to entry & exit

49
Indian Institute of Management, Kozhikode
 Market Entry
European Hotel Chain
Question
Your client is a European hotel chain (say, Intercontinental Group) – operating 4-star and 5-star hotels under several brands. They have achieved tremendous
growth in China (2,000+ hotels) and have 13 hotels in India as of now. They have approached you to advise them whether they should grow in India in a small
time.

Approach/Framework

50
Indian Institute of Management, Kozhikode
 Market Entry
Luxury Car Company
Question Alright. Next, I would like to divide the remaining population into age groups. I will
A luxury car company in US is planning to expand to India. Devise a consider the ages 18-25, 25-40, 40-60 and 60+. We are not considering anything below
strategy. 18 since they are not legally allowed to drive. I will divide the population in the following
manner:Â
£ 18-25: 40%Â
What is the objective of entering? Who are the current competitors? £ 25-40: 30%Â
£ 40-60: 20%Â
India is a growing market, hence there is a lot of potential. The market is mainly £ 60+: 10%

dominated by German companies (80%) followed by Jaguar and Volvo (20%). Other
companies make up a total of less than 1%. Now, an assumption is 18-25 age group will not be self-made HNIs. They belong to rich
Can we assume that the customer base consists of the Indian HNIs? families and will get a car as a gift from their relatives. Thus, we consider one car per
person. The 25-40 age group will have 3 cars since they are in the prime of their careers.
Yes, that is a correct assumption. The 40-60 age group will have 2 cars and will gift another to their children which is
already considered in the 18-25 age bracket, and the 60+ age group will have 1 car each.
Does the client have any experience in entering other developing markets? Considering these the total market size will be 1,56,000 cars.
Yes, they entered China, the Middle East and Australia. They could not enter Europe as it
is dominated by Germans. Yes this seems like a fair number. We can close the case here. Well done. Thank you for
your time.
And how have they performed in these markets? Are we also targeting a similar market
share in India?
The client gained 12% market share in 10 years in China. In India, they are looking to gain
20% market share in 10 years.
Thank you for the information. I shall be looking at the market attractiveness,
operational feasibility, financial feasibility and mode of entry to determine the entry
strategy.
That is exhaustive. I would like you to come up with the addressable market size.
Consider that we are only targeting Indian HNI and currently there are 2.5 lakh HNIs in
India.
We will first divide the population by Gender.
Yes, let's consider it as 50% each.
Thank you. I would like to assume that men would be much more interested in buying
luxury cars. So, we can consider 70% of the men would buy luxury cars whereas 30-40%
of women would buy the cars. Is that a correct assumption?
Yes, that is fine. This way, we can also eliminate the underage population. Let us
calculate only for the men for this case.

51
Indian Institute of Management, Kozhikode
 Market Entry
Bhujiya Sev Company
Question Okay fair enough, in the last sentence you were talking about gaining/taking away
Your client approaches you with an idea to enter the bhujiya sev market share? How and when will a new company like ours gain market share?
market and wants to topple Haldiram as the market leader in 10 years, To gain market share. First, we need to understand the target segments, their needs
how will you go about it. and if those needs are being fulfilled or not, once we perform the need-gap analysis
then we should select the segment which is large enough and whose needs are not
Can you tell me about the client’s business and motive behind entering this market. fulfilled.
Client is a steel company trying to foray into snacking market with the motive of being a Suppose you have identified target segment, then what will you do?
leader in 10 years. Just lay the structure of how you would like to go about it.
Once the need-gap analysis is done, I will go into developing our product to satisfy the
Okay, so the way I will proceed is first I will look at the industry analysis (both qualitative unmet needs, and then price the product while keeping in mind price elasticity of target
and quantitatively) then look at Operational feasibility, will try to understand which part segment and competitor reactions such as a price war etc. The client can then setup
of value chain we should enter and how to enter this market and then understand the various distribution channels both traditional and online channels as per the segment,
target segment by performing a need-gap analysis and finally come to pricing and which can help us gain market share.
distribution aspects.
Okay, that was helpful, I have understood the way you are thinking and before we end
What do you mean by Qualitative analysis? What are the factors you will look into for the case I have one question for you, what is your opinion, since the client wants to be
quantitative analysis? number 1 in 10 years in terms of quantity sold. Should they follow growth at all costs to
achieve this goal? What advice will you give to the client?
By qualitative I meant – I will investigate the competitors currently present, their
capabilities and their possible response after that. Although, growing at all cost sounds enticing and will help in gaining market share
quickly, but in the long run, I don’t believe that growing at all costs is the right approach,
How will you know their response when we have not even entered the market yet – we are instead growth while earning sustainable profits is the right way ahead.
just in ideation stage.

Yes, that’s the right approach.

Yes, I do understand this, but we can always look at previous entries by other players
and reaction of competitors during those entries and along with this we can also look at
different markets where we tried to enter.
Okay, sounds good, and quantitative side, what do you mean by that?
Here, I will try to understand the Market size and how the market is growing.
Can you explain, Why and how does growth rate of this market matter while we are
trying to enter?
Sure, If the market is fast growing then it will be easy to enter and capture the market as
there is high demand for the product and competitors might not have enough capacity
to meet the demand. Hence, we can capture the market share by fulfilling the unmet
demand whereas if the market is growing slowly then it suggests the market is in the
mature stage, thus in order to gain market share, we would need to focus on taking
away the market share from our competitors.

52
Indian Institute of Management, Kozhikode
 Market Entry
Bhujiya Sev Company
Question
Your client approaches you with an idea to enter the bhujiya sev market and wants to topple Haldiram as the market leader in 10 years, how will you go
about it.

Approach/Framework

53
Indian Institute of Management, Kozhikode
 Market Entry | New Business
Autombiles

Question
Now when an owner chooses a service station he would wantm
e[ Quality – In terms of genuine parts if replacements are done, trained mechanics, the
You are having tea with Mr. Ratan Tata. He has just returned from
Germany where he saw third party car service stations which were car being treated properly, delivery on timem
O[ Cost – He would want the service to be as cheap as possiblem
doing very well. So, he is thinking of opening a chain of such stations in
L[ Convenience – The service station should be close or should have a pick & drop
India. You need to give him your thoughts and make a pitch from BCG’s
service.

side for helping him with the project.

There would be a segment of customers who would lay a lot of emphasis on cost while
another segment would lay emphasis on quality. In case of an accident or break-down
Can you elaborate a little on what exactly do you mean by third party service stations?
convenience would play a big role. Local garages will have low quality and low cost
while authorized service stations will have high quality and high cost. Also, local garages
To service a car there are service stations. They can be authorised stations like the
are generally more in number so would be more convenient to reach in most cases.
chain that Maruti has or they can be local garages. The third type, which is currently
missing in India, is an independent chain of service stations which will service any Ok. Now I want you to make a grid of the dimensions that you’ve mentioned and figure
brand. These are third party service stations out where our competitors lie and where we should go. Let us club convenience with
quality. We’ll just analyse the situation based on 2 parameters.
Ok. This is a new business that Tata would want to enter. I’d like to look at know Tata’s
final aim - do they have a target profit /market share/return on assets as their target Now, Tata wants to start a third party chain of service stations which will serve all
from the venture brands. If Tata targetsm
e[ Low quality, local garages will beat them since these garages can service all brands
Tata is a big & profitable company; they want as high profits as possible from the and charge very low unbeatable prices. Also, they would be built at strategic
venture. locations which Tata may not be able to acquire, coming late into the marketm
O[ On comparing Tata stations with authorized service stations, Tata could stand a
I also wanted to know if there are any constraints on financing, expertise in area and
chance. They could ensure quality by sourcing parts from manufacturing companies
synergies with other businesses.
and employing well trained mechanics. Since such a service station will service all

They have no constraints with regards to finances. They build automobiles as you know and brands it will be a convenient place to come to for high quality services. However,

have authorised service stations for their automobiles. the price charged will be high.

Do you think anyone will come to such a service station when they can go to a Maruti or
So, the aim of Tata is high profits and they have sufficient finances and expertise in the
Hyundai authorized service station?
automobile area. I’ll go on to look at the automobile maintenance market. Currently in
India there are 2 kinds of garages – the local ones and authorized service stations. So,
In India a majority of cars are Maruti and Maruti has a very good chain of service
when we enter the market, would we be servicing all kinds of brands and providing a
stations which are convenient to reach and high quality. Hence, Maruti cars will
full range of services?
definitely not come to Tata’s stations. Other brands like Hyundai would come since their
service stations are few and far apart. If Tata offers the same quality at the same price, it
Yes. All brands and a full range of services.
might be cheaper & more convenient for consumers if Tata’s chain has numerous
Now I wanted to look at the competition in the market. We would need to differentiate stations at strategic locations
ourselves from the 2 kinds of competitors that we have in order to get customers. Maruti has almost 50% of India’s car market share. Now do you think it is beneficial to
set up Tata’s third party service chain?
Ok. How would you do that?

I’ll look at why a customer goes to a service station and why he chooses a particular
station to go to. A car would be taken to a service station for i) Regular check-ups/
services ii) In case of an accident iii) Maintenance when it breaks down.

Ok.
54
Indian Institute of Management, Kozhikode
 Market Entry | New Business
Automobiles

Owners of other brands will prefer to go to their authorized service stations as they
would be more trusted. And given such a lopsided market in favour of Maruti, it will be
difficult for us to compete with Maruti directly. So, the number of cars coming to Tata’s
stations might be too low for the venture to be viable. But, if there are expectations that
many new brands will enter India as some already have, then Tata’s venture could be
viable given that these firms would not want to open a service chain of their own due to
small numbers and newer vehicles could mean that the local garages might not be well-
equipped to deal with all kinds of problems with the vehicle.

What would your final recommendation be?

My final recommendation would be to not start such a venture currently since Tata
would not be able to beat competitors on any dimension - cost or quality. However, in
the near future this could turn sustainable so an eye should be kept on this market.

Ok. Thanks!

55
Indian Institute of Management, Kozhikode
 Market Entry
Telecom
Question How do you justify 30%?
Your client is a Swedish telecom company with good investments in 5G. Most of the smartphone players are global players who also exist in markets such as
They intend to enter the Indian market. Should they enter? Europe and North America, which are already making a shift to 5G. Given that a lot of
these variants sold by Apple and Samsung in India are the same as those sold in
Sounds like an interesting case. Do they want to enter with a specific spectrum in mind, Western countries, they will also be 5G enabled, given that they are the same variants.
or do they want to be there across 2G, 3G, 4G, or 5G spectrums?
Makes sense. Please go ahead.
They want to enter the 5G market only.
Population*No. of phones per person -> Filter for smartphones -> Filter for 5G enabled
What is their objective in entering the market- market share, profitability, or something phones -> Filter for SIMs per phone -> New users and existing users-> Within existing
else? users, people who would switch to 5G within their own telecom operator or take 5G
The number of subscribers in their existing markets has stagnated. They want to get as from another player-> People who would take 5G would either port out of the existing
many subscribers as they can. Profitability is not a concern at this stage. They will player or buy an additional sim.

eventually become profitable. Within existing users, the two large telecom players have strong brand loyalty as they
give a lot of value-added services- such as the Jio suite of services, Airtel Payments Bank,
Do they have any timeline in mind? and so on and so forth. Therefore, it might be difficult for the client to compete with
them. Therefore, for our client, the target market would be people who would buy an
They want to enter by the mid of 2022. additional SIM to get 5G services. (Assumption: New users wouldn’t generally directly go
Have they entered any other market recently? to 5G services so early on)

The final estimation comes out to around 3.5 million. Thus, applying a 20% filter (the
No. player will enter into metro circles as 5G adoption in non-metro areas would be difficult)
brings the number to 0.7 million.
What is the competitive landscape for telecom in India?
Do you think they would be able to get this number?
There are two large players- Jio and Airtel, with around 40% market share each, and Vi, with
20%. TRAI regulations state that a new entrant can undercut existing players without the
incumbents being allowed to retaliate, as was seen in the case of Jio. Thus, by using the
I would like to approach this problem by looking at economic viability, opportunity, and
right pricing strategy, they would be able to gain market share. Existing competitors
operational feasibility. In terms of economic viability, I’d like to see the investment
might also be late adopters of 5G, given that there is a significant capital expenditure
opportunities, and under operational feasibility, internal and external factors, and
involved, and they are not very profitable and highly debt-laden right now. The new
market sizing under opportunity.
entrant will also be taking over only a small chunk of subscribers, which would make
Let’s start with the market sizing that you mentioned. incumbents unlikely to retaliate.

Great! There are two ways of going about it- demand and supply. Within demand, we Given that they would only get a small fraction of the market, should they enter the
can look at the need for 5G among customers. On the supply side, we can look at how market?
many phones will be 5G enabled and calculate the market opportunity for our client
using that. Given the strong supply constraint of 5G phones, I believe that would be a The recommendation will be to enter the market. Even though they are getting only a
more relevant approach. fraction of the market, this fraction represents a huge delta of around 15% from their
existing subscriber base and thus will help them tackle stagnating growth.
Let’s proceed with that.

Currently, around 10% of phones in India are 5G enabled. I assume that the number will
be 30% by the mid of 2022.
56
Indian Institute of Management, Kozhikode
 Market Entry
Telecom
Question
Your client is a Swedish telecom company with good investments in 5G. They intend to enter the Indian market. Should they enter?

Approach/Framework

57
Indian Institute of Management, Kozhikode
 Market Entry
E-Cigarrete Company
Question I would like to follow a top-down approach for this, starting with the total Indian
Your client is a US-based E-cigarette company that is looking to population (also depicted in flowchart): È
D Indian Population: Urban (40%) and Rural (60%)

introduce its product in the Indian market.

(Removed Rural branch as consumption of tobacco in the form of cigarettes is less.)È

D Age Split: <18 years (30%), 18-60 years (50%), >60 years (20%)

Why do they want to expand in India? (Removed <18 years for being underage and >60% for low smoking rates because of health

They are facing a lot of regulatory issues in the US because of underage consumption of concerns) È
their product, resulting in stagnant growth. Hence, want to expand in a country with a D Gender: Male (50%) and Female (50%)È

growing economy. D Income Split: Low Income (30%), Middle Income (50%), High Income (20%)

È
(Removed low-income branch as premium cigarette consumption will be negligible)
What type of competition might they face in the Indian E-Cig market? D Considered 40% of smokers in males and 20% in females. Considered all high-income
There is no big player, although there are some small players with Chinese products. population as premium brand smokers. Upper middle class (50% split in upper and
lower middle class) population considered as premium brand smokers.
Can you provide some specifications about the product and the type of customers the
client wants to target? I would now like you to suggest what price the client should quote for the product.

