SGM PROJECT

Submitted by: Faizan Mohammed Saleem

Ganesh Sahu

Naveen Bharath

Naveen Lalaji

Roopchand Medikonda

Syeda Sara Quadri

INDEXS.No. Topic Page No.

1 Recording Industry 1

2 Wine, beer and liquor retailing 3

3 Watch industry 5

4 Poultry industry 7

5 Computer software industry 9

6 Cell phone industry 11

7 Exercise and fitness industry 13

8 Newspaper industry 14

9 Camera-film and film developing industry 15

10 Dry-cleaning industry 15

  RECORDED MUSIC INDUSTRY (DVDS, CDS, TAPES) -

Moser Baer

Moser Baer India Limited headquartered in New

Delhi, is a leading global tech-manufacturing company. Established in 1983, the company is one of the world's largest manufacturers of Optical Storage media like CDs and DVDs.

Every 5th disc manufactured globally belongs to Moser Baer and it is the lowest cost optical media manufacturer in the world. The company is also the first to market next-generation of storage formats like Blu-Ray discs and HD-DVD in India.

But over the years its sales have stagnated and its cash reserves are totally depleted. Its market capitalization is merely 5 percent of what it was five years ago. Ratul Puri, the General Manager of Business Development for Moser Baer India Limited is struggling to keep the company his father

founded and his reputation intact. It is unable to service its massive domestic debt. Moser’s cash flow is about Rs 241 crore. And its debt is a towering Rs 3,267 crore as of March 2011.

Trouble began somewhere in 2004-05. Moser Baer was still growing in volumes but the profit on each CD started declining. The price of a CD fell from about $1.20 to about 20 cents in just three years.

The business of selling movie CDs and DVDs which Moser Baer had entered with a lot of fanfare is almost finished. The insufficient cash flows of the business are not supporting its domestic debt as well as its foreign debt.

Moser Baer’s business of Blank Optical storage (manufacturing CD/DVD/Blu-Ray) is in

operation but it is saddled with huge unutilized capacities.

Therefore, it can be said that the Recorded music industry (DVDs, CDs, tapes) is in the

stagnant/declining stage.

There are no large growth drivers in optical media. World is moving towards flash memory and cloud storage.

WINE, BEER, AND LIQUOR RETAILING

Four Seasons Wines Limited

Starting in June 2006, the UB Group made headlines by being the first Indian company to acquire a premium French winery, Bouvet-Ladubay, and enter the wine business. With a rich heritage of more than a century and a half and unmatchable expertise in making sparkling wine using ‘methode traditionelle’, Bouvet-Ladubay has set standards that have won it more than three hundred awards in the last three decades alone; with 93 of them being Gold Medals. The company currently has a capacity of 8 million bottles per annum, with further scope for expansion when required.

After setting celebrations alight across the world in over 38 countries these fine sparkling wines are now in India becoming both the reason and the means for an unprecedented celebration. Complemented by some of the finest still wines, Bouvet-Ladubay’s wine repertoire offers Indian wine lovers an exquisite range to choose from, to suit every occasion.

USL’s Wine Business in India operates through two companies – United Vintners Limited and Four Season’s Wines Limited. This winery in Baramati, Maharashtra has been gaining ground steadily during the last 5 years, reaching the number two spot in the premium wine segment with sales of 60-65,000 cases last year. Targeting the annual growth of 30%, the company is working constantly to improve the quality, Brand and also garner the export market by participating in Shows and tastings. Abhay Kewadkar, the business head and chief winemaker and one of the oldest hats in the industry, does not mince words in saying they plan to grow systematically and take Sula head-on within this decade and plans to take the Indian wine industry to new heights.

Sula Sula has not looked back since starting the business in 1999. Even during the recession they maintained growth even if at lower rate. Finishing 2011-12 at about 460,000 cases (9-liters) they control over 35% of the total market and continue to lead with a national presence, covering a wide range of the price spectrum.

