Showing posts with label CAGR. Show all posts
Showing posts with label CAGR. Show all posts

Friday, April 12, 2013

An Opportunity that Grabbed us

Benefits of Economy and a Quicker Passage to The Operating table have Made India one of The Front Runners in Medical Tourism. But Critical Failings, from The Government as well as The Private Sector, mean that India is Failing to Adequately tap The Opportunity

Since time immemorial, the mystical land of India has been enchanting foreigners from all over the world. Healing of the body, mind & spirit has been one of the country’s most compelling value propositions, one which even a young Steve Jobs couldn’t resist, many years ago. And as the costs of healthcare have soared, particularly in developing countries, India’s hospitals and physicians have made all possible efforts to become a destination for tourists who seek not just therapeutic solutions but a range of other treatments and sight seeing tours; adding to the “wellness” factor. Almost a decade has passed since medical tourism was originally envisioned as a major phenomenon in India.

A 2009 report by the Confederation of Indian Industries (CII) & McKinsey forecasts that medical tourism will generate $2.4 billion between 2009–2012 for India by attracting 1.1 million health tourists, up from 150,000 in 2002. India’s share in the global tourism industry is expected to rise to around 3% by 2013 (RNCOS report) with revenues of around $3 billion and a CAGR of 26% during 2011–2013.

There are over 3,371 hospitals and around 754,985 registered practitioners catering to the needs of traditional Indian healthcare. Indian hotels are also entering the wellness services market by collaborating with professional organisations in a range of wellness fields. According to the Ministry Of Tourism, as against an ordinary vacationer’s per-capita spend of $3,000 per visitor, the average medical tourist in India shells out more than $7,000 per visit. Traditionally patients from neighbouring SAARC countries and Middle East frequented hospitals in India. But patients from Africa and even Europe and US have started coming only in the last five years. Pricing is the clear advantage. The Planning Commission points out that India is far economical compared to peer countries. For example, heart bypass surgery costs $6,000 in India, $7,894 in Thailand, $10,417 in Singapore, $19,700 in Britain and $23,938 in the US.

India spends roughly 6% of GDP on healthcare and is expected to reach 8% by 2012. Private sector expenditure in healthcare is expected to reach $45 billion by 2012. But in comparison with America’s 15.3%, Switzerland’s 11.3% or France’s 11.1%, the country still falters when it comes to quality as well as quantity of medical facilities. B&E does a reality check to analyse whether the country has really lived up to the hype.

The flip side has majorly been the role of the government; or may we say, the lack of it. Although infrastructure spending for health care has intensified, only the private sector has flourished. Top Indian corporate hospitals like Apollo, Fortis, Wockhardt, Max and Manipal have stepped in to provide quality healthcare and technology. Nearly 75% of health care services and investments in India are provided by the private sector.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
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Friday, October 05, 2012

All Symbolism, No Substance

Soon after the Economic Liberalisation, It became almost Impossible to lose Money in the Movie Making Business due to The Rise of Multiple Revenue Streams. However, Despite Delivering Blockbusters, Dalal Street largely remains Disinterested in These Stocks.

A 2010 media and entertainment industry report jointly commissioned by FICCI-KPMG titled ‘Back in the spotlight’ states that the Indian media and entertainment industry’s turnover last year was around Rs.587 billion and the same registered a respectable CAGR of 10%. The industry is expected to grow by 13% in the next five years. In the entire pie, filmed entertainment contributed Rs.87 billion, which is projected to grow at a CAGR of 9% over the next five years. While production houses are becoming more successful in wooing Indian audiences, for a Dalal Street veteran though, the statistics doesn’t cut any deep ice. The year 2010 has, till date, witnessed a flow of $2.4 billion through the private equity route. The money was invested in 41 deals but surprisingly, only 2.5% – amounting to $61 million – went into media and entertainment companies. Also, neither of the media and entertainment companies in which the PE money went was an exclusive movie production outfit. Despite giving some of the biggest blockbusters back to back, listed movie production houses in India have failed to impress investors on Dalal Street. An analysis of the money that movies have grossed in an year (both blockbusters and flops) compared to the corresponding share price movement of their respective production houses makes it clear that the complexities of showbiz do not appeal to the imagination and remarkably shrewd commercial instincts of investors.