1 device has 4 cartridges and 1 cartridge lasts as long as 1 pack of cigarettes (20 cigarettes). Sure. To suggest a price, I would like to come up with a price band between which we
The device lasts for around 5 years. Customers can purchase a pack of 4 cartridge packs could price the product. Do you want me to suggest a price for the device and cartridge
separately after that. Ideal target customers are premium cigarette chain smokers. separately?

Is there any specific objective regarding market share or profitability that the client Yes. Suggest a price for a pack of device + 4 cartridges, and a price for only a pack of 4
wants to achieve? cartridges.

The client wants to capture the maximum market in less amount of time. Ok sure. Continuing my previous approach, I would like to estimate the lower limit of
the price band through cost-based price and the upper price band through a
I would like to approach this problem statement through 4 stages: È combination of substitute-based and value-based pricing. For that, I would like to
ϯ Understanding market attractiveness – Size and growth prospects along with porter’s understand the cost that our client will incur in the manufacturing and distribution of
5 force analysis. È the product.
¦¯ Understanding profitability aspects – Potential market share, initial investments, Ok. Cost incurred for the device is $27 per unit, and the cost for the cartridge is
pricing of the product, and overall profitability È negligible.
¤¯ Operational feasibility È
̯ Mode of entry Ok. Taking a conversion factor of 70, the cost in INR for the device would be ~INR 1900.
Since the cost of the cartridge is negligible, the lower limit for our price band stands at
The approach sounds good at an upper level. Why don’t we start by estimating the total INR 1900. Now considering the price for substitute – One pack of premium cigarettes
market size? costs on an average INR 300. Since one cartridge lasts as long as 1 pack, hence a pack of
4 cartridges will be equivalent to 4 packs of cigarettes, which stands at INR 1200. Hence
a pack of 4 cartridges can be priced at INR 1200. We can also charge a premium on this
since our device will be much more portable and stylish and will have a status symbol
attached to it.
So, what is your final recommendation?
To capture the maximum market, we should price the device + 4 cartridges just at cost,
i.e., INR 1900. We will earn profit by selling cartridges at >INR 1200 (INR 1500) since the
cost incurred for manufacturing cartridges is negligible.
58
Indian Institute of Management, Kozhikode
 Market Entry
E-Cigarette Company
Question
Your client is a US-based E-cigarette company that is looking to introduce its product in the Indian market.

Market Sizing Approach/Framework

59
Indian Institute of Management, Kozhikode
 Market Entry
E-Commerce

Question
How will you evaluate the risk and challenges faced by this venture?

Currently our client, South East Asian Fast Fashion E-commerce I will evaluate risks and challenges under 3 categories: regulatory risks, operational risk,
business (specialising in Apparel. Footwear, and accessories for both and financial risks (listed a few specific risks under each bucket). Finally, I would like the
men and women) operates in 5 countries: Indonesia, Vietnam, venture to have a positive Return on Investment over the long term otherwise it would
Singapore, Malaysia, and Thailand. How would you evaluate whether it not make sense to enter India. There is a minimum ROI threshold that any business has.
should enter India or not? If the business in India is exceeding that threshold, we are good to go.

Seems comprehensive. Let’s stop here and move to other problem that we are facing.
Sounds great. Let me recap, our client which is into E-commerce Fashion Business is Our profitability is suffering as there is a high inventory wastage of 30%. We source from
currently operating in 5 countries and wants to expand in India. I need to evaluate this our suppliers in China and send it to 5 above-mentioned countries. There is huge
option. I have a few clarifying questions before we evaluate the market entry. wastage in Vietnam and Malaysia whereas stock out in Singapore. How would you
reduce the wastage in Inventory? Also, we cannot move inventory from one country to
Yes , go ahead.
another as the double taxation across countries makes it unviable to move inventory
I would like to evaluate 4 areas here. Firstly, I would like to see if the market for Fast from, say, Singapore to Malaysia. Thus, we either throw the remaining inventory or
Fashion in India is attractive. Secondly, I would like to evaluate how will we provide deep discounts.
operationalise the venture in India. Here I would like to evaluate various options that we
have. Thirdly, as this is a foreign venture, I would like to evaluate any risks or challenges Let’s, look at it from 2 aspects. Short-term and Long-term solutions.

that we might face. Finally, I would like to see what is the Return on Investment that we Under short term solution, we could work on (i) need based shipments with a smaller
might be able to generate. order size, or (ii) We can have minimal customisations at Chinese factories. The required
customisation can be done at the destinations which would help in reducing the
Seems good. Could you elaborate on each of the areas that you have mentioned? wastage by improving the scope of usage of the product.

In Long term: (i) We have to work on better demand forecasting mechanisms to predict
Sure. To see if the market is attractive, I would like to understand the market size and
the inventory requirement and (ii) Establish country level manufacturing facilities. This
the market growth. I am assuming since e-commerce is growing rapidly in India, the
would be contingent upon the Economies of scale that we can establish there.
growth would be robust and in double digits, but if we have any hard numbers around
these it would be great. Then I would like to evaluate our competitors and what are the Interesting. Suppose we are sending 1000 materials to these 5 countries. Would you be
points of differentiation that we bring with us in terms of product lines, customer in favour of sending 300 materials in the same proportion to these 5 countries.
targeting, and scale economies that we can leverage to compete in India. Finally based
on this I would like to understand what is the market share that we can gain in the initial Let’s look at the benefits and the indirect costs that we might face if we are reducing
few years. the order size from the Chinese factories.

Benefits: Reduced wastage, lower inventory holding costs.

That looks like a good approach. Can you let me know what are factors you will look at Costs: Stock out (opportunity cost), customer dissatisfaction (longer delivery time if we
in order to operationalise the venture? are sourcing the order after the customer has made the purchase) leading to higher
customer churn.

To evaluate how we will operationalise our venture, I would look at 4 factors:º

Here the costs are higher than the benefit, so I would not recommend reducing the
¥ Getting the necessary licenses and permissions from the govt.º
order size by 70%.
™ Setting up the supply channels in India.º
— Setting up the distribution networks viz. warehouses, delivery channels, customer That answers my question. Thank you.
service.º
¡ Launch strategy in terms of pricing, marketing and promotion, and initial product
lines.

Based on the above 4 factors I would evaluate what options do we have. I presume we
can evaluate 2 options here: a ground up greenfield strategy or acquiring an existing
fast fashion e-commerce.
60
Indian Institute of Management, Kozhikode
 Market Entry
Food Delivery Services

Question
Alright, What I will do now is to evaluate what are the number of orders that could be
delivered per delivery person and compare it with the breakeven number of orders. To
Our client is an Indonesian food delivery giant. It is looking for growth
calculate the number of orders delivered, let’s assume that the delivery person works
opportunities outside its own country. It has identified India as one
for 10 hours and takes around 40 minutes (justified this by considering, average
possible destination for expansion. However, they will enter India only
distance, traffic situations, etc.). Thus, a peak delivery of 15 orders per day could be
if the unit economics make sense. This is their only criteria for entry.
done. We need to factor in the idle time during the afternoons, and lunch time and take
Could you evaluate if they should enter?
10 orders. Now, to calculate the breakeven orders, we first need to calculate the average
ticket size per order to calculate the commission (Considered 3 segments: Bachelors,
Interesting case. Let me reiterate to be on the same page, our client is an Indonesian Couples, Large Family; and then applied weighted average to arrive at INR 300 per
food delivery is looking for expansion in India. I need to evaluate this option in the light order). Thus, the commission that we can charge per order is 20%*300 = INR 60.

of unit economics. I would like to ask a few clarifying questions before I begin. Thus, the revenue per order is 60 + 20(Delivery charge) = INR 80.

Given variable cost per order = INR 30(Customer related charges), the contribution per
Yes , go ahead. order is INR 50(80-30). As the salary of delivery person is INR 25000 per month, we
would need to deliver 25000/50 = 500 orders per month to break even on the unit level.
What is the objective of the expansion? What about the competitors?
If the number of working days is 25 per delivery person, each delivery person would
The client believe that India has a potential market which is expected to grow substantially need to deliver 500/25 = 20 orders per day. Thus, the unit economics do not make sense
in the coming years. Talking about the competition, there is high penetration; so many here.
companies have already ventured into food delivery segment.
Great, could you suggest what are the metrics that we need to optimise to ensure that

Okay, Do you want me to evaluate market attractiveness as well, or we should just the unit economics make sense?

evaluate the unit economics?

Let’s divide the metrics in two aspects:
No, jump straight to unit economics. Customer related metrics: Ticket size/Customer, LTV/customer
Delivery person: Number of Deliveries/day, idle time/total working time.
As we are considering just the unit economics, let's ignore the fixed cost for the time
being. We can consider it afterwards if needed. We should consider 2 aspects here, Great, that would be all.
Revenues per order and Costs per order. For revenues, we would charge a commission
to restaurant partners per order and would charge a deliver fees to the customers. On
the cost side we would have customer acquisition costs that would be spread across
the orders and the delivery charges in terms of rider commission per order and fuel
costs.

Great I think we are good with all these costs. Let me give you some numbers for this.
Delivery person salary: INR 25000/month (inclusive of fuel)

Other customer related charges: INR 30

Commission from the restaurants: 20% of the ticket size

Delivery charges: INR 20/order

61
Indian Institute of Management, Kozhikode
 Market Entry
Food Delivery Services

Question

Our client is an Indonesian food delivery giant. It is looking for growth opportunities outside its own country. It has identified India as one possible
destination for expansion. However, they will enter India only if the unit economics make sense. This is their only criteria for entry. Could you evaluate if
they should enter?

Approach/Framework

62
Indian Institute of Management, Kozhikode
 Pricing
Heli Taxi Services

Question
Yes, that’s a fair assumption to make. You may proceed.

Your client is a company launching a Heli Taxi Service between Pune

and Mumbai. You need to advise them on the price it should charge This brings the total seats sold to approximately 72000. [seats sold per day-34 (6

their client. trips*60%(5)+4 trips*80%*(5)) x #helicopters (7) x 300 days]. Since there are 21000 trips,
the maximum number of available seats is 105000. Taking into consideration the
occupancy rates, 72000 feels right. Should I move ahead with the costs?
I would like to ask a few clarifying questions. What is the objective of the client?
Yes, please move ahead with the costs.
The sole objective is to break even in a year.

Can we know about the details of the company and its prior industry experience? The total fuel cost is 42 crores. Considering the number of helicopters in Leasing and
Hangar costs. The Total Fixed cost is 23(2+(3*7)) Crores and hence the total cost is 66
Having no prior experience, it has leased 7 helicopters.
crore and the breakdown of the cost will be between 9,000 and 10,000 (66
Are there any competitors and if yes, do they run on the same route? crores/72000). Does that look fine to you?

No, this is a new route that we are launching Yes, that’s correct. Can you also explore the value-based and competitor approach as
well?
What is the duration of each ride?

It is 1 hour with the inclusion of all the time from check-in to check-out. There are two types of values that the helicopter service adds; Time and Flexibility. Time
refers to the value of time of the top executives of the companies and the time saved
Pricing can be done using 3 approaches. Cost-based, Value-based, and Competitor using our service. The time saved will be accounted for using the time taken between
based. However, in this context, cost-based pricing seems appropriate. Shall I proceed the origin and the destination (by car and the same points using the helicopter including
with the same? the commute to the airport).

We can also use Competitor based pricing. Since we are the first to start a service
That is a fair assumption. You may proceed.
between Mumbai and Pune, we can look for services with similar distances or similar
kinds of services at another location.
I would divide the costs into fixed and variable. The fixed costs would include the
salaries, Leasing Charges, and Airport and Hangar Charges. The Variable costs would We have a service in Bangalore where they take 3K-3.5K for a 15-minute journey.
include the Fuel cost and any other VAS costs for the customers. In order to go ahead, I
would love to know details about the same. A crude calculation would bring the price to 12K-14K for a similar experience. We would
also consider the value of the service within the city and the value of the service when
The Salary is 2 Crores per year, Leasing – is 1 Crore per Helicopter per year, and Hangar and flying between cities. We could also consider the different kinds of traffic faced in these
Airport charges are 2 crores per helicopter per year. The Variable costs are 20,000 per trip. cities and the types of customers taking these services. A competition to the same can
be corporate jets for Mumbai to Pune. This is because professionals in large corporates
Okay. How does the company operate? i.e. How many hours does it work in a day?
who pay 10,000 for a helicopter ride may have a corporate jet to travel across cities.
The helicopters operate for 10-12 hours a day and can do 10 trips a day on average. The
Ok, this looks good.
helicopter seats 6 people including the pilot.

That brings us to 21000 trips a year assuming that the helicopters work for 300 days in
the year (300*7*10), leaving aside the holidays and the helicopters being grounded for
maintenance. I would want to further look into the number of seats that would be
utilised in the whole year. I would want to divide the trips into Peak (2 round trips) and
non-peak hour (3 round trips) with 80% and 60% occupancy respectively. Does that
sound fair assumption to make before estimating the number of seats?

63
Indian Institute of Management, Kozhikode
 Pricing
Heli Taxi Services

Question

Your client is a company launching a Heli Taxi Service between Pune and Mumbai. You need to advise them on the price it should charge their client.

Approach/Framework

64
Indian Institute of Management, Kozhikode
 Pricing
Vistara Airways
Question
You would have traveled with Vistara in the past. Let’s say that they
want to price their Premium Economy and Business Class services. How
would you go about doing that?

There are three ways of pricing – Cost-based, Competitor-based and Value-based. Since
it is a premium service, cost-based pricing does not make sense. However, to get a
pricing floor, we can use the prices of normal economy class. We also cannot do Approach/Framework
competitor-based pricing since its competitors like Jet Airways is no longer in business.
Vistara serves only India, and hence, Air India is the only competitor. Hence, we would
go ahead with the value-based approach. Is this a fair assumption to make?