Their top-level Shiraz- the barrique aged Rasa introduced in 2010, sells for Rs.1150 (€18). Barely 1500 case production, it is made from grapes selected from their best parcels. They also produce the low end wine from indigenous grape fermentation, calling it Port 1000 that costs only Rs. 126 ($2.30).

Over the years, Sula has pioneered many classic grape varietals in India like Sauvignon and Chenin Blanc in 2000, Zinfandel in 2001 and Riesling in 2008. In 2005, it launched its first reserve wine, the Dindori Reserve Shiraz, as well as India's first dessert wine, the Late Harvest

Chenin Blanc-all with the help of Kerry Damskey from Sonoma, who has been Sula’s consultant winemaker since beginning.

Sula is targeting 630,000 cases of domestic wines in 2012-13, besides foreign wines and spirits.

The wine, beer, and liquor retail industry in India is an emerging industry. While India

doesn’t have the most ideal climate for growing wine grapes, its local industry which is still at a

nascent stage, is growing at a rate that more established countries can only envy.

A population of 1.13 billion with over half under 35 years, offers a huge opportunity for wine

producers.  About 300 million belong to the middle class with 30 million as potential wine

drinkers; currently there are less than 2 million. India has been traditionally a liquor guzzling

country with over 400 million cases consumed annually. Even the relatively new beverage beer

has created 160 million-case market because of lower prices and the penchant of youth. But as

the younger population achieves adulthood, it is expected to also add wine as a choice.

The industry is still an infant but growing steadily, aided not only by passion-driven producers

but also the favourable consumer trends, higher disposable income, increase in population of the

middle class. Despite complex tax structure and no government subsidies like in EU, the

producers are optimistic about the future and more are entering the arena with collaboration in

technology, equipment, viticulture and even equity.

Around 90 wineries are registered as compared with less than 10 barely a decade ago. Although

wine education is crucial- proper storage for distributors and customers is still a challenge; the

situation is changing for the better.

The government is becoming more progressive in allowing retail sales and licensing concessions

for sale of wines on trade and off-trade. The response from the tier-2 and tier-3 cities is very

encouraging, with wine clubs opening in smaller cities like Ludhiana, Nagpur and Pune too.

Brand building is becoming the key factor for growth and even sustenance. A shake out of

industry is expected with several smaller wineries unable to market their products, forced to shut

down but the next decade will see India as a wine producing country to reckon with.

WATCH INDUSTRY

Chrono Watch Company is a new ‘affordable to accessible luxury’ watch distribution, retailing and e-tailing company headquartered in Bangalore, India. Chrono Watch Company was incorporated in June 2012 and will commence commercial operations in January 2013.

Chrono Watch Company will be introducing and officially launching 45 international watch brands in India, which are currently not available in the country. This is the first time any watch distributor has launched such a wide array of premium quality international brands at the same time in any country. Our featured watch brands are mostly from Switzerland, Germany, Italy, France and USA.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has projected the market size of Indian watch industry which is currently estimated at Rs.5,000 crore will be worth Rs. 15,000 crore by 2020 due to emergence of strong middle class and a large number of high net worth individuals.

Indian watch market is set to more than double in the next five to seven years to around Rs 15,000 crore growing at 15 per cent every year, driven by youth and premium segment of consumers.

The organized sector of the watch market alone contributes up to 40% of this figure, and the rest of the demand is being met by the unorganised grey sector. More than 80 percent of the population is below 45 years of age. The average growth in the size of the market is slated to be around 15-20 percent per year.

There is enormous potential for growth of the industry in this untapped segment. Some customers look out for features like fashion appeal, technology, sophistication and status. Others go for durability, economy and precision. Many customers prefer mechanical and automatic watches, while others prefer quartz watches.

Newer segments are also on rise such as ladies watches, children’s watches and gent’s watches. Customers usually base their preferences and buying decisions on a variety of factors like price, durability, utility, aesthetic appeal and brand name. A combination of all these points ultimately forms the customer’s buying decision that translates into the purchase of a watch.

Overall 4.5 crores watches are manufactured in a year. The highest share of watches retailed is around the price range from Rs. 500/- to Rs. 5,000/-. The second category of watches retailed in the price bracket of Rs. 5,000 to Rs. 25,000 is growing at an exponential rate of over 25%.