We take the top four prominently listed movie production houses in India as examples, namely Shree Ashtavinayak Cine Vision, PVR Pictures, UTV Motion Pictures and Mukta Arts. Since 2008, these outfits have produced movies such as Dabangg, Rajneeti, I Hate Luv Storys, Khatta Meetha, Tare Zameen Par, Jaane Tu Ya Jaane na et al. Dabangg produced by Shree Ashtavinayak Cine Vision at a budget of Rs 420 million has grossed Rs.1.4 billion since its release in September 2010 while Blue, another Shree Ashtavinayak venture costing Rs.1 billion, only managed Rs.417.8 million. Similarly, Rajneeti by UTV motion pictures was produced at a budget of Rs.600 million and till date has managed to gross Rs.929.3 million. I Hate Luv Storys (Rs.170 million), which was not well received by the audience earned a respectable Rs.426.8 million. But therein lies the intriguing anomaly worth pondering over. A trend analysis reveals a startling fact: Dalal Street does not necessarily react significantly either to the news of a big release (unlike when a manufacturing company announces a new plant or a services firm announces a new service) or to a movie bombing at the box office. In fact, stock prices of PVR Pictures, UTV Motion Pictures, Shree Ashtavinayak Cine Vision and Mukta Arts fell by 51.48%, 34.87%, 89.485% and 77.67% respectively over a span of two years since 2008. This during a time when the stock market has risen from historic lows (Sensex was around 8000 two years ago) to historic highs (now 21000 plus). All of this despite the fact that movies produced by them not just recovered the budget amount but also garnered extremely lucrative profits. Says Shubhoshekhar Bhattacharjee, CEO, Planman Motion Pictures, “Evidently, while movie house CEOs have marketed their scripts well, they’ve not marketed their ‘scrips’ well, which is an imperative in India.”


Source : IIPM Editorial, 2012.
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IIPM : The B-School with a Human Face
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Saturday, August 11, 2012

THE FOOD PROCESSING IMBROGLIO

There is an urgent need for reforms in the food processing sector, the poor, fragmented and often ignored cousin of agriculture. Such transformations would not only create hundreds of thousands of new jobs, but prove to be the catalyst for the much needed second Green Revolution in Indian agriculture.

Norman E. Borlaug, a Nobel laureate once said, “If you desire peace, cultivate justice, but at the same time cultivate the fields to produce more bread; otherwise there will be no peace.” Will a poorly managed and much ignored India’s food processing sector bring a peaceful smile on the country’s face?

<< Indian workers package ice cream at the Havmor ice cream plant in Ahmedabad. The ice cream factory, established in 1944 supplies ice cream to India’s Gujarat, Maharashtra and Rajasthan states. India’s growing food demand and changing consumption lifestyles make a strong case for the long overdue reform of the food processing industry a top priority for policymakers


The setting: no electricity, little water and the archetypal feudal structure in the heartland of rural India with trampled village folk struggling to prolong their quotidian existence. The introduction: “500 thousand farmers of Gujarat present...” and the collective might of rural India is unleashed. For the uninitiated, the above is a true story recreated on celluloid by veteran cinema icon Shyam Benegal. It’s none other than Manthan (The Churning), the 1976 National Award winning docu-drama that paid tribute to the White Revolution which overhauled the milk-processing and production practice in Gujarat and opened the gates of good fortune for these underprivileged millions forever. Today, yet another ‘Manthan’ is required for a sector, which, if given wings, can not only create millions of blue-collar jobs but prove the catalyst for the Second Green Revolution in India. For, if all the mills start running at top speed, India’s food processing sector can prove to be the new dark horse of India Inc.

Consider this. India is the second largest producer of food in the world just after China. India’s food consumption has grown at a CAGR of over 6% over the last decade, while its population has increased at the rate of 1.6% per annum.

Better news for those willing to delight the Indian food-lovers is the fact that expenditure on food items account for the largest chunk of expenditure for Indian households; they spend 31% of their incomes on it. By 2015, the Indian food industry is expected to clock turnover figures of $258 billion, from $181 billion registered in 2008. In India, increase in food consumption has happened more due to an increase in per capita expenditure, rather than an increase in the number of mouths being fed. And the urban-rural divide is visible here too. Economic liberalization causing a growth in the urban middle class and their disposable incomes has taken urban food consumption far ahead of rural India.

But, in stark contrast to the developed world and even some of our developing counterparts, India’s total food processing output is estimated at $70-75 billion – just 40% of value of the entire food industry. It is presently growing at a CAGR of 15%, but is predicted to leapfrog at 35% per annum in the future. From mind crunching numbers to headcount, the sector employs an estimated 15 million people. According to an analysis by Dr. J. S. Bedi, “without any replacement of labour, the employment intensity in the organised food processing sector per million rupees of investment currently stands at 1.8 directly and 6.4 indirectly.” As far as the unorganised section of the food processing industry is concerned, there the employment intensity is estimated to be approximately 10 for both direct and indirect employment per million rupees of investment. However, there are concerns as whenever Indian agriculture goes into a state of disarray, farm processing runs into a rough patch. A sneak peak into the economics & dynamics of the sector, and you realise that it scores just a tad better than agriculture, which in India, still remains largely subjected to the vagaries of the weather!

What are the roadblocks and challenges going ahead? Currently, the food processing industry is both nascent and highly fragmented. In sharp contrast to developed countries and even China where food retailers are much larger than food processors and producers, India’s packaged and processed food makers are much larger than food retailers, largely because of the 100% level of FDI allowed (as compared to zero FDI allowed in food retailing where many brands are sold).

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