About Indian Tourism

• As per the Travel and Tourism Competitiveness Report 2009 by the World
Economic Forum, India is ranked 11th in the Asia Pacific region and 62nd
• overall, moving up three places on the list of the world's attractive destinations.
• It is ranked the 14th best tourist destination for its natural resources and 24th
for its cultural resources, with many World Heritage sites, both natural and
cultural, rich fauna, and strong creative industries in the country.
• India also bagged 37th rank for its air transport network. The India travel and
tourism industry ranked 5th in the long-term (10-year) growth and is expected to
be the second largest employer in the world by 2019.
• India has been ranked the “best country brand for value-for-money” in the
Country Brand Index (CBI) survey conducted by Future Brand, a leading global
brand consultancy.
• India also claimed the second place in CBI’s “best country brand for history”, as
well as appears among the top 5 in the best country brand for authenticity and
art & culture, and the fourth best new country for business.
• India made it to the list of "rising stars" or the countries that are likely to
become major tourist destinations in the next five years, led by the United Arab
Emirates, China, and Vietnam.
 Contribution to the economy

• According to the Travel & Tourism Competitiveness Report 2009

brought out by the World Economic Forum, the contribution of
travel and tourism to gross domestic product (GDP) is expected to
be at 6.0 per cent (US$ 67.3 billion) in 2009 rising to US$ 187.3
billion by 2019.
• The report also states that real GDP growth for travel and tourism
economy is expected to be 0.2 per cent in 2009 and to an average
7.7 per cent per annum over the coming 10 years. Export earnings
from international visitors and tourism goods are expected to
generate 6.0 per cent of total exports (almost US$ 16.9 billion) in
2009, growing (nominal terms) to US$ 51.4 billion in 2019.
• The travel and tourism sector which accounts for 6.4 per cent of
total employment or 1 in every 15.6 jobs in 2009 is expected to
generate 40,037,000 jobs i.e. 7.2 per cent of total employment or 1
in every 13.8 jobs by 2019. Real GDP growth for Travel & Tourism
economy is expected to be 0.2 per cent in 2009 and to average 7.7
per cent per annum over the coming 10 years.
 Government Initiative
• The campaign ‘Visit India Year 2009’ was launched at the International Tourism Exchange in Berlin,
aimed to project India as an attractive destination for holidaymakers. The government joined hands with
leading airlines, hoteliers, holiday resorts and tour operators, offering them a wide range of incentives
and bonuses during the period between April and December, 2009.
• The airlines participating in the campaign, Air India, Jet Airways and Kingfisher Airlines are offering a
“companion free ticket” for every ticket purchased for international and domestic flights. Connecting
flights to the departing airports are included in the final travel costs. The Indian Travel Agents’
Association (IATO) is offering holiday-makers a free sightseeing tour in a city of their choice.
• Euromonitor International's Travel And Tourism in India report states that the Government of India
increased spend on advertising campaigns (including for the campaigns ‘Incredible India’ and ‘Ahithi
Devo Bhava’ - Visitors are like God) to reinforce the rich variety of tourism in India.
• The Ministry promoted India as a safe tourist destination and has undertaken various measures, such as
stepping up vigilance in key cities and at historically important tourist sites. It also deployed increased
manpower and resources for improving security checks at key airports and railway stations.
Initiatives at State-level with involvement of Locals:
States are taking initiatives in teaming with locals to provide a flavor of their culture and
traditions. Some of the initiatives are mentioned below:

HIMACHAL PRADESH - The Himachal govt has introduced a scheme – Himachal Pradesh
Home Stay Scheme 2008 under which tourists are given the opportunity see the rural areas.

GUJARAT – Through the ‘Vibrant Gujarat’ programme plans to actively market the tourism
sector.

MP – The govt of MP is keen to initiate the development of an artificial beach in the state.
The concept is based on ‘Ocean Dome’ artificial beach in Japan.