Due to increased international travel, Indian consumer has more awareness of various brands available globally and willing to purchase in India. With more international brands foraying in

Indian market to cater to the growing demand of fashion and luxury watch consumers, it has also created some challenges for local manufacturers.

However local players still continue to dominate the Indian watch industry due to good manufacturing base and price points at which watches are retailed. Collaborations, right planning and joint ventures in marketing hold the key to success for both domestic and International watch manufacturers.

With the growing infrastructure in tier II and tier III cities, brands with significant presence in the Indian metros now plan to woo customers through retail tie ups in these cities.

Male watch buyers far outnumber females and account for around 65% of sales. Students are the largest segment of buyers accounting for approximately 30% of the sales, mentioned the paper.

Tissot has emerged as the largest selling Swiss brand in India. It is estimated that Tissot's volume sales during 2010 in India crossed 50,000 watches with average retail price recovery of Rs 15,000 per watch. In volume terms, Tag Heuer and Raymond Weil also became very popular.

In terms of volumes, the organised players currently command 40 per cent of the industry and the rest 60 per cent by the unorganised segment, which consists of smuggled watches, cheap imported watches and those assembled by small unorganised players, adds the paper.

However, the organized players that include domestic firms such as Titan, Timex India, Maxima and HMT, and a host of international brands and companies such as LVMH, Seiko, the Swatch Group, Chanel and others.

Amongst the Swiss and other brands like Piaget, Chopard, Vacheron Constantin, Corum, Baume & Mercier, Panerai, Maurice Lacroix, Cartier, Rolex, Titoni, Raymond Weil, Bucherer, Gucci, Esprit, Carerra, Breitling, Movado, Ebel, Giordano, Triumph, Beverley Hills Polo, Romanson, Chanel, Van Cleef & Arpels, Montblanc, Dunhill, Jaeger- LeCoultre, Bovet, Follie Follie amongst others. 

The watch industry in India is in the stage of rapid growth. The industry has been witnessing a growth of 8-10 per cent from past few years. It is expected to grow at 12-15 per cent in next few years.

At 25 per cent growth per annum, India is all set to become a $2 billion market over the next three years. India's watch retail industry is maturing to world-class standards and offering real joy to Indian consumers.

POULTRY INDUSTRY

Suguna Foods (Formerly Suguna Poultry Farm Limited)

Over a period of 25 years, Suguna has gone from strength to strength and has become a Rs. 4200 crore company that makes it India’s No. 1 broiler producer. Along the way, Suguna’s pioneering efforts in contract farming helped create thousands of rural entrepreneurs who share the growth successfully. "Poultry Integration" introduced and pioneered by Suguna in the country has energized the livelihoods of farmers in rural India.

Suguna ranks among the top ten poultry companies worldwide. With operations in 11 states across India, it offers a range of poultry products and services. The fully integrated operations cover broiler and layer farming, hatcheries, feed mills, processing plants, vaccines and exports. Suguna markets live broiler chicken, value added eggs and frozen chicken. With the intent to provide consumers with fresh, clean and hygienic packed chicken, Suguna has set up a chain of modern retail outlets.

Today, the company’s brand Suguna Chicken is a household name in India. With itsSuguna Daily Fressh outlets, Suguna Home Bites, Suguna Anytime processed chicken and four varieties of specialty Suguna value added eggs, Suguna is the undisputed leader in poultry products. Suguna Home Bites being the latest in its product range is a new category of home meal replacements (HMR).

The local poultry industry was valued at Rs 450 crore. Last fiscal, Suguna Poultry, touched revenues of more than Rs 4,200 crore, working with 18,000 contract farmers; the poultry meat business comprises more than 65% of the Rs 50,000 crore poultry industry.

This is an atypical rags-to-riches story of entrepreneurs making the most of an opportunity to hitch a ride to big gains. In fact, their business model clicked perfectly at a time when Indians had started consuming more and more meat, especially chicken. More players have entered the segment, and a few of them are growing faster than the industry growth of 12-13% per annum.