How would you define value and how would you go about measuring the same?

Value is the price a passenger is ready to pay for extra services like priority check-in,
priority boarding, free upgrades, last-minute cancellation, and all other benefits. We
could measure value by conducting customer surveys. After flying with Vistara, we get
an SMS to rate various services which can be put to use. We can also include how likely
the customers would be willing to avail these services and at what price.

You may continue with the value-based approach.

When we look at value-based pricing, we look at the frequency-of factors that people
favor the most. For example, if a person saves half an hour due to priority check-in, the
value can be calculated of that half an hour for that person and hence a personalized
value can be estimated. However, since this is an arduous task, grouping people into
segments and measuring the same through the calculation of average value obtained by
customers in that segment would be ideal. Do you want me to proceed further with this
analysis?

Ok, this looks good

65
Indian Institute of Management, Kozhikode
 Unconventional
Vision for Swiggy
Question
No. Let’s think what motivates the employees. It’s the monetary and non-monetary
Assume I am the CEO of Swiggy, and I am asking you to devise a Vision aspects. Let’s ignore the monetary aspects as the vision would not directly address that.
for Swiggy and based on that come up with the Vision statement. Could However, employees would be motivated if we are pioneering the industry and building
you help me? something that no other player is building viz. drone delivery.

That’s Interesting, thank you. Just before we delve into this, I would like to understand Good. What would make my restaurant partners happy?
what do we mean by Vision here. I believe, vision is something that you aspire to reach
and your strategy is formulated based on this statement. Am I correct in assuming this? There are 2 things that would make them happy. Getting more and more customers
and a higher ticket per order. To achieve the first, the restaurants should have an equal
That seems to be correct. But also consider that it captures the aspirations of all the opportunity to be featured on the list of restaurants in Swiggy. To achieve the latter, the
stakeholders of the firm. platform should be smart enough to understand the needs of the customers and upsell
or cross sell the items.
Perfect. So, something like True North that a firm aims to reach and which motivates all
its stakeholders. Got it. I think the question is pretty clear. I would like to derive the I think you have all the words that would help in devising a good vision statement.
Vision using 4 sequential steps. Firstly, what would be the market that we would be Could you summarize your elbaorations and come up with a concise vision statement
targeting in the long term. I would like to analyze this by evaluating our core assets now?
(tech, manpower, captive customer data). Secondly, what are the capabilities that we
To pioneer the food delivery business and connect each and every restaurant in India
need to develop, to capture those markets. Thirdly what key challenges and risks we
to the customers
might face based on the analysis of the first 2 buckets; and finally, what would be
finances required to reach our goal and how would we mobilise the funds as we are not That’s all. Thank you.
publicly traded currently.
Good. Using this we would be able to understand the tangible aspect of vision. But vision is
something intangible. For e.g., Dunzo’s vision is on the lines of bridging the logistics gap
between the users. How would you capture this intangible aspect?

For this we can understand the needs of the stakeholders as you have highlighted
earlier as well. The stakeholders here are the founders, investors, employees, and the
customers.

Are you missing an important stakeholder here.

Okay got it. As this is a 2-sided platform, restaurant partners are also an important
stakeholder.
Now think of a statement that would make all the stakeholders happy.

Based on the stakeholders, the vision could be to build the best food delivery
ecosystem in India that maximises the value for the customers and partners.
Will that motivate my employees. Will they be willing to wake up every day and be inspired
to work at Swiggy?

66
Indian Institute of Management, Kozhikode
 Unconventional
Employee Productivity at Public Sector Bank
Question
The process is usually driven by the managers of the employees. You can assume that it
Client is a public sector bank and they have been facing low employee is largely a top-down approach.
productivity. You are required to diagnose the problem and come up
Do some geographies complete their targets vis-à-vis others?
with recommendations.
Yes. For example, in Mumbai, some of the branches are doing much better while others
Sure,sir. So, the key problem is that our client is facing low employee productivity.I am are unable to meet their targets
required to diagnose the problem and provide some recommendations. I would like to
ask some preliminary questions.
Okay, so prima facie, the issue is with the target setting process in itself. I can think of
the following flaws with the process:

Okay. Go ahead. 1. No external input to target setting. For example, if a region is experiencing slow

Does the client have a pan-India presence? growth in general, it is unrealistic to set targets that would be nearly impossible to

achieve.

Yes 2. Target setting should also take into account branch-wise inputs to decide on what the

branch can achieve in the coming year.

Since how long has the client been facing this issue?
3. Individual employee capabilities need to be accounted for when setting individual

It’s been there for a very long time. Due to change in management, the client wants to targets.
focus on this problem now.
This is what we also observed as problems. How would you go about addressing these
Is there any specific geography that the client has been facing this issue? issues?

This is a pan India problem. - A more robust mechanism on region-wise data collection should be put in place to
identify appropriate targets
What does a client mean by employee productivity and how do they measure it? - Employees should be made part of the target setting process with a caveat that the
targets which they select will have a direct bearing on their overall rewards
Percentage of targets achieved.
With that, you can move to the rewards.
What are the employee targets?
Targets are a mix of loans, fixed deposits, savings accounts etc. Basically, everything that an What type of R&R policies does the client have?
employee can sell in a bank branch. Employees have a fixed and a variable salary. Apart from that, there are some employee
Why is our client saying that their employee productivity is low? What are they recognition mechanisms wherein employees with the highest sales numbers are given
comparing it to? some award price.

Though the client’s employee productivity is not as bad when compared to other public
How is the variable pay determined?
sector banks, due to change in management, the new benchmark that the company is As per employee targets, a level-wise variable pay matrix is created. Ratings are
looking at is private sector banks. In comparison to private sector banks, our client’s assigned as per completion of the targets.
numbers are very low.
Is the same variable pay matrix used across India or is it tailored to each geography?
I would like to start with the first bucket. How are targets set currently?
The matrix remains the same.
Each employee is given targets as per their previous year targets, irrespective of whether
they were achieved or not. That also creates a problem because as discussed, some regions have potential for
more business and some employees are more skilled than others which can lead to
What are the other aspects considered in target setting? different levels of motivation for achieving those targets.
67
Indian Institute of Management, Kozhikode
 Unconventional
Employee Productivity at Public Sector Bank

The client already has a state-of-the-art technology system in place. What else?
How do you suggest solving this problem?
The organisation can make its R&R policies more transparent and to communicate the
As we discussed before, individual targets should be a function of regional potential and upside of performing well to the employees.
employee capability. The variable pay policy should follow a cohort system wherein
employees taking up higher targets are rewarded differently vis-à-vis employees taking That can be done. But how can organisations additionally support the ones who are
up lower targets. ready to work harder?

The organisation can make an app that helps these employees track their targets on a
Good. That is what we also recommended. What else?
daily basis and can correspondingly check their variable pay. That would keep them
Contextualise R&R policies to the region to ensure that employees get recognised at the motivated regularly.
right forums.
Exactly. That is what we also recommended to our client. The development of that app
is underway as we speak. Good job.
Okay. Anything else you want to consider?

I would like to analyze the problems related to organisation culture and other softer
aspects. I will consider multiple aspects here:

• Organization support

• Organization culture and employee motivation

• Employee capability and skills

Okay. That looks good.

Starting with employee capability and skills first. What sort of training and development
initiatives are provided by the client organisation?

There is regular employee training. They are kept up to date with the latest changes in
product offerings as well. In one of the surveys, the client found out that the employees
were actually very happy with the efforts that the organisation was putting in with respect
to the training.

I will tackle the other 2 together. What sort of support is provided by the top
management?
What do you mean by that?

In terms of sales process and knowledge sharing, how does the organisation support its
employees?

Knowledge sharing is very common in the organisation. Top management is usually always
to provide all the necessary support. However, there are employees who are willing to work
towards achieving their targets. What sort of additional support do you think the
organisation can provide?

The organisation can have technological systems to support the sales process.

68
Indian Institute of Management, Kozhikode
 Unconventional
Reserves Accumulation at Energy Sector
Question 2. Investment to enter new markets/ businesses etc.¸
Our client is an energy sector player in Mumbai. They are into the Õì Investment in new markets – The client can consider investing in new geographies
to supply liquified gas. Since the client already has capability in that area and the
business of providing LPG to the households. They have an annual profit
liquid gas supply industry is in its nascent stage, the client can become very big in
of INR 500 crores. Over the years, the money has accumulated and we
this sector. Given the excess cash, the client can look at directly acquiring an
have been hired to suggest how the client can put this money to use. existing player or can aggressively bid for new tendersì
Ðì Investment in new businesses – Since there is lots of talk about green energy and
That’s interesting. I would like to start with some clarifying questions. Where does our reduction in carbon footprint, our client is in a good position to enter some new
client lie in the overall value chain? business and build capability overtime to ensure that their future position is
Our client sources liquified gas from market players and supplies it to households. The secured.

client owns the entire infrastructure required for operations. 3. Financial investments – The client can hire an investment management company to
manage its excess cash by investing in capital markets and can then look for
Why has the client been accumulating so much money? Is it a public sector entity? investments in the future.

Yes. It is a public sector entity. Initially, they were funding their infrastructure needs Okay. Let’s say that the client has 4 projects as options across these buckets. How
through their profits but since the required infrastructural investments are practically nil, would you go about selecting and recommending a project?
they have been amassing this wealth for some time. As to why exactly they haven’t thought
of putting it to use before is unknown to us. I would consider the following parameters to decide on which project should the client
choose:¸
Noted. What are the aspirations of the client from this excess cash? Do they have any ì Criticality of the project to the business (sustainability, immediate requirement etc.§
specific target/ outcome that they want to achieve? ¦ì Initial investment required and our current cash position¸
¤ì NPV of the projects
Not really. The issue is that they don’t know what to do with this money. We can practically
explore anything under the sun. Let's say all the projects have positive NPV. Also, the client has enough cash to fund any
of these projects initially. All the projects also have similar criticality for the business.
Alright. I shall look at 2 investment avenues for the client:¸
© Investment to grow existing business¸ I would look at the timings of the future cash flows to suggest a specific sequence of
© Investment to enter new markets/ businesses etc. projects to the client.

There is one avenue which is missing. Can you think which one? How would you do that?

Financial investments? I will estimate future cash flows of the projects. Post that, I shall start with the project
with the highest NPV. Since it also has the highest cash outflow and no other project can
Yes. Go ahead. Tell me what all types of projects would you consider in each of these be funded simultaneously, I will look at the cash flows and see when the next best
options? project can be funded or at what sequence the NPV for the client would be highest.

I would consider the following:¸ Great. I think we can close the case here.
ì Investment to grow existing business¸
Õì nvestments to improve operational efficiency – The client can consider investing
in improving operational efficiency which would lead to even higher profits in the
future, which we can find ways to put use to.¸
Ðì Expanding within Mumbai – The client can consider investing in expanding its
infrastructure in and around Mumbai to expand its customer base, again leading
to even higher profits for future use.

69
Indian Institute of Management, Kozhikode
 Unconventional
Inadequate Profits for Interest Payment
Question Okay. With this price, the revenue of the client will increase to (80*20) $1600mn. Fixed
The client has a sea-port, currently operating 10 mn tons of cargo but cost will remain the same, i.e. $400mn. Variable cost per unit is (200/10=$20 per ton)
and total variable cost for 20mn tons will be (20*20) $400mn. Hence, the total cost is
has a capacity of 25 mn. He is charging $100 per ton and earning a
(400+400) $800mn. EBIDTA is basically deducting cost out of revenue. Therefore, in this
revenue of $1000 mn. Out of this, variable cost accounts to 200 mn and
case EBIDTA would be (1600-800) $800mn.
fixed cost as 400 mn. The rest is the EBITDA Margin amounting to 400
mn. The client is required to pay an interest payment of $1000mn So, what can you inference from this data points?
yearly. Devise a turnaround strategy for the client. The revenue for the client has increased and they are in a better position to pay off the
interest payment if compared with the previous target.
This seems like an interesting problem. To better understand it, I would want to begin
with some preliminary questions.
Great. Do you have any recommendations for the client?
Is a client has an all-India presence or operates in any specific region? Also the problem
being faced by competitors in that region? I’ll like to give following recommendations:
Improve the service quality as to attract more consumers
Being national or regional presence is irrelevant here. The problem is specific to the
 Provide discounts in case of bulk quantities
client’s sea port.
 In long-term, the client can open sea ports in another region to increase the profit
 They can sign ling-term contracts with some of the business houses and corporations
Okay. Can you please provide me some more detail about the competitors? What is
their operational capacity and what price are they charging? Sounds good. I believe we can wrap up the case here.
There are 2 other ports which are currently operating in 90mn tones and charging $90 per
ton.

Alright. Who are the customers?

The client only deals with business houses and corporations.

I would now like to deep dive into the problem. The turnaround strategy for the client
should be to increase the revenue as to make timely interest payments. I can think of
doing it through organic strategy (same or additional portfolio of services) and
inorganic strategy (through diversify into new business, penetrate into new market,
etc.).

Okay. Inorganic strategy is not feasible for our client at this particular time. You can focus
on the organic strategies
Noted. The organic strategy can involve either by increasing the customer base or
increase the price charged by the client. But since the competitors are already charging
a lesser price, the client should decrease the price in order to gain the competitive
advantage and increase the customer base.
This seems feasible. Hypothetically, take the price as $80mn which will subsequently
increase the operating tons from 10mn to 20mn.

70
Indian Institute of Management, Kozhikode
 Unconventional
Inadequate Profits for Interest Payment
Question
The client has a sea-port, currently operating 10 mn tons of cargo but has a capacity of 25 mn. He is charging $100 per ton and earning a revenue of $1000
mn. Out of this, variable cost accounts to 200 mn and fixed cost as 400 mn. The rest is the EBITDA Margin amounting to 400 mn. The client is required to pay
an interest payment of $1000mn yearly. Devise a turnaround strategy for the client.

Approach/Framework

71
Indian Institute of Management, Kozhikode
 Unconventional
Steel Manufacturer

Question
Okay. I wanted to look at the process of obtaining specifications from the customers
and feeding the data into the plant. I wanted to check if there’s any chance for human
The client is a steel manufacturer who is facing decline in profits. You
error or loss of information during the process.
need to figure out the issue and provide recommendations.