KERALA - Kerala has introduced innovative tourism initiatives. Two of its villages,
Aranmula and Kumbalangi, are being promoted as tourist destinations in a big way as part of
the ‘Endogenous Tourism Project’ of United Nations Development Programme and Govt of
India.
Tourist Circuits in India
RAJASTHAN - Rajasthan has a developed tourism infrastructure, with
close to 6,000 hotel rooms spread over more than 150 hotels.

AP – AP has about 18 projects lined up under various categories such

as temple circuit development and eco-tourism projects.

CULTURE, HERITAGE AND ETHNO :TOURISM – Chattisgarh, amongst

other states has identified and is developing ethnic villages. The private
sector is also being encouragement for proper maintenance.

ADVENTURE TOURISM – Adventure sports such as water sports,

trekking, rock-climbing, para-sailing and bungee-jumping are popular
with the younger travelers and working executives.

ECO – TOURISM – India’s forest, national parks and wildlife

sanctuaries are major attraction for a whole lot of tourist from around
the world.

AVIAN TOURISM – Adding another dimension to the Kerala's

backwater and health tourism is the avian tourism to attract
birdwatchers from all over the world.
• MEDICAL TOURISM AND SPAS – India has originated as one of the most
important hubs for medical tourism. Many people from the developed countries
come to India for the rejuvenation promised by yoga and ayurvedic message
therapy as well as for high-end surgeries like cardiac bypass surgery or knee/hip
replacement.

• HIGHWAY TOURISM - Besides catalyzing diversification of tourist traffic and

revenue from the urban centers, planned development of highway tourism opens
opportunities for enhancing local employment and uplifting rural economy
through local feeder enterprises, which will find scope to grow in the vicinity of
such highway tourist complexes.

• RAIL TOURISM – The Indian Railways has introduces several new services to
promote rail tourism – luxury tourist trains, exclusive steam and hill charters, tour
packages.

• CARAVAN TOURISM – A new policy guideline to promote ‘Caravan Tourism’ in

India and facilitate the infrastructure required for the same would be announced.

• WELLNESS TOURISM - A new policy guideline for promoting ‘Wellness Tourism’

in India would be announced. The policy would aim to leverage India’s potential in
traditional systems of wellness and medicines like Ayurveda, Siddha and Yoga
and to project India as a unique destination for spiritual healing.

• HELIPOT TOURISM - With a view to promote tourism in hilly and remote areas,
guidelines would be framed to provide central financial assistance to States and
Union Territories for constructions of helipads/heliports at selected destinations
which have tourism potential but lack good connectivity's
 Travelers analysis

9% 7% SE Asia
2% W Asia
28% W Europe
0%
Africa
2% Australia
5% C & S America
E Asia Share of Outbound
12%
E Europe
N America
Travelers, 2006-2008
20% S Asia

30

25

20

15
Number of
10 Travellers
(Mn)
umber of Outbound Indian Travelers5
0
1998 2004 2006 2008 2018
 Foreign Tourist Arrivals

• Estimates of foreign tourist arrivals (FTAs) and foreign exchange

earnings (FEE) are important indicators of the tourism sector. FEE
in US$ terms during the month of November 2009 were US$ 1.2
billion as compared to US$ 1 billion in November 2008.
 Tourist Visits in India

The number of domestic and foreign tourists has almost doubled in 2003 and
2008.
 Indian Tourism Industry-Market Size

300
Market Size in Bn

250
79%
200 78%
78 International Touri
77%
150 Spends
74%
Domestic Tourist Sp
100
22 164
50
11 73
15 32
0 4
The most important growth is the robust economic growth that has
been witnessed in the country.
India’s GDP has been growing at the rate of 6% since the
liberalization of economy in 1991 and has grown over 8% in the past
few years.
At 8% CAGR, India’s GDP would almost triple from US$ 1200 Bn to
US$ 3500 Bn by 2023
 Growth in GDP per Capita

India’s strong economic growth has caused the GDP per Capita to
increase rapidly over the past 5 to 10 years. At current rate, the GDP
per capita in 2013 would be double of what it was in 2003
Distribution of Households Across Income Brackets

More and more families are expected to leave the deprived or aspirers category and
join India’s burgeoning middle class.