Rising disposable incomes, quick urbanisation and the expansion of the Great Indian Middle Class are a few key drivers of the stunning growth in chicken business. Alongside, integrated poultry production and contract farming have lowered the cost of production of chicken.

The poultry industry in

India is in the rapid growth phase.

India's chicken consumption has risen to more than 3 kg per head a year from less than 1 kg a decade earlier. The segment is expected to grow at 12-13% annually. The chicken consumption is likely to double over the next five years, signaling further growth.

SOFTWARE INDUSTRY

Indian Information Technology industry is one of the fastest growing industries in the country. The IT industry has built very valuable brand equity for itself in the global markets. The Indian IT Industry comprises of software industry and information technology enabled services (ITES), which even includes business process outsourcing (BPO) industry. Indian IT Industry is considered as a pioneer in software development and a favorite destination for IT-enabled services. In the year 1974, the origin of IT industry in India can be traced, when the mainframe manufacturer, Burroughs asked its India sales agent, Tata Consultancy Services (TCS) to export programmers for installing system software for a U.S. client

IT Industry in the country has played a major role in placing India on the international map. The Indian IT Industry mainly comprises of instance System Integration, Software experiments, Custom Application Development and Maintenance (CADM), network services and IT Solutions. According to the analysis done by the annual report 2009-10, prepared by the Department of Information Technology (DIT), the IT-BPO industry was expected to achieve a revenue aggregate of US$ 73.1 billion in 2009-10 as compared to US$ 69.4 billion in 2008-09, growing at a rate of over 5 %. The report even predicts that the Indian IT-BPO revenues may reach US$ 225 billion in 2020.

The Indian software industry continues to add jobs at a fast clip despite the threat of a slowdown. The industry is estimated to close fiscal 2012 with an addition of around 230,000 jobs.

For the coming fiscal, the industry has already made about 100,000 jobs offers on campus,. But revenues are growing faster than people added, indicating that the shift towards non-linearity in revenues is beginning to happen. For FY12, IT industry revenues are set to grow at 16% but the number of people added is likely to grow only by 10%, says the industry body.

Woes in global IT spending continued to persist in FY12 given the dire economic situation in the US and Europe. Businesses across the globe started cutting on discretionary IT budgets; this was

particularly true for the Banking, Financial Services and Insurance companies. Indian IT industry, however, managed to weather the storm to some extent on the back of superior quality, cost and execution efficiencies and between FY2008 and FY2012, the industry grew from Rs 2,534 bn to Rs 4639 bn, registering a CAGR of 16%.

• India’s IT industry can be divided into five main components, viz. Software Products, IT services, Engineering and R&D services, ITES/BPO (IT-enabled services/Business Process Outsourcing) and Hardware. Export revenues primarily on project based IT Services continue to drive growth with IT Services accounting for 59% of total revenues followed by BPO and Engineering services at 22% and Software Products at 19%. Multi-year annuity based outsourcing agreements are expected to increase going forward. In terms of total export and domestic revenues, Application Development and Maintenance(ADM)still continues to be the bread and butter for Indian IT companies, contributing to roughly 60% of their total revenues.

• Labour arbitrage has been the competitive edge of the Indian software sector over the last few years. However, this seems to be threatened now by MNCs’ who are replicating the Indian outsourcing model and setting up bases in the country. Going forward, the advantage of low employee costs could peter out and the sector could get commoditised.

• Increasing competition, pressure on billing rates and increasing commoditization of lower-end ADM services are among the key reasons forcing the Indian software industry to make a fast move up the software value chain by providing higher value-added services like consulting, product development, R&D, mobile, cloud computing and end-to-end turnkey solutions.

• With the Indian government emphasizing on better technology enabled delivery mechanisms for a multitude of government projects like e-passport, Unique Identification Scheme, etc., the domestic market connected with software services looks equally promising. Domestic IT-ITES market increased revenues from Rs 886 bn in FY2008 to Rs 1,475 bn in FY2012 registering a CAGR of 14%, with Software and Services contributing to 60% of domestic revenue and Hardware contributing to the balance 40%.