The whole process is automated and there’s nothing wrong with the process. You can
Here, is the decline due to decrease in revenue or increase in costs? And since how long
explore manufacturing process
have they been facing the issue?

As per my knowledge, there are 5 broad steps involved in the process: Raw material ->
The client has seen a decrease in revenues since past three years.
melting -> adding alloys -> rolling (incorporating the specifications/dimensions) ->
logistics. Please correct me if I missed anything.
Given that it is an issue on the revenue side, is it because of the decrease in volumes or
price per unit?
Looks good!
The issue lies with the volumes.
Are there any problems in any particular above mentioned steps?

I would like to know is the issue specific to the company or is it an industry wide issue?
We have no such idea
Competitors are doing well.
As the problem is delivering wrong product, is there any issue with machinery used for
rolling process or human error involved in the process?
So, we can conclude that the issue lies with the company. I wanted to know product
portfolio and who are the customers? Can you also tell me about where are they
There’s no problem with either the machine or labour. Deep dive a little more into
located in India and how many manufacturing plants do they have?
manufacturing process.

The client operates in the eastern part of India (raw material easily available) and distributes
Okay. I want to know about the batch size. Do they have a fixed batch size or does it
1 plant. Customers include all types of industries from heavy
all across India. They have only
differ with the demand?
vehicles to medical instruments. There are nearly 10,000 SKUs (types of steel) which is
slightly higher than the industry standard. So if there is a demand from one customer of 10 units and the batch size is 50 units, the
client waits for more demand to come in and starts manufacturing only after they have a
Before moving ahead with the problem, can I know if the problem is with demand or certain threshold of demand because the inventory costs are too high and hence do not
supply? want to store their products. This was the reason for the delay in delivery.

They are facing the issue with the demand Got it. But what is the case when the batch size is 60 units?

Considering the issue is from demand side, I would like to categorise the problem into 3 They send the 50 units from one batch and again wait for more demand to come in for the
broad categories: 1) Are customers not satisfied with the product? 2) Any better rest of the 10 units which was the reason for the incorrect quantity of supply.
substitutes available in the market? 3) Are competitors doing anything better than us in
quality of product or better reach? Can you tell me if the issue lies in any of the
terms of Okay. The client has also registered complaints regarding wrong product. Does it also
above mentioned categories or should I explore further? have to do with the batch size or should I look at other things?

Okay. The client has been receiving complaints from customers on various things like: 1) The problem was that if they produced 50 units of x but the demand is 25 units of x and 25
Product is incorrect 2) Product of wrong quality 3) Delivery not on time. units of x+1, they just sent x to both as the difference in specifications was minimal.
I wanted to look at the wrong product first. What do you exactly mean by wrong
As we have identified the problem lies with batch size, the client can revise the size by
product? Can you elaborate on that part?
considering the historical data. They can also work upon the 10,000 SKUs part by
negotiating with players from the same industry and try pushing for a standardised
Sure. The product is slightly different in the specification asked for but still could be
adjusted and used by the customers.
product so that the 10,000 number can be reduced.
These recommendations sounds reasonable. Thank you!
72
Indian Institute of Management, Kozhikode
 Due Diligence
Robotics

Yes, so essentially heavy industries are out of the picture and as we are looking at
Question
automation we would also like to focus on industries with high volume, hence our focus

Your client is a PE firm and is evaluating a start-up that manufactures an market is industries with high volume and low weights i.e., FMCG, e-commerce, small
machine part manufactures, apparels etc.
automated warehouse management robot and you have to evaluate the
market and give a recommendation.
That’s sounds good. W hat are you going to look at next?

Sure sir, could you give me a little more information about the product and also about N ext its important to look at what kind on penetration rates we would be able to
what kind of return period is the PE form looking at, and some information about the achieve in each of target industries , this essentially needs to be done using some
portfolio of the PE firm. intelligent estimates based on what kind of acceptance the industry has seen towards
change, and also what industries we have been able to sell before and what sales
channels will the company employ , what kind of interest the Customer decision makers
Sure, the PE firm is looking at a short-term investment for 2-3 years, and evaluate
are taking in the project and warehousing cost reduction at the movement.

investment as stand alone so the portfolio is not important, the product is a small
Then we essentially would have the number of target warehouses we will be able to sell
automated robot that helps loading and unloading of inventory in a ware house, so
in 2-3 years, based on industry/size of warehouse we can look at the number of FTEs
essentially now this is either done manually with help of mechanical tools such as fork
employed in each warehouse divide by 2 and Multiply by $20,000 to get the market size.
lifts etc, A robot essentially costs around 20,000 and would be able to replace 2 FTEs.
The start- up has been operating for two years and is the only one in India right now and
Yes, now suppose we did that and the market turned out be under whelming, not a half
has sold over 1000 robots. So why don’t you start by assessing the market size, say how
a billion or a billion-dollar market but a meagre 20-million-dollar market, on what other
many robots will be sold in say in next 2/3 years I am essentially not looking for
things you will look at and go to the client with.
numbers but more along the lines how would you evaluate? (Assume the per day cost of
FTE in India is $15 ) Yes, firstly I will look at the short and long term, as the market is unattractive in 2-3
years; there is a possibility it explodes in the medium and long term.

Sure sir, could you give me a little more information about the product and also about Then we should also look at the competition, right now we are the only player in the
what kind of return period is the PE form looking at, and some information about the market but if the market explodes, we would see a lot of competition especially from
portfolio of the PE firm. China.

W e should also look at the risks involved, as India is a labor-intensive market, we should
Yes, we are going to focus on the medium and large warehouses; Medium ware house also evaluate risks of resistance from the labor unions and any labor law regulations.

in 40,000 sq. ft. and large is around 100,000 sq. ft. and each of these have a total space W e should also do a complete evaluation of all aspects of the company, this would
of around 1500 million sq. feet. involve the Financial, O perational and Cultural evaluation. Apart from this we also
should look at Alternative U ses of the technology

So, we have a target market of 37,500 (1500mn/40,000) medium warehouses and 15,000 And lastly evaluate exit options. This will not only consider other PE firms, but also a few
(1500mn/100,000) large warehouses.
strategic buyers like large logistics firms, or firms that sell a suite of warehouse
I want to evaluate target industries first, warehouse management for heavy and large management software and would like to integrate the product in their offering.
industries would require specialised tools, safety measures and also the flow of material
is a factor we should consider, along with that the weight capacity and product That’s very good, you hit a lot of points that we actually looked at during the evaluation;
specifications. but could you tell me why did you forget profitability.

Yes sir, profitability should have been the first thing I should have evaluated, but once
R ight, so we have two products specifications one with 100 kg payloads and 500kg
you told me that the market size is disappointing, I started looking for other factors.
payloads.
O k no problem, it was great. Thank you.

73
Indian Institute of Management, Kozhikode
 Due Diligence
Cement Industry
Question There is a possibility of getting bulk discounts because of scale and having a focused
factory ( a factory inside a factory – possibility of eliminating the plant that is closer to
A cement manufacturing company is looking to acquire or organically get the client). Also, post-acquisition, the company will get advantage in distribution
into the paint industry. What are the factors to be considered? because of economies of scale and scope which will lead to reduced storage and
transportation costs.

Before starting the case, I would like to ask some questions for a better understanding O kay. What about the other two categories?
of the problem. Why our client is looking for an opportunity in the paint industry and
what is the objective of the company? I would wish to split risks into internal and external.

• Internal – The distributors will lose margins if they get into cross selling activities, as
The company is looking for growth and profitability. They see a lot of scope in paints.
the cement distributors can sell paint and not vice versa. So, some distributors from the
target company will be agitated if a lot of volumes of paint are pushed through the
Alright. Does our client operate in any specific region or pan-India? What is the value-
cement value chain. There is huge financial risk owing to huge debts and operation risk
chain and who are our customers?
as well if we are rationalising our resources across the value chain.

• External – Here, I would like to do a PESTLE analysis and observe the reactions from
The company has a pan-India reach. Cement is distributed to dealers and then it is sold
to the retailers. The client has two type of customers – 1) large clients who purchase in the competition and customers.

bulk. 2) Contractors & individuals who buy in small quantities. For the Financial Analysis, I want to evaluate the company on the basis of their ability to
generate future cash flow and decide the amount we are willing to shed to acquire this
As I understood that the question is whether to go for Acquisition or organically company through NPV analysis.
establishing the value chain for paints, I want to do a cost benefit analysis for both the
options and decide which is the best option. I think this is comprehensive. We can skip the PE STEL and NPV analysis. Is there
anything else in your mind?
O kay. Can you list down all the factors that you would consider for acquisition alone?
The client can create a 2X2 matrix of market attractiveness Vs Ease of doing business
I can think of four categories: Market, Value addition, Risks and Financial Analysis to be and check where our target company lies and if both factors are promising we can go
considered for acquisition alone.
for acquisition. Market Attractiveness can include – Market and results from financial
Starting with the first category, I would like to estimate the market share of the analysis and Ease of doing business can include – synergies and risk.
company. Can you please help me in the figures here? Also, I want to understand about
the target company’s growth vis-à-vis the industry. Sounds great. We can wrap the case here.

The size of the market is meagre 50 crores. The target is growing as per industry but are
in losses.
Understood. Now, I would like to analyze the second category i.e. value addition post-
acquisition. It can be split it into Revenue, Cost and Financial synergies.

Revenue - cross-selling, bundling possibilities

Cost – Given the fact that both the companies are not in the same category, is there any
common raw material for both paint and cement? This question is relevant because
both material is used in construction work and I wanted to know if we can expect to
reduce any redundant resource due to this acquisition.

Financial – What is the value of debt and cash in both acquisition and target company?
There is a common raw material as an ingredient for both paint and cement and one of
the plant is being closer to the client. And on the financial aspect, the acquiring
company and the target company both has huge debts.

74
Indian Institute of Management, Kozhikode
 Due Diligence
Airport
Question 2) Financial

Mostly focus on major factors affecting revenue and costs.

• Domestic vs international mix: We have already bid the highest which is why we won

Client is a large conglomerate with portfolio spanning across ports, power

the bid. If the international passengers from the airport are higher than domestic, the
plants and coal plants. The client has recently won a bid that gives access
outflow to the government would also be higher and thus higher costs. We may need
to operate 6 airports currently under AAI. These airports are in state higher level of working capital to meet payment obligations.

capitals. Airports serve both domestic and international flights. The bid • Location and size: Many airlines follow hub and spoke strategy where the hub usually
gives access for 50 years. Two-part case:

represents high demand metros. The traffic at these hubs is much higher. Given that
i. Top 5 key issues/risks that the client should worry about on Day 0
this is not a hub, the revenue may get affected due to limited traffic be it retail or
corporate. If the size of the airport is small, it will act as a supply constraint. Also, the
(think of keeping lights on and business continuity)

capability to offer premium flying slots or direct plane access facilities (no need for
ii. Maximize ROCE (in this case take EBITDA as proxy) over the next 5 years
airport shuttle) would be limited and therefore the revenue will get impacted.

I would like to understand the objective of the client behind bidding for airports 3) Operational

provided the current business portfolio does not include airports. Look at value chain and focus on what may interrupt the flow.

• Talent (Hint: People aspect out of People, Process and Technology): We have
The client believes this business is familiar because the portfolio businesses are also experience with capital intensive businesses but not airports explicitly. Therefore,
capital intensive. Operating airports is very close to working as a monopoly. Lastly, the answering whether we have the required talent is a question mark. For this, we need
client wanted to diversify its existing portfolio. look at internal workforce capabilities and external availability of required talent – may
have to even poach from other private players. Such dearth of experience or talent may
Understood. Before we move on, I’d like to understand how the business model works. delay transition and hamper efficiency.

Please correct my understanding that all types of revenue would accrue to the client in
exchange for an upfront fee to the government? Please help with the location of the 4) Marketing

airports as well because I understand these airports are in state capitals but how • Branding: In case there is low traffic due to location issues, the company may have to
populated and connected are the cities under question? spend more on branding the location as a lucrative travel destination to bring higher
traffic/footfall. Could entail offering services at low cost to attract passengers.
On revenue – yes the client would receive all types of revenue and would have to pay a
convenience fee per passenger to the government. The client won the bid for quoting This is very comprehensive. Let’s move on to the second part of the problem to
the highest convenience fee. The convenience fee is higher for international passengers maximize EBITDA. Please focus on revenue side. What are the different streams of
than domestic passengers. On location – these state capitals are populated and well revenue for an airport?
connected but not metropolitans as such. Major sources of revenue can be classified into five:

Sure. Thank you for the background. With the information available with me, I’d like to 1) Revenue from airlines: Passenger handling charges and aircraft related charges
address the first part of the case problem i.e. to identify key issues/risks on acquisition. (terminal access fee, parking, baggage/freight handling and others)

And the bidding has already happened and hence evaluating whether to bid or not is 2) Lease: paid by stores (Here the interviewer hinted to include lease from surrounding
out of scope.
areas as well. There lease paid by stores inside the airport and parties surrounding the
I would break down risks into four buckets and take it from there.
airport. The space surrounding the airport can be occupied by corporate offices, hotels
1) Administration

and/or shopping arenas.

• Stakeholder management: Our client is a private player and may have to deal with
3) Parking

government authorities/bureaucrats which may be cumbersome. Their working style a) Passenger/normal cab parking

and ours would be different and thus there is possibility of conflict. This is a highly b) Exclusive parking slots given to cab aggregators (Gave example of Delhi airport
regulated industry as well meaning there can be interference and legal compliances.

where Ola is given a designated spot where you can sit in any of the cabs and enter
destination later)

• Cultural differences: Our working environment may be different from that of AAI. The
4) Advertisements: Could be paid by inside stores or external advertisers
employees who would now work for us may face difficulties to cope up with new policies
and procedures.
75
Indian Institute of Management, Kozhikode
 Due Diligence
Airport
5) Vending machines: A small share of revenue but vending machine sales would also
accrue revenue to the airport either in the form of percentage of sales (if owned and
operated by airport) or a lease like arrangement.
If I were to ask you to focus on maximising revenue from any two streams, which ones
would you choose and why?