By 2025, the Indian middle class is expected to constitute 46% of the Indian population.

Subsequently, discretionary spends would be going up and this bodes well for the
tourism sector.
 Share of LCCs In Airlines

80
70
60
50 53%
40 47%
30 Fsc: Full Service Carriers
%
inS
h
re
a

20 LCC : Low Cost Carriers

10
0

The above graphs indicates the increasing share of LCC from 33% to 47%
between 2006 and 2008.

The advent of LCC has spurred domestic air travel to grow from 11 Mn
travelers to 36 Mn travels in the last decade.

Operational airports in the country have gone up from close to 40 airports in

2004 to 81 airports at present.
 Air Travel in India

50
43.35%35.79%
40

30 7.56%
To tal
20 Domest
A
xisT
tle

Internat
10

0
1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005-
97 98 99 00 01 02 03 04 05 06
 Steps taken by Government to Promote Tourism in
Country.

 Airline tickets, tour package are all set to go cheaper with 2%

reduction in service tax

 State-run oil companies have slashed Aviation Turbine Fuel (ATF)

prices by 7%, the 11th reduction since September last year.

 Airport Charges to be cut for a limited period by 50%.

 Removal of 8% excise duty on ATF.

 Reduce the charges which airport operator charges from the oil
companies, leading to enhanced performance.
 Indian Textile and Apparel Industry
 Indian textile and apparel industry is one of the oldest and most
significant industries in the country and one of the largest in the world.

 Apart from China, no other country can match the size, spread, depth and
competitiveness of the Indian textile and apparel industry.

 Today the industry contributes around 14% to industrial production in the

country, 4% to the GDP, is estimated to directly employ apprx. 35 Mn
people apart from the indirect employment in allied sectors, thus making
it the second largest employer after agriculture.

 It accounts for about 15% to the country’s exports and is, in sum, an
important economic engine for the nation.

 In the past 10 years, the industry’s actions, government policies as well as

market events have begun to converge, providing several growth
opportunities for the sector domestically as well as in the global market.
 Current Size : Indian Textile and Apparel Market
Indian Textile and Apparel
Market US $ 62 Bn

Domestic Market Exports

US$ 40 Bn US$ 22 Bn

Textiles Clothing
US$ 12 Bn US$ 10 Bn

The present size of the Indian textile and apparel market is US$ 62 Bn
of which 22 US$ Bn is exports while rest US$ 40 Bn is the domestic
market.

The Indian domestic textiles and apparel market is one of the fastest
growing market in the world. It is expected to become one of the major
consumption bases in near future.
 FDI in India : Current Scenario

 Due to India’s recent liberalization of its foreign investment regulations, the

country has become one of the fastest growing destinations for FDI inflows.
 India offers many advantages to foreign investors like strong economic growth
leading to increased buying power by the middle class, low wages, and an
educated work force.
 India’s Special Economic Zones (SEZs) attract foreign investment by providing tax
incentives, assistance with bureaucratic and administrative problems and access
to reliable infrastructure.
 Indian economy is growing 6 % per annum since last 10 years. Even in times of
recession / slowdown in most of the developed economies, India is expected to
maintain this level of growth.
 From August 1991 to March 2009, India has attracted a total of US$ 106 Bn, of
which approx. US$ 90 Bn was invested during Apr ‘00 to March ’09.
 In textile and apparel sector, 100% FDI allowed under the automatic route. FDI
sectors to the extent permitted under automatic route does not require approval
either by Government of India or Reserve Bank of India (RBI).
 Foreign Investment in Textile and Apparel Industry