Therefore it can be said that the software industry in india is in Rapid Growing Phase .

CELL PHONE INDUSTRY

PROSPECTS

The overall India mobile handsets market registered sales of 50.2 million units during January-March 2012. This was reported in the CyberMedia Research India Monthly Mobile Handsets Market Review for 1Q 2012 released today.

India Smartphones Market: The Shape of Things to Come

Total India smartphone sales touched 2.7 million units during January-March 2012. Samsung emerged as the leader in the smartphone segment with a 40.4% share, followed at No. 2 and No. 3 by Nokia with 25.5% and RIM with 12.3% share respectively.

Smartphones saw exponential growth in 2011. India already has high penetration of mobile phones. This further increased with the success of smartphones. Smartphones are available in all price segments, making these products accessible to every strata of the population. India being a youth-centric country saw a surge in Android smartphone ownership. Samsung successfully managed to increase sales of smartphones with its wide variety of models. Other companies maintained a higher price for their smartphones

In 1Q 2012, Samsung launched seven new smartphone models in India, further tightening its grip on sales in different price bands between INR 7,500 to INR 27,000. This is the range in which the company sells its portfolio of smartphones currently. It excludes products like the Samsung Galaxy Note, which, with a 5″ screen is categorized under the category of media tablets / tablet PCs. Indian mobile handset vendors have also started aggressively widening their Android-based smartphones portfolio. 

“As the India mobile handsets market grows in maturity, the needs of users are clearly seen to be converging around two major form factors – high-power, high-speed smartphones vis-à-vis value-plus, content-enabled featurephones. While most players are strong in a particular category, Samsung and others have been able to maintain a strong presence across the spectrum, driven mainly by innovation, quick time-to-market and a segmented approach”, stated Anirban Banerjee, Associate Vice President, Research and Advisory Services, CyberMedia Research.

“Players like Motorola and Sony have clearly chosen to stay in the ‘high value’ smartphones segment, which accounts for just 5.3% of shipments but added up to as much as 23.4% of the market value in 1Q 2012. Currently, large, international players like Nokia and RIM, as well as relatively new entrants like Micromax, Karbonn, Lava and Spice are faced with the challenge to enhance their portfolio of products, models and services, to stay relevant and profitable in the long run”, added Naveen Mishra, Lead Analyst, CMR Telecoms Practice.

India 3G Phones Market: Decline in Data Tariffs to Trigger Increase in Shipments?

“With the recently announced reduction in tariffs of 3G services by as much as 70% by leading India telecom service providers, the market for both 3G-enabled devices and mobile broadband-driven content is likely to see an upward trend in adoption in the forthcoming quarters

Therefore it can be determined that the cell phone industry in india is in Stagnant / Decline stage .

Exercise and Fitness Industry :

Indian Fitness & Slimming Industry constitutes about 8% of the wellness market.  Presently, the fitness industry is in its nascent stages. The industry is fairly fragmented since the majority of the market appears to be dominated by a large number of mom-and-pop gyms. Organized fitness services account for merely 25% of the overall fitness industry. 

Trends in the Industry

• Franchising• Beyond Tier I• Burgeoning Investments • Innovative formats• Training Trends

The Indian Fitness & Slimming Industry is set to ride high with all levers in place. Growing disposable income of the people coupled with rising awareness of a healthy body augur well for the Industry. Significant changes in lifestyle related to lack of physical activity and increased consumption of fast food among both affluent and working class population has led to greater need for healthy lifestyles.

Indian fitness & slimming industry currently pegged at USD 0.78 billion is stated to grow at a

CAGR of 25% to reach USD 2.4 Billion by 2015. We would not be surprised if the industry

outperforms our ballpark figure. 

Emerging fitness growth HEALTH AND fitness market in India is estimated at around Rs 2,900 crore.It is growing at a compounded annual growth rate of 15 per cent up market club in this category have a penetration of a mere 0.1 per cent.

The averages annual spend on health and fitness by individuals is approximately Rs 2,600.