I would choose lease and advertisements because:

• Lease – The proportion of revenue generated from leases would be high. Furthermore,
an airport is like a monopoly and the area inside as well as outside the airport would
provide exclusive access. Corporate offices, hotels and shopping arenas would enjoy the
benefit of higher accessibility and would be ready to pay high premiums. For corporates,
having offices near airports is not only strategic but also a matter of reputation.

• Advertisements – Airports attract traffic not only from within the city/state but also
outside. The passengers accessing the airport would have diverse profiles. Also, there is
high visibility on traffic in a functional airport. Advertisers can not only target such
passengers but also have higher certainty on number of eyeballs watching the
advertisements. People also tend to have layovers and have bandwidth to look at the
advertisement in the free time.

What is the reason for not taking other revenue streams?

Why not these factors?

• Airlines – There are supply constraints around working with airlines be it in terms of

slots or location or size. Incremental benefit if any may not be as high. Airlines anyway
promote their offerings to increase passenger traffic. Passenger travelling decision is
also based on affordability, accessibility, awareness and likeability which the airline
would already be working on. Our effort would not create a huge impact.

• Parking – Directly dependent on passenger traffic (similar argument as above). While

one can enter into an arrangement with a cab aggregator (refer 3b above), this may not
help beyond a point.

• Vending machine – Price per product in a vending machine is low and therefore
revenue accrued through this source would also be very low unless volumes are very
high. Low price goods would also translate to lower margins. Not a major source of
revenue in the first place.
Good, that’s about it.

76
Indian Institute of Management, Kozhikode
 Due Diligence
IT Services Company
The existing players are growing. Can you think of why revenue per customer is still
Question constant for us even if the players are expanding?
Our client is a large-scale IT services company based in India (with annual There could be two reasons, contract related: The expanded business of the clients is
revenue of $5 Bn) that acquired an IT services company based in the US not yielding benefits to us, which can be due to poor contract structuring or client-
(with annual revenue of $20 Mn). However, the acquired company's related: The clients that we are retaining might not be growing at the same pace as the
revenue has remained constant for the last 5 years. The client wants to industry.
know if they should invest further in the acquired company or sell it.
You can focus on the second factor

I would like to clarify the nature of business for both the acquiring and acquired Alright, so our clients are not growing, due to which our revenues have remained
company. I would also like to know the market size and growth rate for the acquired constant. Possibly, we are focusing on a client segment that has not expanded much.
company. I would also like to confirm that the objective is revenue growth.
Yes, most of our clients are small clients who only account for 20% of the market, while
The acquiring company is similar to TCS, Infosys, or Wipro. The acquired company is a large clients account for the remained. The growth has been driven primarily by large
small IT services company to health insurance clients across the US, there are regional clients.
players in the market, which are small-sized and large-sized players who serve
Fair enough. It explains the other half of the problem too. As small clients are regional
multinational clients (Market size of $2 Bn, CAGR 20%). Yes, the objective is revenue
clients, we cannot acquire new clients, as the market in our region will be pretty small.
growth.
And small clients in the other areas will have existing contracts with IT players in those
As we currently own a tiny percentage of the total market and the market is also regions.
growing at a good pace, I will first try to figure out why we are not growing at the same Yes, this sounds correct, so what course of action do you recommend?
pace as the market and then explore the potential to acquire even more outstanding
market share. If we can see the possibility of increasing the growth rate and obtaining a We need to shift our focus to the large clients as they account for the majority of the
significant market share, we can continue to invest in the acquired company. Otherwise, market and are increasing.
I will explore lucrative exit options.
Can you help devise a strategy to acquire large-scale clients?
The approach sounds reasonable. We can first focus on identifying why our revenues
are not growing. I will like to focus on four areas to acquire new clients. a
e People: We will require an expansion of staff under the technology and sales
Surely, I'd like to break the revenues as, No. of clients x Revenue per client. I'll further (account managers)a
break the number of clients into clients acquired and retained. Do we have some data e Process: The process of approaching the new clients, onboarding, and delivery of
about the retention and acquisition rate of our clients? Also, what is our average solutions, need to be tailored as per the requirements of the clients, as large clients
revenue per client, has there been any change in it? usually require customized solutions.a
We have been able to retain the clients. However, new clients are not being acquired. e Technology: Scaling up operations and offering the latest technology based on the
The revenue per client has remained constant. requirements of this segment.a
e Goodwill: Based on my understanding, in the SaaS industry, clients usually have
I first want to focus on the revenue per client aspect. As we have health insurance long-term contracts, so we need to have a strong reputation in the market. Provided
clients, I want to understand if the industry is growing. I think it is growing at a rate we are a regional player. We will require a firm brand name. It can be done by
slightly higher than 20% (as the IT Services industry for health insurance clients is leveraging the name of the parent company
growing at 20%).
This sounds good, so what are your final recommendations to the client?
Yes, you are correct to assume that
I will advise the client to continue investing in the acquired company as the enormous
And is the growth coming from the entry of new players (insurgents), or are existing and proliferating market size. The acquired company must focus on large-scale clients.
players expanding their revenues? I require this information because if current players
are growing, their revenue tickets must also increase. Thank you for the case.
77
Indian Institute of Management, Kozhikode
 Due Diligence
Hand Tool Manufacturer

Question There are clear cost synergies since both companies are hand tool manufacturers. The
distribution and retail networks can be merged to avoid conflicts between the product
The client is a foreign hand tool manufacturer which sells its products in lines of both companies and prevent cannibalization. There are revenue synergies due
to a similar segment of customers.
India, however, the client has not been able to gain a lot of market share.
The client wants to either make it to the top 3 players in the next 18
Can you summarize your recommendations for the client?
months or leave the market altogether. Discuss the various options.

In short term, sell the acquired company s tool to take advantage of the popularity of
’

Can I get some information about the product mix of the client and their customer
the existing product line and avoid cannibalization. In long term, develop its own
portfolio? I would also like to understand the competition in the market and the client's
product for various segments.
pricing approach.

The top 3 players own 30%, 1 %, and 10% of the market while the client has a 1. %
5 5

share. The company has a presence in 70 countries with huge cash reserves. The
company sold hand tools at a 10% premium due to more comfortable handles with the
other performance remaining the same. The end customers are mostly daily wage
laborers.

Since the end customers are daily wage workers they are likely to be price sensitive and
the 10% premium makes the client's products unattractive. Since the client wants to be
in the top 3 which requires capturing at least 7-8 times the current share, we can
consider inorganic growth through an acquisition or we can also pursue aggressive
organic growth strategies.

Sounds reasonable. Can you discuss 1 good option for both types of growth strategies?
Also, discuss the top priority issue and how to resolve them.

For organic growth, we can explore price competition by cutting down the prices as the
end customers were daily wage laborers, who are very price sensitive. To maintain the
profit margins, we need to explore ways to cut down the cost of more comfortable
handles.

What do you suggest for inorganic growth?

We can acquire the company with a 10% market share to gain direct access to the top 3
slots. This is the most appropriate option since we only have 18 months to make it to
the top 3. Probable risks with this approach are cannibalization and inefficient merger/
acquisition implementation.

What synergies can such a merger/acquisition o er?

ff

78
Indian Institute of Management, Kozhikode
 Frameworks

Case Interviews

Guesstimates

Industry Analysis

79
Indian Institute of Management, Kozhikode
 Water Consumption in Kozhikode in a day Guesstimates

Question
Estimate the water consumption in Kozhikode in 1 day?

Preliminary Questions
Should I consider water intake alone?

- Yes

Should I include Industries?

- Let's ignore that for now. Focus on the daily household

consumption

Can I neglect the effect of COVID-19?

- Yes

Assumptions
± Population of Kozhikode= 3 millio×
± 70% of the population comes under drinking age group of
21-60¨
± Average water consumption is 4L¨
± Average household size is 4¨
± Average alcoholic consumption is 0.75L for which 66% water
is used I.e. 0.5L & average non-alcoholic consumption contain
50% water.Ï
± 50% Males & 33.33% females consume alcohol in a day¨
± Non alcoholic Consum. : < 21 yrs, 0.5 ltr ; 21-60 yrs, 1 ltr ; < 60
yrs 0.25 ltr

Approach
± Water intake happens through direct water consumption, Water Consumption: 0.6 Mn *3L+ 1.8 Mn*4L + 0.6 Mn*5L = 12 Mn Lt.

beverages- alcoholic & Non- alcoholic, and through foo) Alcoholic Beverage: (0.525 Mn +0.315)* 0.5L = 0.42 Mn Lt.

± Number of household = Population / Avg household siz& Non Alcoholic Beverage: (0.9 Mn *0.5 L+ 1.8 Mn *1L + 0.3 Mn * 0.25) *(1/2) =2.325 Mn Lt.

± Consumption of water = Per meal water usage * # of meals Household Water Consumption: 0.75 Mn*4L*3 Meals = 9 Mn Lt.

Total Water intake by Kozhikode per day: 12+0.42+2.325+9 = 23.745 Mn Lt.

80
Indian Institute of Management, Kozhikode
 # of regular size Pizzas Domino’s sells in India per day Guesstimates

Question
Estimate the water consumption in Kozhikode in 1 day?

Assumptions
Timings

Domino’s Opening Hr: 11AM to 12 Midnight (13 Hrs)

Peak Hour Timings Hours
Lunch Time 12:30 - 2:30 2 Hrs
Dinner Time 8:00 - 11:00 3 Hrs
5 Hrs
Stor¤
µ Total Area of India = 3.2 Mn sq. Km. ~ 3 Mn Sq. Km¢
µ 10 % of the area is urbanŽ
µ Each 200 sq. Km. Of urban is served by a single store

# stores = (3,00,000 Sq. Km/200 Sq.Km.) = 1500 Stores

Consumption
µ No of customers visiting onsite in peak hours is 15/ Single store Consumption

Hr. Each customers consume a single regular pizzaò = (Dine In + Home Delivery) = (110+180)

= 290 Pizzas /Store

µ # of customers ordering for home delivery in peak

hours is 20/Hr. Each customers consume a single Total Consumption

regular pizzÏ = (No.of Stores * Consm. Per store) = (1500*290)

= 4,35,000 Pizzas
µ Consumption during Non-Peak hours is 30% of Peak
hours for dine In and 50% for Peak hours for Home
delivery.

81
Indian Institute of Management, Kozhikode
 Guesstimates
Pizzas ordered in a day in India

Question

How many pizzas are ordered in a day in India ?

Assumptions

Population of India = 130 Cr

Population Percentage

Rural 91Cr 70%

Urban 39 Cr 30%

Urban Population Percentage

< 5 Years 10%

5-60 Years 80%

60+ Years 10%

Consumption

¢ People in rural areas don’t consume pizzaŒ

¢ Pizza is luxury so people from the lower income

groups can’t afford itŒ

¢ People above 60 years old don’t consume pizzŽ

¢ People below 5 years, don’t consume pizzŽ

¢ A single pizza is shared by 3 people

Pizza/month ~ 3 Cr

Pizza/day : 3 Cr/30 = 10 lakhs/ day

82
Indian Institute of Management, Kozhikode
 Profit a typical Tea Stall makes in a day in Delhi Guesstimates

Question
How much profit does a typical tea stall make in a day in Delhi?

Assumptions
Timings

Tea Stall Opening Hr = 6 AM to 8 PM (14 Hrs)

Timings Demand
High 6:00 - 10:00 160
Raw Material Rate Used/Cup Cost (450 cups/day)
Low 10:00 - 16:00 120
Milk 40/L 30 ml (450*30*40)/1000 ~ 540
High 16:00 - 20:00 160
Tea Leaves 200/Kg 1 tsp/4g (450*’4*200)/1000 ~ 360
Total Demand ~450
Sugar 20/Kg 1.5 tsp/4g (450*1.5*4*60)/1000 ~ 160

Preparation Masala Fixed Rs 2/Cup 2*450 ~ 900

Gas Cylinder Fixed ---- 100
– In case of high demand, the capacity utilisation is
full. Let us say the tea maker can make around 20 Disposable Cup Fixed Rs 2/Cup 900
cups of tea at a time , that take around 30 minutes to
be consumed by customers. So, the tea cups made Total Demand ~ Rs 3000
in high demand are 40 Cups/hr¤

– In Noon, Let's say only 50% of capacity is utilised. Revenue from selling tea at the rate of Rs 10/Cup = 450*Rs 10 ~ Rs 4,500

So the tea maker makes only 20 cups/hr. Total Cost = Rs 3,000

Profit = Rs 1,500

Consumption
– Consumption of tea across all region of Delhi are
uniformº
– Demand of tea is high in the morning & Evening,
low in the afternoon.

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Indian Institute of Management, Kozhikode
 Sanitary Napkin use over a month in India Guesstimates

Question
Estimate the number of women who use sanitary napkin in India over a month.

Estimation
Indian population: 130 crores

50% are women = 65 crores

Age group of women who menstruate: 13-50 years

% of women under the age group 13-50 years:

~25% women are <13 years

~15% >50 years

women under menstruation age:

60% of 65 crores = 39 crores

Net market size: ~ 40 crores

û The ideal menstruation cycle: 28 days.

Taking 30 days, there are 12 cycles in a year.

Considering 10% women have 10 cycles/year and 10% women have

14 cycles/year. It averages to 12 cycles/year¿
û Now, to subtract the pregnant women, let’s say there are 2
crore births per year in India

The above assumption can be made based on discussion with the

interviewer¿
Considering the urban-rural divide

û It implies, 2 crore women are pregnant in a year£

30% women in urban areas. Let’s say 75% of them can afford sanitary napkins,

û Let’s assume these women were pregnant for 6 months in a 40*0.3*0.75 = 9 crores

year on average£ 70% women in rural areas. Let’s say 25% of them can afford sanitary napkins,

û So, out of 40 croresø 40*0.7*.25 = 7 crores

Æ 2 crore women have menstruation 6 times/year ,

Total women who can afford = 16 crores

So 1 crore women/ mont¾ Let’s say 10% of them prefer to use options like menstrual cups, tampons,etc = 1.6 crores

Æ 38 crore women have normal menstruation

No. of women using sanitary napkins/month = 16-1.6 crores = 14.4 crores
12 times/year i.e. once per mont¾
û In total, 39 Crores, is the new target market size.

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Indian Institute of Management, Kozhikode
 How much a typical PVR Plaza make in a day Guesstimates

Question
How much revenue does a typical PVR plaza of India make in a day ?