Vertically Integrated :
Indian industry is amongst the
very few in the world that is
vertically integrated from raw
material to finished products.
Cotton Other Natural Fibres MMF ( from fiber to retail).
Broad range of Products
Indian Industry has over the
years steadily diversified its
Ginning Spinning Extrusion raw material base t include
man made fibers such as
Small
Players Small polyester, viscose, acrylic,
Garment Players polypropylene etc.
Production Capacity : The
capacity in spindles in the mill
Weaving / Knitting Processing sector increased from 35.9
Mn in 2007 to 38.4 Mn in
2008.
Domestic Retail / Big players constitute mainly
Fabrics: The Indian
Distribution Channel the composite units or
Exports Buyers garment exporters weaving and knitting has
today includes products as
diverse as fine dress fabrics,
worsted suiting, denim,
 International Outlet Centers

Outlet Center Country Mall Size ( Mn Sq

Ft.)
Chelsea Premium US 0.2
Outlets
Atrium Furniture US 0.3
Mall
Sungei Wang Plaza Kuala Lumpur 1.2
Bicester Village UK -

An outlet Center offers discounted merchandise for slow moving

items and non seasonal merchandise for various categories.

Dominating categories include apparel & footwear, consumer

durable, furniture, furnishings and electronics.

This sort of concept, leveraging first- mover advantage, does not

exist in India.
 International Lifestyle Centers

Outlet Center Country Mall Size ( Mn Sq

Ft.)
Deira City Center Dubai 1.2

Ngee Ann City Singapore 2.0

Suria KLCC Kuala Lumpur 1.4

Times Square Kuala Lumpur 3.5

Pacific Place Hong Kong 0.7

A lifestyle center is essentially a premium shopping destination

designed for the entire family.

Lifestyle centers have emerged as the most successful way to

differentiate and create space in the already established retail
malls.
 Healthcare Industry

 The wave of change has swept across every industry, such

dynamism and corporatization has completely changed the face of
the healthcare industry.

 Due to increased competition Healthcare Providers are unable to

pass the burden onto patients in the same proportion.

 Since there is a rising demand and unprecedented growth of the

sector, there is a growing need to come up with newer models to
improve operational efficiency and make processes, infrastructure
and out outlook to management more lean and specific.
 The Ongoing Transformation in Hospitals

Hospital
Documentati Mode of Public Quality Financial Human Customization
on Payment Relations Operations Resources

Revenue Active
Electronic
Third - Marketing / Accreditatio Cycle Employee Personalize
Medical
Party CRM n Managemen engagemen d Care
Records
t t
 Changing Healthcare The Toyota Way

Changing market dynamics and customer attitudes are forcing

companies to redefine their business models. While there is no
standard formula to do the same, hospitals have improvised and
developed their own USP models.

Some innovative practices adopted by hospitals to reduce the costs

and improve on the throughput:

A popular ‘for-masses’ Indian hospital charges different fees for

diagnostic services at different times of the day. They have been
able to increase patient volumes by differential pricing.

To streamline operations, use of “Case Process Map” wherein

the activities of all the staff involved in a procedure are mapped
and time plotted allowing the variation to be studied and
corrected.
 Case Process Maps

Start Patient Patient Incision Procedu End Closur Patient Room

Entry Prep re e Exit Cleaning

Surgeon            

Assistant              

Machine                  
Support

OT Nurse                

Anesthesio                
logist
 Japanese Process Improvement Traid.
Eliminate ‘Muda’ : Waste Reduction

Avoid ‘Muri’: Minimize ‘Mura’:

Standardization Promote Consistency

Muda: Mura: Muri:

Waste Inconsistency Randomness

Many hospitals are adopting the classic Japanese Process Improvement

Traid as Shown. Activities such as re-organization, value mapping and
best practices are designed to help implement these principles
Facility Planning: Role in Performance enhancement

 In recent times patient expectations and demand for quality healthcare

facilities in India have undergone a transformational shift.

 In today’s changing environment, as hospitals look to improve their

performance, they should take into account various design parameters
that can result in direct or indirect economic benefits.