NEWSPAPER INDUSTRY:

But it has also become clear that digital advertising dollars will never offset what newspapers are losing in print advertising—which is why papers want to be less dependent on ad revenue. Advertising, which is high-margin, has historically contributed around 80% of American newspapers’ revenues, far more than in most other countries. This is changing, mostly because advertising has slid so far. In the third quarter the New York Times earned more than 55% of its revenues from circulation, compared with only 29% in 2001. Newspaper bosses say they are moving their papers to a model where they get half their revenues from advertising and half from circulation.

The future of newspapers has been widely debated as the industry has faced down soaring newsprint prices, slumping ad sales, the loss of much classified advertising and precipitous drops in circulation. In recent years the number of newspapers slated for closure, bankruptcy or severe cutbacks has risen—especially in the United States, where the industry has shed a fifth of its journalists since 2001. Revenue has plunged while competition from internet media has squeezed older print publishers.

The debate has become more urgent lately, as a deepening recession has cut profits, and as once-explosive growth in newspaper web revenues has leveled off, forestalling what the industry hoped would become an important source of revenue. One issue is whether the newspaper industry is being hit by a cyclical trough and will recover, or whether new technology has rendered newspapers obsolete in their traditional format. To survive, newspapers are considering combining and other options, although the outcome of such partnerships has been criticized.

The challenges facing the industry are not limited to the United States, or even English-speaking markets. Newspapers in Switzerland and the Netherlands, for instance, have lost half of their classified advertising to the internet. At its annual convention slated for May, 2009, in Barcelona, Spain, the World Association of Newspapers has titled the convention's subject "Newspapers Focus on Print & Advertising Revenues in Difficult Times."

In September 2008, the World Association of Newspapers called for regulators to block a proposed Google–Yahoo advertising partnership, calling it a threat to newspaper industry revenues worldwide. The WAN painted a stark picture of the threat posed to newspapers by the search engine giants. "Perhaps never in the history of newspaper publishing has a single, commercial entity threatened to exert this much control over the destiny of the press," said the Paris-based global newspaper organization of the proposed pact.

By the late 1990s, the availability of news via 24-hour television channels and then the Internet posed an ongoing challenge to the business model of most newspapers in developed countries. Paid circulation has declined, while advertising revenue — which makes up the bulk of most newspapers’ income — has been shifting from print to the new media, resulting in a general decline in profits. Many newspapers around the world launched online editions in an attempt to follow or stay ahead of their audience.

However, in the rest of the world, cheaper printing and distribution, increased literacy, the growing middle class and other factors have more than compensated for the emergence of electronic media and newspapers continue to grow.

CAMERA FILM AND FILM-DEVELOPING INDUSTRY: India is the largest producer of films in the world. In 2009, India produced a total of 2961 films on celluloid, that includes a staggering figure of 1288 feature films. Indian film industry is multi-lingual and the largest in the world in terms of ticket sales and number of films produced and 2nd largest in terms of revenue. The industry is supported mainly by a vast film-going Indian public, and Indian films have been gaining increasing popularity in the rest of the world—notably in countries with large numbers of expatriate Indians.Lot of Indian producers are producing Foreign Films .Scope has increased.

It is Growing industry.