Assumptions Revenue in Weekdays : Mon-Thu Revenue Assumptions

Timings
Timings Capacity Revenue
PVR Opening Hr = 9 AM to 3 AM (18 Hrs)
09:00 - 12:00 25% 300*0.25*3*1*100 = 22,500
Revenue 12:00 - 18:00 6 0% 300*0.6*3*2*250 = 2,70,000

 Movies and Food outlets are the only source 18:00 - 00:00 7 0% 300*0.7*3*2*400 = 5,04,000
revenue 00:00 - 03:00 50% 300*0.5*3*1*300 = 1,35,000
Capacity Total 9,31,500

¢ PVR has 3 movie halls on averagª Revenue in Weekends : Fri-Sun

¢ Each hall can have 6 movies/day with an average
capacity for 300 people. Timings Capacity Revenue
09:00 - 12:00 35% 300*0.35*3*1*100 = 31,500
Variation Assumption 12:00 - 18:00 7 0% 300*0.7*3*2*250 = 3,15,000
¢ The demand is not varying based on type of moviesÄ 18:00 - 00:00 80% 300*0.8*3*2*400 = 5,76,000
¢ The demand is uniform on all daysÄ
¢ Taking the price of all seats at the same 00:00 - 03:00 6 0% 300*0.6*3*1*300 = 1,62,000
Total 10,84,500

Pricing Assumptions Revenue from the Movie/Day = ( 9,31,500*4 + 1084500*3 ) / 7 = Rs. 9,97,072

Timings Demand Price/Ticket A ssuming 20% of people in each slot buy from PVR food outlet paying Rs. 300 on an average

09:00 - 12:00 1 100 =[( Capacity on a week day *4*300 ) + ( Capacity on a day of a weekend *3*300)] /7

= (475200 +639900) /7

12:00 - 18:00 2 250 = 159300

18:00 - 00:00 2 400

00:00 - 03:00 2 250 Revenue Per Day = Rs 11,56,372 ~ Rs 12 Lakhs

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Indian Institute of Management, Kozhikode
 Number of deliveries done by swiggy in a day Guesstimates

Question
Number of deliveries done by Swiggy in a day

Approach

Assumptions

p Considering that only the urban population

uses food delivery platforms in IndiŒ

p There is one restaurant/ eateries/ cloud

kitchens etc. per 400 people and 30% of these
restaurants are with aggregators like Dunzo,
Swiggy, Zomato etc. and 20% is with Swiggy
(exclusive and along with other aggregators\

p For estimating number of delivery partners

available on an average day, consider the
average of peak (100%) and non-peak (50%)
days is (1 lacs + 0.5 lacs)/2 = 75,000. On a daily
level, a delivery boy can take 2 deliveries in 60
minutes and work for 10 hours a day.

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Indian Institute of Management, Kozhikode
 Guesstimates
Number of Ac’s sold in a year in India

Question

To calculate the number of ACs sold in a year, consider only household demand, discount commercial demand for now

Assumptions
Income Wise Distribution Rural (~20 Cr) Urban (~10 Cr)
s Average life of AC = 10 year`
Poor (20%) 4 Cr 2 Cr
s Growth Rate = 5%

Middle Class (40%) 8 Cr 4 Cr

Upper Middle Class (30%) 6 Cr 3 Cr

Approach
Rich (10%) 2 Cr 1 Cr
 There can be two approaches for this guesstimate: Demand

side i.e., population-based and Supply side i.e., number of

manufacturers of air conditioners in Indi£

Penetration Rate Rural Urban

 For this case, I would like to take a demand side approach

Poor Nil Nil
which includes both new demand and replacement demand¬
Middle Class 5%*8 = 0.4 Cr 30%*4 = 1.2 Cr

s New Demand = Growth rate * Market Size Replacement

Upper Middle Class 30%*6 = 1.8 Cr 60%*3 = 1.8 Cr
Demand = Current Market Size/Life
Rich 80%*2 = 1.6 Cr 100% *1 = 1 Cr

Total Market Size for air conditioners = 7.8 cr

New Demand = Growth rate * Market Size = 5%*7.8 = 0.39 crores

Replacement Demand = Current Market Size/Life = 7.8/10 = 0.78 crores

Total Demand = New Demand + Replacement Demand

= 0.39 + 0.78 = 1.17 crores

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Indian Institute of Management, Kozhikode
 Frameworks

Case Interviews

Guesstimates

Industry Analysis

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Indian Institute of Management, Kozhikode

 Automotive Industry Analysis

Overview

A Total motor vehicle production 22.4 mn units, growth 1.4% YoY O

A World largest 2 wheeler, 3 wheeler and tractor manufacturer O
A EV market set to reach 50,000 cr ruppes by 2025 O
A Vehicle penetration to reach 72 vehicles per 1000 people by 2025 O
A Contributes in GDP 7%, exports 4.7%

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Indian Institute of Management, Kozhikode
 Automotive Industry Analysis

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Indian Institute of Management, Kozhikode
 Aviation Industry Analysis

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Indian Institute of Management, Kozhikode
 Aviation Industry Analysis

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Indian Institute of Management, Kozhikode
 Banking Industry Analysis

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 Banking Industry Analysis

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Indian Institute of Management, Kozhikode
 Industry Analysis
E-Commerce

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Indian Institute of Management, Kozhikode
 Industry Analysis
E-Commerce

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Indian Institute of Management, Kozhikode
 Industry Analysis
Chemicals

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Indian Institute of Management, Kozhikode
 Industry Analysis
Chemicals

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Indian Institute of Management, Kozhikode
 Industry Analysis
Steel

Revenue Streams Cost Drivers

INBOUND LOGISTICS

OUTBOUND LOGISTICS
I Sale of Flat/Long Product7
I Raw Material – Iron ore, Coa[

I Iron ore pellet7

I Payroll and Salarie7

I Pig iron sale Processed

Ironmaking Steelmaking Rolling
Processing
Customers

Raw Material (Flat & long

Centres
I Fuel cosk

Products)
I Repairs & Maintenanch

I Advertising & Selling expense7

Byproducts Products
Mining

I Transportation cost

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Indian Institute of Management, Kozhikode
 Industry Analysis
Steel

Growth Drivers
Competitors
FY 16-20 FY 21P FY 21-25P % of Steel Demand

Building

3-4% (5-7%) 5-6% 35-40% Major Player

Construction

Infrastructure 6-7% (8-10%) 8-10% 25-30%

Capacity 34 18 21 11

Automobile

(2-3%) (12-14%) 9-10% 8-10%

Manufacturing 96% 94% 96% 95%
Utilisation

Engineering &

4-5% (12-18%) 4.5-5.5% 20-25% Capacity in MTMA (million tonnes per annum) FY 21-22
Packaging

Emerging Trends

Vehicle Scrappage Policy: Recycled vehicles to be used as raw

materials to reduce cost component and help companies

becomes cost competitive.

Capacity expansion: companies in the industry are undertaking

modernisation and expansion of plants to be more cost efficient

Emphasis on technology innovations: MOS issued directions to

the steel companies to take up R&D projects by spending at least

1% of their sales turnover to facilitate technological innovations.

Substitution: Coal and natural gas substitution with hydrogen

as a reducing agent will reduce emissions

Impact of Electric vehicles: Indian government is putting a

significant thrust on electric vehicles, which will require less steel

as these vehicles have fewer auto components.

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Indian Institute of Management, Kozhikode

 Telecom Industry Analysis

Indian Tele Density

4 Mn
140.04% Urban Contribution

Towards

60.22% Rural Employment

Business Model Cost Drivers

Mobile Services: Fixed

Broadband Services
Network Installation

charges to the users on

Packages for offering
& Maintenance
the basis of consumption
broadband internet services
of voice and/or data services
Prepaid Revenue Sharing with

partner platforms, websites Spectrum License Cost

Postpaid
1198.5 Mn Telephone Subscriber Base Broadband Subscriber Base 780.27 Mn Equipment manufacturing

Infra Development

and providing of
& IT Upgradation Cost
Subscription based infrastructure
98.2% Wireless 97.1% services

Periodic subscription for

various value added Providing payment related

Employee Benefits &

1.8% Wireline 2.9%

services, add-ons & other financial services

through UPI, Wallet other Expenses

Value Chain Key Players

Infrastructure and
Application and
Telecom Service
Retail

Telecom

Equipment Provider Content Providers Providers Distribution Operator

Market
35.69% 22.56% 31.62% 9.85%
Customers Share

ARPU (INR)

June 2022
176 128 183 N/A
Value Added Service Providers
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Indian Institute of Management, Kozhikode
 Telecom Industry Analysis

Active Internet Users Internet Use Case Growth Drivers

~96% of users access internet for  Government support & initiative
entertainment

 Rise in demand for cellular service

692 Mn 900 Mn ~ 90% use it for communication
 Increasing data consumptio  Changing lifestyle & preference for convenienc
2022 2025 ~ 82% use to access social media  Uptick in consumption of VA  Reducing gap between rural and urban citie
platforms
 Increasing per capita income of peopl  Favorable startup ecosyste1
~ 45% have used the internet to do  spurring innovation
 Advancements in technologie
Maharashtra Bihar some sort of online transaction

~28% are estimated to regularly  Infrastructure developmen

Highest Internet Lowest Internet
Connections Connections shop online  Local and foreign investment inflows

Emerging Trends

 IoT will help in connecting a large By Dec 2022, DoT is targetingš

 5G Tech is projected to contribute no. of devices on the network and  100% broadband connectivity in the
approx. $450 Bn (2023-2040 will play a pivotal role in the 100 villagesŠ  Data analytics through AI, ML helps
 5G subscriptions to reach ~350 smart cities project of IndiI  55% fiberization of mobile towersŠ telecom operators in implementing
Mn by 2026 contributing to 27% of  BSNL partnered with Skylo tech  Average broadband speeds of 25 MBP automation, cutting down on
all mobile subscription India for NB-IoT (Narrow Band-  30 lakh kms of optic fibre rollouts network costs, and boosting the
Internet of Things) – providing performance of networ^
 5G radio products to be
access and connectivity to millions Sustainable practices being adopted  AI powered conversational
manufactured in India for global
of unconnected machines, sensors by operators, infra companies
platforms
and domestic need
and industrial IoT devices - lowering their energy consumption

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Indian Institute of Management, Kozhikode
 Technology Industry Analysis

Overview

Õ Globally, North America dominates with 34% share, followed by APAC at 32¶ $ 191 Mn $ 350 Mn
Õ Indian IT contributed to ~8% to GDP in 2020, expected to reach 10% of GDP by 202º 2020 2025

Õ Indian domestic revenue ~$44 Bn and export revenue around $147 Bn in FY2ª

Õ BFSI major contributor to revenue of Indian IT, adoption of new emerging tech accelerates 12.9% CAGR
growtÉ

Õ Indian IT companies have delivery centres spread across the globe – US, Europe etc. Indian Market

Business Model Cost Drivers

Fixed Price: Pre-

Licensing Model: Pay a R&D and innovation
determined price for the
royalty or license fee to use,

service contract
cost
sell or copy the product

Transactional Model: Pay

within a given period of
a fixed price per unit of
time Infrastructure set up,
IT Services Cloud Services hardware/service provided
delivery center costs

Application development & Maintenance SaaS Time & Material

(T&M):
Employee benefit
Charge out rates in expenses
IT infra & Installation PaaS accordance with the Other business models:
resources involved
9 Freemium mode<
Subscription Model: 9 Bundling mode< Product development
Business Process Outsourcing IaaS expenses
Pay a fixed fee per unit 9 Razor blades mode<
of time/resource, 9 Crowdsourcing model
Assurance Services FaaS (Function) receive in return a fixed Other operating
number of units of the expenses
Enterprise Solution product/service

Value Chain Key Players

Infrastructure,

Operations & Support;

Equipment & Hardware

Software Providers Other Professional Services IT & ITeS
Providers
Systems
Application
Service Delivery

Software Software Centres

Cloud Service
Providers

End Users

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Indian Institute of Management, Kozhikode
 Technology Industry Analysis

Metrics Growth Drivers

‘ Increasing number of internet user¹
SaaS companies commanding higher valuation than traditional IT-ITeS players.
‘ Growth in Data Centers (2nd Largest driver of IT
‘ Adoption of remote working (increasing need
Reasons for higher multiple could be:
spending), Enterprise Solutions (Largest driver of IT
of infra for storing humongous volume of datav
spendingv
- Recurring revenue Annual recurring revenue
‘ Covid reinforced tech-enabled organizational
‘ Indian AI market valued at $6.4 Bn (Aug’20) - IT and transformatioµ
- Fast growth Client growth %

services has 41.1% share, tech sector (software,

‘ India’s highly qualified talent pool of technical
- Easier scalability, Larger market via the cloud Client and geographical penetration
hardware) has 23.3%, BFSI has 9.6f
graduate¹
- Higher lifetime value of customers via long-term contracts LTV vs CAC
‘ SaaS growing at fast pace - frugalness of operating in ‘ Cost advantage to India – about 5-6 times
- Proprietary technology and IP No. of proprietary tech. patentable processes
India, given the lower manpower cost required to cheaper than U™
create a large pool of diversified skilled talent ‘ Incremental focus on digitisation
- More deal activity in the industry Funding raised, investors’ interest

Risk and Challenges

High Competition among new-age startups, technology giants – leading
to similar product and service portfolio
Revenue concentration across clients, geographies, >50% revenue of
Indian IT industry coming from US

Given the positive sentiment around the potential of technology,

valuation multiples of many companies have peaked

Information & Cyber security; data protection & privacy

Due to emerging tech, companies may have to revisit their

business model and come up with new product offerings

Emerging Trends

Covid-19 pandemic induced major IoT will help in increased

3C: Cloud, Collaboration, Cybersecurity, will drive the sector
shifts – acceleration in the pace of transparency and efficiency in
Changing
digital transformation & hybrid work logistics management, data
business models
model, changing the dynamics of the management and infrastructure.

