Strategy: The Next Big Things ::Kotak Sec,

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Strategy
GameChanger
The Next Big Things. The companies profiled in this report take forward several of the
themes we have explored in our GameChanger series: demographics, water,
agriculture, mobile banking, manufacturing, education and skill-building. As we noted
in our reports, we have anticipated policy and entrepreneurial action on these fronts.
The Next Big Things takes this road forward – identifying trailblazers who are building
sustainable business models in these niches.


Theme 1: The insatiable Indian: demographics-driven demand
Increasing incomes are allowing Indians to consider using products and services that either did not
exist in the consumption basket earlier or were simply unaffordable. Companies like Lemon Tree
Hotels and Tirumala Milk Products have grown over the past few years by offering Indian
consumers products and services that are locally suited, aspirational and yet, affordable. As
incomes increase, the ability and willingness to spend on newer product categories rises, driven
partly by choosing an improved version of earlier consumption baskets (for instance, moving up
from 1 or 2 star hotels to 3 and 4 star rooms) or higher value products (choosing cheese over milk).
Theme 2: E-exchange: change for good
Driven by 100 mn internet users in India, buying of services, say a travel ticket (whether airline or
bus) or products like books, entertainment and consumer durables, is now moving online. As the
channel convergence takes place online, payment convergence is taking place on the financial side.
Companies like redBus offers customer convenience and ease of e-shopping (and enable offline
shopping) while ItzCash and Prizm Payments reach out to consumers to ease their payment
processes.
Theme 3: Agriculture & manufacturing: new furrows
Indian agriculture is getting more technologically intensive as farmers reinvest their increased
profits back in agriculture clearly favoring companies like Nuziveedu Seeds which provide ‘high
technology’ seeds. Manufacturing companies have found interesting niches in which to create a
mark for themselves. For example, Tega Industries now has a market share of around 10% in
rubber mill-linings in the world while Parksons Packaging specializes in creating paper-based
packaging for FMCG, food and pharma companies in India, and is a derivative of the booming
consumption demand in India. Similarly, as cities begin to measure their water consumption, the
trend is opening up large opportunities in water meters for Chetas Control Systems.
Theme 4: Education and bridge services: do or die
Companies like TeamLease Staffing Solutions and Manipal Universal Learning are catering to
the insatiable appetite of Indians to educate and train themselves for better career prospects.
India’s demographic surge is kicking in even as the employability of its young educated people is in
doubt. India’s education system has long focused on rote-learning and has not kept pace with the
rapidly changing economic structure of the country, even as the government has increased its
emphasis and focus on school enrolment. A parallel schooling system is now emerging which is
equipping students with employable skills.
Theme 5: Opportunity creation: spunk and entrepreneurship
Companies like NetAmbit and Nova Medical Centers demonstrate the innovative business
models that Indian entrepreneurs can create. Indian entrepreneurship is the cornerstone of India’s
growth story. For example, compared with the Chinese economy which is far more investment
driven and directed by the state, the Indian story has been driven by the bottom-up start-ups that
have understood the needs of their customers.
GameChangers
The future for these companies, and indeed the economy in general, critically depends on (1)
ensuring continued economic growth – leading to increased incomes, (2) deeper penetration of
internet and broadband, (3) effective and well spelt-out policy making and (4) regulatory certainty.