DRY CLEANING INDUSTRY

The Indian economy has experienced huge growth in the past decade. With an average annual growth rate of 7% since 1997, it is one of the world’s fastest growing economies. In the last quarter of 2010, the country’s GDP grew by 9.4%, slowing to 7.8% in the first three months of 2011.The first quarter of 2011 saw a 9.3% growth in trade, hotels, transport and communication and 8.2% growth in construction, according to data issued by India’s Central Statistics Office.For suppliers of goods and services to the textile care industry, India is a land of both frustration and opportunity. A growing middle class is driving growth in restaurants and hotels, accompanied by increasing expectations of improved quality and service.However, at the same time, poor infrastructure is inhibiting the establishment of central laundry and other services.“The lifting of trading quotas and India’s increasing popularity as a top-class business and tourist destination are bringing the right conditions for laundry to turn into a more profitable, better quality industry but big changes are needed,” says Bernard Jomard from Danube, which supplies several five-star hotels in the country, as well as a number of on-premise laundries (OPLs) in the pharmaceutical industry and an embassy.“Infrastructure is progressing steadily but services still lag behind international standards and laundry is perhaps lowest on the list. That is why international hotels need their own OPL operations.”Most four- and five-star hotels have their own OPLs using modern equipment from American and European suppliers. Many deal not just with their own hotel linen but also offer laundry and drycleaning services to the local population.“The middle class is willing to spend more money to send their laundry out,” comments YS Wang from Jensen, whose main sales in India are automatic feeders, flatwork ironers, automatic folding machines and stacking machines.He explains that hotels are now targeting the middle class customer and most of the time they will set up a valet laundry in the hotel as well as the OPL?for the hotel linen.Central services rareHigh-quality central laundry services are still rare in India, although many believe that they will eventually become more common, creating competition for the hotel valet service, but there is still a long way to go before that happens.

Wang believes that central laundries could work – but only if they are set up for hotels that are located close together. Poor transport infrastructure inhibits the provision of laundry services across long distances.However, one company is making some headway into industrial laundry services in the country. Lindström, the Finland-based, international textile service group, entered the Indian market in 2007, providing workwear services to local businesses in Chennai and Mumbai. It has since expanded its operations to New Delhi and Hyderabad.“Our service has been received well in India,” says Lindström’s Mika Hartikainen. “We provide customers with services where we bear the responsibility for the condition and sufficiency of the workwear. The customers can focus on their own core operations.”The lack of central laundry services means there is currently little demand for heavy-duty products in India.However, the cost of water and energy has driven many of the higher quality hotels to acquire machines that are more efficient and environmentally friendly. However, there is little to no pressure from the government for laundries – or drycleaning services – to meet environmental standards.This means demand for higher-tech, modern laundry equipment is largely restricted to the larger hotels and hospitals, while smaller hotels and laundries tend to use less expensive machines sourced from China, India or other parts of Asia.“Traditionally, laundry has been done by a particular service class, dhobis, which used to collect personal and institutional linen, wash and dry it at the local river and then finish it with coal or electric irons,” Jomard explains.“Dhobis still provide the main service in some country areas but in towns their significance is declining and some have switched to using basic drum washers and hydro-extractors.”Kannegiesser’s best seller in India is its DC50 dryer which is suited to the OPLs as it provides them with “more volume in less space”.He believes that there is a great opportunity for the market to develop further to improve the standard of laundry in the country. However, he adds: “Local investors are slow to invest in modern automated equipment. If the market is to develop, it needs bright investors to come forward.”

Viewed as low valueOne of the problems inhibiting the development of centralised laundry services is that laundry continues to have a low value, so it is difficult to be able to charge a high enough price for the service to be able to make the investment in high-tech equipment feasible.However, as the country’s middle class – and its expectations for higher quality – continues to grow, this may change.Another problem is that while hotels can often claim a tax exemption for equipment imported from overseas, a centralised laundry service would have to pay tax on imported equipment as it would be regarded as directly generating revenue for a private business.“If they are not allowed to chase imported equipment, they can’t upgrade,” Wang says.“The laundry industry could be another field for development. There is a huge development deficit in tier-II and tier-III cities which are trying to match the modern urban lifestyle.

High turnoverAnother challenge for laundries is the high rate of staff turnover, says Ron Pringle from Ecolab India. This is because unskilled workers change jobs regularly to make more money.“Hotels have been known to have a staff turnover in the hundreds of per cent,” Pringle says.To help with hotel staff retention and raise standards, Ecolab operates a small training academy where it runs various workshops on all aspects of the laundry operation. This education not only improves laundry results but it also helps with staff retention.Another challenge is water quality. “For the majority of hotels, water is delivered in a tanker,” Pringle explains. “They will have 10 – 15 deliveries a day, often from variable sources.”He says the challenge is washing linen in variable water conditions, where iron and hardness can vary from one delivery to another.“It takes a skilled manager and good support from a chemical supplier such as Ecolab to get the best from the water conditions in India,” Pringle adds.