will be witnessed Cloud market is expected to grow from $371.4 Bn in

workplace and the service delivery Global industrial IoT market expected
amid heightened 2020 to $832.1 Bn in 2025, CAGR of 17.5%
to reach $949.42 Bn by 2025
digital innovation
High penetration of Industrial
across the various
Revolution 4.0 technologies; SaaS market is expected to reach Cybersecurity: Spending on cloud security tools

industries
Blockchain, AI, ML, Big data will see $219.5 Bn by 2027 from $68.2 Bn in projected to increase from $5.6 Bn in 2018 to $12.6 Bn by 2023
enhanced use cases 2020, CAGR of 18.2%.
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Indian Institute of Management, Kozhikode
 Industry Analysis
Media and Entertainment

Overview
Advertising Spends FY22
Total Ad Spends - Rs 726 Billion
p Media and Entertainment industry is projected to grow at a CAGR of 8% (2022 -2026F
p M&E industry grows and falls faster than GDP due to discretionary nature of advertisingo
Internet
p Advertising key source of revenue, revenue from subscription & value added services are
increasinN
TV 22.72%
p India’s subscription revenue is projected at Rs. 940 billion in 2023, from 631 billion in 202J
p We have 550 million television and smart phone consumers, expect a billion screens by 2029
Print 11.05%
p Despite slowing economy, a robust growth in digital segment posting 26% increase in FY2J
p Television saw a 22% fall in advertising revenues due to highly discounted ad rates during
Others 4.27%
the lockdown months, now recovered at pre pandemic levels

Cost Drivers

Website Classification and major segments

Platform Maintenance
Value Chain - Value Map
IT Systems
E TelevisioF
44% FY 2020 FY 2023P

Content making/buying E Film: 41%

E Prin;
Distribution & Licensing E RadiS
Salaries, Copyrights
E Online GaminJ
E Out of Home (OOH2
E MusiN
Revenue Streams E Digital & OTQ 18%
16%
18%
E Animation & VFX
15% 15%
13%
11% 10%
Advertising Revenue

Subscription Revenue

Value Added Services Print Digital & Fi lms Others

OTT

Business Model
It’s a classical mode l
This model is base d
Content created an d
Content Marketing Advertising is mos t

were revenue i s
on access to conten t
then earn throug h
is,simply put, using
common model, her e

generated by directl y
for a period of tim e
licensing its rights t o
content as a tool to
companies pay media
selling an item or a
that’s recurring .
that another medi a
market some other
outlets to place their
service to a customer Access to pool o f
company handle s
product or service ads in between/ beside
content than on e
marketing an d
from which you their content.
content distribution. make money

Transaction Model Subscription Model Licensing Model Content Marketing Advertisement model

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 Media and Entertainment Industry Analysis

Growth Drivers Competitors

1 Elite affluent, aspirers & next billion income class Television P rint F ilm Mu sic
1 Key demand drivers included rising demand for
are expected to grow at CAGR of 11%, 9% 5%, &
content among users and affordable subscription
2%, respectively by 2025 & will drive growth in
packages,
M&?
1 Widening of the consumer base will also be aided
by the expansion of the middle-class, increasing 1 Growth has been driven by personalisation and
urbanisation and changing lifestyle# customisation of content to regional language#

1 India’s per capita income at current prices grew 1 The number of suppliers of content will increase
11.0% to reach Rs 141,447 (US$ 1,960.46) in due to low barriers to entry and cheaper internet
FY19AE will increase consumer spends. facilities & free-of-cost social media platforms

Emerging Trends Challenges

The New Tariff Order (NTO) implemented during February 2019 increased
On the back of increased wireless Consumption of regional content is
The addition of another 100 end-customer prices for television content, reduced the reach of certain
and wired broadband expected to grow over the next few
million smart phones and genres of channels and resulted in a 6% reduction in time spent watching
connections and proliferation of years. Currently it comprises over
continued conversion of 2G and television during the second half of calendar 2019
low-cost smart television sets, 50% of Tv viewership, 44% of films,
3G connections to 4G, online
they smart sets will increase 43% of newspaper circulation and
With the influx of fake media and making headlines, media outlets must
gaming segment will drive a 3x
from 4 to 40-50 million by 2025 30% of OTT consumption. growth in this segment by 2022 also look to establish credibility with viewers. Misreporting the facts or
misrepresenting what was said can hurt the network’s credibility overall.

In 2020 rising number of

In FY20, TV penetration in India
Online piracy of film
and TV content is rampant in India and investments
With consumers willing to pay for
consumers switching to mobile
stood at 69% driven by DTH
content and extra services, the in preventive technology need to be made robust if this is to be checked.
tablet/laptop screens for
market. In FY20, DTH registered a
subscription segment is going to
entertainment increased paid With social media and commerce players increasingly investing in original

market share of 37% to the total play an important role in the post
video-on-demand subscriptions content or licensing more traditional media players find the economics of

TV market against 34% in FY19 digitisation era.

increased by ~60% YoY content creation and acquisition increasingly challenging.

Government Initiatives

·FDI inflows in the information and broadcasting sector (including print

· The Government of India increased the FDI limit from 74% to 100%.
media) stood at US$ 9.4 billion between April’00 and December’ 20

·I n February 2021, (IAMAI) finalised a code of conduct to form the basis · The NTO 2.0 seeks to protect consumers by capping tariffs for channel
for self-regulation code for OTT content. bouquets, price composition of the NCF.

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 Industry Analysis
Digital Payments

Payment Type and Volume

Key Players

Payment Bank Mar ket Share

46%

34%

14%

Others 6%

Transaction Type and volume

Growth Drivers Major Payment Products Major Payment Products

) Expansion of Digital InfrastructurŸ ) UP Regulator4

) RB
) Shifting Customer preferences for
) BNPß ) NPCI (National Payments Corporation of India)

contactless payment2

) Digital WalleÕ
) Increased merchant Acceptance for Regulatory Update4

Digital Payment2 ) NPCI’s mandate to restrict market share up to

) Card payment2
30% for any single player in UPI payment2
) Tech Disruptions and enablement by
) Net Banking/Bank Transfer
big tech and fintech ) RBI lifted ban on Mastercard to onboard new

customers for debit, credit and prepaid cards

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 Logistics and Supply Chain Industry Analysis

Growth Drivers
Government’s Infrastructure Development
Initiatives

Expansion of Retail Sector

Rising Demand from Tier-2 and Tier-3 cities

Simplification of Taxes

Technological Advancements

Cost Drivers National Logistics Policy

Key Players
\ Warehouse RenÈ
\ Delivery and Warehouse PersonneÁ \ Aegis LogisticC Unorganised and Fragmented Logistics sector of India is the reason for high
\ Vehicle ChargeC logistics costs which is 14-15% of the GDP as against 7-8% of Developed countries

\ Fuel CostC \ Blue Dart ExpresC Aim of the policy is to bring down the cost to 8% of GDP in next 5 years

\ IT and Data CostC \ Container Corporation of Indi| Impetus on reduction logistics costs and improving efficiency through use of
\ Packaging Costs technology

\ Gati Limite India ranks 44th on Logistics Performance Index Announced in Budget 2020

Revenue Drivers \ Mahindra LogisticC Turnaround Time of container vessels reduced from 44 hours to 26 hours

\ Storage ChargeC
\ SafexpresC New Eco-friendly waterways, 40 air cargo terminals, 30 airports with cold storage
\ Inventory Management ChargeC and 30 multi modal logistics facilities to be set-up

\ Transportation ChargeC \ Transport Corporation of Indi| Single window portal for all warehousing providers, shipping experts,
\ Last Mile Delivery ChargeC transporters, etc to be set-up
\ Reverse Transportation Charges \ Snowman Logistics

Emerging Trends Value Chain

\ Emerging TrendC
\ Express Delivery (Quick
Your business orders/ Finished Products shipped 3PL warehouse receives Inventory is warehoused Ecommerce orders go directly from
Commerce; makes products to 3PL warehouse inventory and logs it into stock by 3PL company all your platforms to 3PL providers

\ Reverse Logistics (Return

Processing;
\ Use of technology in Logistics
and WarehousinW Orders are delivered to your Orders are shipped, often the same Orders are picked and
customers day the customer places the order packed by 3PL company
\ 3PL Warehousing (Third party)
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Indian Institute of Management, Kozhikode
 Energy Industry Analysis

Overview

, India is 3rd largest producer & 2nd largest consumer of electricity globally2
, India’s installed power capacity of 373 GW (Oct 2020), renewable capacity 94 GW (Feb 2021
, Fossil fuels like coal, oil & natural gas, dominates global energy mix - constituting over 65%2
, 70% of India’s electricity generation from thermal (234 GW), coal contributing ~86%#2
, ~50% of India’s power to be generated by renewables by 2030 (Central Electricity Authority) Indian Energy Mix

Business Model Cost Drivers

Energy generation &

Energy generation & Infrastructure Setup
storage on site

supply
Cost
Energy supply on customers’
Contract with transmission
site. Example, solar cells,
companies or businesses
wind turbines, bio waste
(for direct captive use) -
plant directly supplying
Equipment, machinery
fixed charges per unit
power and providing excess costs
consumption
storage capabilities
Running expenses –
Natural Gas
Manpower etc.
Oil
Energy infrastructure Energy as a service
providers
Customers pay for Repair and
Global Energy Consumption Hydroelectricity
Providing infrastructure energy service without Maintenance costs
Mix by 2050* Nuclear Energy
facilities to generation any capital investment –
companies, corporates, subscription for electric
Renewable Energy
households etc. devices License and other
regulatory expenses
Coal

Value Chain Key Players

Evaluation &
Electricity Generation Transmission Distribution Power Players
Processing

Customers
Renewable Energy

Infrastructure, Energy Services, Electricity devices & Appliances

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 Energy Industry Analysis

Installed Energy Capacity in India (Feb’21) Growth Drivers

$ Rise in demand for electricity' $ Infrastructure development'

Central 25.37% $ Changing mix of energy consumptio^ $ Advancements in technologies'
$ Increasing per capita usage of energJ $ Climate change driven shift towards renewable
State 27.33% $ Government support & initiativeF sources of energy'
$ Soaring demand from the industrial and $ Changing lifestyle & preference for conveniencq
Private 47.30% domestic sectors' $ Reducing gap between rural and urban cities'
$ Local and foreign investment inflows $ Favourable startup ecosystem spurring innovation

Risks & Challenges

Restricted supply of raw material - erratic domestic supply of coal, fluctuations
in international coal prices, shortage of natural gas
Weak infrastructure of the transmission and distribution (T&D) system -
leading to transmission and distribution losses

Dynamic regulatory environment – Tariff structure, PPAs

Climate change accelerating shift in energy mix from traditional to non-

conventional sources, posing potential supply chain challenges for existing
players

Transitioning towards Non-Conventional source of Energy Emerging Trends

Target of 175 GW renewable energy setup Solar energy – largest renewable power
Development of ‘green city’ in every Indian state,
by 2022, of 450 GW of installed renewable source in FY 2021 with installed capacity
powered by renewable energy:'
energy capacity by 2030 – about 280 GW of ~40 GW vs wind energy having installed
$ Mainstream environment-friendly power
(over 60%) expected from solar capacity of 39 GW in 2021
through solar rooftop systems on all houses,'
$ Solar parks on city’s outskirts#
By 2029-30, the share of renewable energy India’s first renewable energy InvIT in
$ Waste to energy plants,'
generation increase from 18% to 44%, 2021 - KKR backed Virescent Renewable
thermal expected to reduce from 78% to Energy Trust $ Electric mobility-enabled public transport
52% systems

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 FMCG Industry Analysis
Overview FY19 Segment Wise Revenue
z Global FMCG market size valued at $10,020bn in 2017, projected to grow by 5.4% to $15,361.8bn
by 202’ Household &
z In India it is expected to grow at a CAGR of 23.15% to reach US$103.70 bn by FY2{ Personal Care

z It’s 4th largest sector in Indian Economy & is likely to be the 5th largest FMCG market by 2025† Tobacco products

z In the last few years, the FMCG market has grown at a faster pace in rural India compared with Food & Beverages

urban Indid Health care

z The rural market reached US$23 bn in FY18, and it is expected to grow to US$ 220 Bn (2025).

Business Models
Traditional Trade Modern Trade Online Trade
Traditional trade builds on Modern trade outlets are chains Online Marketplace allows the
inter- personal relations or groups of businesses. Retail customers to search, select
between the customers and operations are more planned and purchase the products,
the retailers. Traditional trade and- operations use a more services and information
is less organised than modern organised approach to inventory remotely over the Internet
trade and is more likely to run management, merchandising and and get it delivered at their
out of stock or push logistics management eg home. Eg : JioMart, Amazon
Cost Drivers alternative products to hypermarkets, supermarket Pantry
• Logistics
customers. Eg : Kirana Stores chains and mini-markets
• Packaging

• Commissions

• Employee Costs

• Marketing costs

• Promotions and discounts

Revenue Drivers
z Sale to end customerÃ
z Corporate tie-upÃ
z Occasion based offers - Bundled sale
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Indian Institute of Management, Kozhikode
 FMCG Industry Analysis

Growth Drivers
Market Players
Organised sector Low penetration Rural consumption Internet and
growth is expected to levels of branded will increase, due to different channels of
Major Player
grow with increased products in combination of sales has made the
level of brand categories like increasing incomes accessibility of
consciousness. Growth instant foods will and higher aspiration desired product to
Market Share 14% 12% 3% 3%
in modern retail will attract investors as levels, there will be an customers more
augment the growth of the FMCG products increased demand for convenient at
organised FMCG sector have demand branded products in required time and 82% 23% 102% 32%
ROE
throughout the year. rural India place
Increased
Retail

Organised Market Easy Access Inventory Turnover 14% 6% 10% 16%

Penetration Consumption

Emerging Trends Risk and Challenges

Brand Consciousness Organised sector is expected to grow as the share of Increasing challenge to balance market penetration and logistics cost as in
unorganised FMCG market has seen a fall with increased level of brand order to increase penetration among consumers, companies offers small pack
consciousness. sizes. However smaller pack sizes mean higher packaging and logistics costs.

E-Commerce Focus on strengthening ecommerce engagement, around 72% Non-availability of robust Infrastructure of Cold chains and continuous power
Indian consumers are most likely to shop online locally for premium product adversely affect certain product segments dependent on it eg : Ice cream market.