Small drycleaning unitsAs with laundry, the drycleaning market continues to operate as it has in the past, The majority of businesses are family-run units in which both laundry and drycleaning are carried out. In urban areas there are one or two larger companies (such as White Tiger and Novex in Delhi) but they are still in the minority.The small units are used by individuals and families, while business travellers and tourists tend to favour the in-house facilities offered by hotels.“The concept of commercial laundries has developed to some extent in urban areas but it is still not the way it should be,” says Massimo Sanvito from Pony who believes that what the market needs is for a large company to enter the market on a nationwide basis.”“People are looking for good-quality laundry and drycleaning units,” he adds.Renzacci’s Marco Niccolini agrees. “There are retail shops in the big cities but the number is not growing and it is not what it should be. There is a lot of potential in drycleaning and laundry but there are still many cultural obstacles that need to be removed.”The majority of machines that Renzacci sells to the Indian market are previous-generation machines, Niccolini says, with most sales being to the hotel industry, although it also sells to the textile industry and retail drycleaning and laundry shops.

TRENDS

Hand wash detergents accounted for more than half of overall value sales in laundry care in 2011, and has a significant influence on the category. During 2011 the robust performance of the Ghari detergents brand by Rohit Surfactants offered strong competition to the leading brand Wheel. This narrowed the difference between the Wheel and Ghari brands to four percentage points in value terms. This was largely achieved due to the strong presence of the brand in Uttar Pradesh, and due to it moving from being a regional brand to a national brand. In the last three years, the company added 10 states to its distribution reach. This widened the distribution reach of the brand to 19 states. The surprising aspect in all of this is that Ghari is priced higher than Wheel and Nirma. In a category which is highly price-sensitive, Ghari still managed to show strong growth as the company strengthened its presence all over India.

COMPETITIVE LANDSCAPE

Hindustan Unilever was the leading player in laundry care in 2011, holding a 39% value share. The company has a strong presence in both automatic detergents and other detergents. The company has introduced various products at different price points to cater to a wider audience. For instance, Wheel is its economy detergent, and Surf is mid-priced. Rin is available under the premium and economy segments.

PROSPECTS

Laundry care is expected to continue to be driven by detergents. The shift from bar detergents to powder detergents will continue to take place in the rural and urban markets, as more and more consumers opt for the convenience and better performance of powders versus bars. Niche categories are expected to emerge and perform well, due to increasing disposable incomes amongst the middle-classes. Consumers are also expected to upgrade from economy to mid-priced brands, and from mid-priced to premium brands. Scented variants in all categories are expected to be introduced to attract consumers. Liquid laundry detergents, on the other hand, is not expected to substantially increase its share in laundry detergents, unless a national player follows the conventional retail route to expand the category.

"India has a huge unorganized sector which needs to be professionally handled. The way markets have developed in the US has not happened in India. However, India is going to grow in this business and there is a need for organised players to provide world-class services and educate the unorganized sector", he said. He further added that Wardrobe is growing at around 20% every month.

"Connectivity and brand building is crucial for us to be a success story in India." Wardrobe, which came to India in 2008 with an initial investment of 150 cr and plans to open 100 high-end fabricare stores by end of this year.

According to market research agency, The Nielsen Company, the market size of fabric cleaning which includes detergents, powders, pre-post wash, soap cakes is Rs.12,118 crore & 2,877,587 tonnes respectively.India being the second fastest growing major economy after China and growing at 6.1% year-on-year during the first quarter of April-June, organised players are cashing in on this unique opportunity to enter the unorgansied laundry market in a big way. And even as global and domestic laundry bigwigs make their presence felt, there is still a large unorganized sector waiting to be tapped.

"Laundry is a necessary evil. During recession, consumers can stop buying clothes but they would want to keep their existing garments clean. This is an industry, which has been least hit by the downturn and promises a brighter future for the dry cleaning and laundry sector in India. As a result of which we have grown by 25-30% every year and in future, we could grow at a modest rate of 22-25%," said Rajeev Sekhri, vice-president, White Tiger.