Smart Packaging Packaging used to stimulate consumer engagement, provide

a customised experience, and boost value and service. eg Presence of QR code As logistics service providers are not cost effective and not in a position to offer
economies of scale, most companies manage their own logistics.
Customer Experience With the growing demand for convenience, companies
Dealing with Counterfeits products which accounts for loss of sale worth more
strive to improve customer experiences with help of AR,VR and Gamification
than Rs 300 billion for the FMCG sector

Government Initiatives

Food Security Bill: FSB reduces prices of food grains for Below Relaxation of License Rules: Industrial license is not required
SETU SCHEME : Government has initiated Self
Poverty Line (BPL) households, allowing them to spend resources on for almost all food and agro-processing industries, barring
Employment and Talent Utilisation (SETU) scheme
other goods and services, including FMCG products. This is expected certain items such as beer, potable alcohol and wines, cane
to boost young entrepreneurs. Government has
to trigger higher consumption spends, particularly in rural India, sugar and hydrogenated animal fats and oils as well as items
invested US$ 163.73 million for this scheme.
which is an important market for most FMCG companies. reserved for exclusive manufacture in the small-scale sector.

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Indian Institute of Management, Kozhikode
 Industry Analysis
Healthcare

Overview

µ Indian Hospital industry ~80% of total healthcare market, $132 Bn by 2023 – CAGR of $194 Bn $372 Bn
16-17%ª 2020 2024
µ Indian Digital healthcare INR 884.5 Bn by 2025 from INR 144.59 Bn in 2019, CAGR of 33.92—
µ Indian Telemedicine market projected to reach $5.4 Bn by 2025 – growing at 31% CAG¶ 3 9% CAGR
µ National Digital Health Blueprint can provide benefits of ~$200 Bn over next 10 yearsª
Indian Market
µ India’s healthcare advantage lies in its skilled manpower and cost competitiveness

Business Model Cost Drivers

Classification

Healthcare delivery –
Biotechnology Primary
Hospitals, clinics, nursing Infrastructure setup
Telemedicine – Charging
home charging patients for cost
for the tele consultation,
Healthcare Delivery Hospital Secondary the healthcare services –
home care services
consultancy, diagnosis,
Equipment, machinery,
treatment, surgery etc.
Pharmaceuticals Tertiary medical supplies’ cost

E-Pharmacy –
Diagnostics Delivering medicines
Biotechnology – Operational expenses –
Technology breakthrough Professional fees,
and healthcare supplies,
resulting in patentable
Home Healthcare earning margins over support staff
Telemedicine drugs which can provide
cost of procurement.
revenue streams over the
Offers subscription
tenure of the patent R&D cost, clinical
Medical Tourism services as well research expenses etc.

Medical Devices Medical Tourism – Providing patients with opportunity

to receivequality medical services in foreign countries at Licenses and other
reasonable cost as compared to developed markets regulatory expenses

Value Chain Key Players

Medical College &

Training Institute Healthcare Delivery Institute 3rd Party Administrator Hospitals

Pharma Companies
Hospital Clinics Insurance Companies

Equipment Suppliers
Pharma

Diagnostic Chain /
Customer Patient

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Indian Institute of Management, Kozhikode

 Healthcare Industry Analysis

Key Statistics and Facts Growth Drivers

 Growing middle class along with rising  Spending on medical Infra ~$200 Bn by 202]
S About 60% of hospitals are in cities, where only
5 Beds/ 10,000 Indians
32% of India’s population reside> burden of new diseases  Increasing access to insurance
155/167 Rank Globally
S 70,000 Ayushman Bharat centres are operational  Rise in demand for affordable & quality  Local and foreign investment inflowU
in India – providing primary healthcare service>
8.6 Doctors/ healthcare  Life expectancy projected to exceed 70 years
10,000 Indians S Cost of surgery in India is ~1/10th of the cost in
USA or European nation>
 Better health awareness  Indian companies getting higher ANDA approvalU
Life
Expectancy 69.7 Years S Non-Communicable Diseases account for ~50%  Rise in medical touris2  Favorable startup ecosystem spurring innovation
of India’s disease burden and 60% of all deaths  Advancements in technologies – AI, IoT, RPA  Government support & initiatives

Risk and Challenges

High premium is putting insurance out of reach from many people of the country

Availability of quality healthcare professionals remain a challenge – we have

~1/5th of cardiologists, paediatricians, and clinical psychologists than required

Patient experience has not been up to the mark owing to several reasons like
doctor’s absenteeism, wrong diagnosis, exorbitant expenses etc.

Infrastructure ramp up remains a major challenge; private and organized players

could aid in improving the state, given the support from concerned authorities

Emerging Trends

Usage of AI for providing the best treatment Indian Bio-tech sector is presently around  Emergence and growth of new-age health ~$200 Bn is
to patients and for maintaining health records. $70.2 Bn and is expected to reach $150 Bn by tech startups, focusing on telemedicine, e- expected to be
AI-based drug discovery, clinical decision 2025. Comprises of: pharmacy, diagnostics etc. spent on medical
support, genetic analytics, healthcare  Bio-Pharma  No. of PE/VC deals in health-tech sector infrastructure by
administration, personal health  Bio-Services/CRO increased to 34 in 2020 from 15 in 2016 2024
 Bio-Informatics
 Telemedicine could replace ~50% of in- Life expectancy

 Bio-Agri
Surgical robotics market in India is person outpatient consultations by 202\ Projected to exceed
 Bio-Industrial
expected to reach $350 Mn by 2025 –  Data and analytics-enabled apps could 70 years, paving way
growing at a CAGR of 20% Plans to create 1 Mn skilled healthcare improve diagnosis, help people in tracking for more healthcare
providers by 2022 their vitals etc. services

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Indian Institute of Management, Kozhikode
 Hospitality Industry Analysis

Overview
c India ranked 10th among 185 countries in terms of travel & tourism’s total contribution to GDP in
2019e $39 Mn $53 Mn
c Hospitality sector primarily thrives on tourism, an important source of foreign exchange & 2020 2029
employmente
c It continues to be one of the worst hit, yet-to-recover and in survival-mode industry due to Covid-19.e
c Revenue in India tanked by 30.3% in the Q4’21 after plunging by over 50% in the quarters of 20-21.e
c Hospitality contributed nearly 13.68 lakh crore to the GDP in FY19 as per WTTC’s Economic Impacte
No. of Jobs in Tourism
c Hospitality industry is expected to grow at a rate of 6.9% to reach Rs 35 lakh crore by 2029

Business Mo els d Cost Drivers

Company owned, Company Company owned, Franchise Franchise owned, Company Franchise owned, Franchise c Maintenance coste
operated – COCO Model operated – COFO Model operated – FOCO Model operated – FOFO Model c Upgradation coste
c Fixed rental expensese
c Employee expenses
In this the company owns, Here the company does capital The franchisee owns the In this model, the company gives
makes investments and also expenditure, site selection etc. property and does the other its brand name. The franchise Revenue Streams
operates the entire business And the franchisee takes care of capital expenditures. While, provides for capital , expenses,
at a particular location. additional operational costs like company manages the store/ and manages everything within c Accommodatione
salary, electricity, and sundry outlet operations helps them the guidelines set by the c Banquet servicese
expenses to manage quality company
c Loyalty programse
c Food and beverage

Classification
ClassificationofofMajor SegmentsininHospitality
Major Segments Hospitality
Lodging Food & Beverages Recreation Easy Access
Luxury palaces, boutique hotels, bed and The largest sector in hospitality, is made up Recreational establishments focus on It comprises means of transportation to
breakfasts, camping grounds, hostels… the of properties delivering food, snacks, drinks relaxation and entertainment of guests. move travellers from one place to another.
lodging sector covers an extremely diverse for immediate consumption, on- or off-the Properties such as movie theatre or Airlines, cruise ships, buses, trains fall into
spectrum of properties. premises. amusement parks fall into this category this category.

Government Initiatives

The Ministry of Tourism launched the NIDHI The Ministry has set up Hospitality
Under Swadesh Darshan Scheme ministry Ministry of Tourism developed SAATHI portal to understand the geographical spread Development & Promotion Board to
of tourism are developing several theme- (System for Assessment, Awareness & of the hospitality sector, its size, structure and monitor and facilitate hotel project
based tourist circuits. Training for Hospitality Industry)
existing capacity in the country clearances approvals.

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Indian Institute of Management, Kozhikode
 Hospitality Industry Analysis

Growth Drivers

Economic Growth Changing Consumer Niche Offering Geographical Diversity

Hospitality Habits

Increasing disposable Increasing popularity of Niche offerings such as India offers geographical and
incomes to allow consumers Hospitality apps and medical tourism & eco- cultural diversity, attractive
to increase spending on social Hospitality to tourism expected to beaches, 37 World Heritage sites,
recreational activities such propel growth. create more demand. 80 national parks and 441
as Hospitality. sanctuaries is a major crowd-puller
for tourists across the globe.

Competitive Landscape Challenges

Lodging Dominated by unorganised sector & numerous non-star hotels, guest houses, High fixed cost industry with high operating as well as financial leverage makes it
inns lodges etc. The Leading organised hotel groups are Marriott, Taj Group, Raddison, difficult to manage cash flow in case of negative impacts.
ITC and OYO, AirBnB.
Traditional players need to upgrade constantly in order to survive as Innovative new
Travel and Tourism moving towards digital and online travel agents like MakeMyTrip, tech- oriented start-ups such as Airbnb, OYO Rooms etc. are giving tough competition
Goibibo, Yatra, Cleartrip, both to book tickets, destinations, hotel rooms and leisure
activities.
Business travel driven revenue (cash- cow) faces a possible structural long term shift as
Food services industry a largely unorganised sector apart from a few Quick Service Covid induced restrictions made people travel less and do most of their work online.
Restuarant(QSR) brands like Domino's, Café Coffee Day, McDonald's,etc Tourism industry major part of hospitality industry is known to exhibit seasonality thus
it has a direct impact on the Hospitality sector.
Recreational and Leisure Inox Leisure (premier multiplex chain), Delta Corp (Casino),
and Future Gaming And Hotel Services (lottery company) are some key leisure and The industry involves employees/workers to work day/night and even on weekends
entertainment players in India. along with lower wages leads to shortage of Skilled labour and High rate of attrition.

Emerging Trends
Restricted Corporate Level Rise of E-Tourism Ancillary Revenue MBA & Rebranding to gain Momentum Potential of Tier - II & Tier -III Longevity & Wellness tourism

Organizations, going forward Hospitality supply in Tier The internet has modernized Last 5 years 230+ hotels have been Ancillary revenues will be key Development of wellness tourism is
are likely to embrace a hybrid II and Tier III locations will the face of travel industry converted from a standalone focus area to improve the being accelerated with hike of
work environment and increase based on the and its impact on the property to a brand. This is topline, thus making every healthcare costs in advanced
Corporate travel is expected untapped potential of the tourists. People prefer online expected to gain considerable enhancement in customer countries & lack of proper health care
to permanently remain below domestic commercial and bookings, reservations and momentum as businesses aim to experience payable. facilities in developing countries
the pre pandemic levels leisure demand virtual tours now-a-days tide over the current downturn

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Indian Institute of Management, Kozhikode
 Fintech Industry Analysis

Overview Share of companies

i India had the highest adoption rate of financial technology (~87%), (global average ~70%r
48.5%
Payments

i Indian fintech market has received $29 bn in funding across 2,084 deals to date (Jan17-July 22), 28.6%
Alternative lending

gaining 14% share of the global funding and Ranked #2 on the deal volume Ž 7.9%

Internet first
i UPI has seen participation of 358 banks and has recorded ~6.8 Bn transactions worth over insurance platforms

5.4%
Investment Tech

$135 Bnb 5%
Banking Tech

i 37% CAGR in growth in digital payments transactions from FY19-2” 3%

Finance &
i Exponential rise in funding over the last few years; the sector received funding worth ~$9.8 Bn Accounting Tech

1.5% Others
in 2021, led by the Payments segment (53% fintech funding across all fintech verticals in India

Key Players
Payments Wealthtech

Insurtech
Lending

Regtech

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Indian Institute of Management, Kozhikode
 FinTech Industry Analysis

Growth Drivers The top five fintech destinations are Mumbai, Bengaluru, Gurugram, New Delhi, and Hyderabad
Mumbai Fintech Hub (MFH) Fintech Valley Vizag
‘ MFH was an initiative undertaken by the Maharashtra government to promote ‘ It is a flagship program launched by the Government of Andhra
fintech ecosyste~ Prades´
‘ Mumbai is the first city to have implemented a fintech polict ‘ The initiative was undertaken with the motive to develop Vizag
‘ The prime stakeholders include financial institutes, governments, regulators, as a national as well as global fintech hu–
academic institutes, technology partners, incubators, and market influencer ‘ It brings together investors, the market, and academia to
‘ Functions of the policy: Providing access to capital, promotion of open innovation, innovate, develop, and build the fintech ecosystem in the state
catalysing the fintech ecosystem, access to global market and fintech experts

Growth Drivers Market Challenges

Change in consumer demographics
Market Challenges

Increased Internet penetration

Cybercrime and Data security

Growth in digital infrastructure

Consumers distrust on online modes of payment

Upsurge in the target market to unbanked and under-banked population

Cash Based economy

Government Initiatives
Regulatory and compliance laws

Government Initiatives
The RBI has also created a Reserve
Jan DhanYojana has been targeted
Bank Innovation Hub (RBIH). The aim
at increasing financial inclusion in Aadhar Enabled Payment A central repository, Central KYC,
of Innovation Hub is to promote
India by helping in new bank System allows individuals to has been developed for reducing In 2021, it increased
innovation across the financial The government
account enrollment of conduct financial the hassle of undergoing multiple
allocated INR 15 Bn foreign direct
KYCs for different financial sector by leveraging on technology
beneficiaries for DBT and transactions on a Micro- for boosting digital investment (FDI) in the
institutions. This allows the KYC and creating an environment which
accessibility to a host of financial ATM by furnishing their payments in the insurtech segment from
process of consumers to be would facilitate and foster
services applications. This enabled Aadhaar number and recebt budget 49% to 74%
conducted only once unless there innovation, in collaboration with
Fintech startups to build verifying it with the help of
are any changes in consumer financial sector institutions,
technology products to penetrate their fingerprint/iris scan
details technology industry and academic
the consumer base in India
institutions.
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Indian Institute of Management, Kozhikode
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Indian Institute of Management, Kozhikode

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