 Some of the parameters that can lead to operational efficiencies and

thereby, cost savings are:

» Patient monitoring.
» Patient flow.
» Nurse travel distances .
» Standardization.
 Facility Planning

Patient Monitoring Nurse Travel Distances

Ideal Unit Configuration for Critical Care Patient Arrival Layout of a Typical Patient Care
Unit Nurse Travel Distances
Registration

Waiting
Patient Flow
Typical Patient Flow for Outpatient OPD Consultation
Services
Billing

Pharmacy Diagnostics
 Customer Relationship Management
• Customer Relationship Management (CRM) is a method for an organization to track,
maintain and organize a database of its current and prospective customers.
• In the healthcare sector, there is a wide difference between the customer and
consumer.
• Hence there is a series of relationships that need to be nurtured and managed to
enhance patient retention.
• CRM is increasingly applied in the healthcare industry in the following way:

 CRM goes long way in building patient confidence and goodwill, and hence it
becomes a deciding factor for patient while choosing a hospital again. Hence
customer service is one of the major drivers of repeat business.
 In a active CRM programme it is necessary to train every member of the hospital in
providing quality care and service to the patient . It plays important role in retaining
the patient.
 The cost of efforts undertaken to retain a customer is ten times lesser than that of
acquiring a new one.
 Today health care has become global. India has growing number of international
patients and more and more hospitals are rushing to upgrade their services.
 Application of CRM
Application of CRM
CRM has now evolved into a science which has been used very
Collection
effectively and productively to enhance the efficiency of various sectors &
such as the banking industry. Integration of
Customer
data

Multi-channel
Integration

Customer
Marketing
Customer
Credit Cards, Delight
Insurance Schemes &
Retention
Customer
Analysis
Customer profitability,
Propensity to busy,
Attrition behaviors

Analysis
Customer &
Care Application
Of this date to
provide quality
Service to
customers
 Hospital Revenue Cycle Management
Standard Revenue Cycle with Activity Analysis
Front - end
Appointments Scheduling Registration
•Registration •Computing the deductibles
•Patient information collection and co-payments
•Information verification •Public health insurance
•Insurance validation program counselling

•Clinical documentation (used

•Collection and recording of
in the billing process and
cash received
Communicated to third-party
•Contractual allowances
Payer)

Back-end Core
•Billing and collection •Charge capture into Hospital
•Follow up for outstanding
•Claims review, approval and information System (HIS)
payments/accounts receivable
denial along with insurance •Diagnosis and procedure
•Denial management company coding

Less than 10% of the Indians are estimated to be covered under some sort of health
insurance. Most patients pay for their hospital expenses directly. Today in most hospitals in
metro cities, over 50% of patients have some form of third-party reimbursement plan.
Failure to realise this could seriously affect the working capital of a hospital.

The hospital revenue cycle has 3 major components :

– Front-end: From the time the patient comes in first contact with the hospital to
registration.
– Core : Provision of actual healthcare services.
– Back-end :Billing and discharge of the patient.
 Electronic Medical Records

Advantages of EMR In India, barring a few Pvt.

Hospitals, all record are
maintained in physical form.
For cross referral check or an
Continuity in Accessible at all times,
treatment Continually upgraded opinion at second hospital, the
patient has to go through the
entire process of documentation
and resting again adding to his
financial distress.
Electronic Media Records
Safe with (EMRs) eliminate the burden of
Cost efficient
Authorised viewership tedious paperwork occupying
much of the physician’s quality
time.
EMR serves as comprehensive
database of the patient’s entire
history, but they are also very
Vital information Search and sorting user-friendly as they help to
At vital times Made easy
locate relevant data instantly
when needed across multiple
locations and point of times.
Case Study: An Indian 650-bed multi-specialty state-of-the-art hospital
deployed an advanced web-based HIS.

Better inventory and medical package

control.
Rapid access to laboratory result.
Customisation Improved continuity of medical records

Automated patient billing

Pharmaceutical With over 400,000 outpatient visits per
substitution year, the hospital reduced its outpatient
processing time by 40% to increase patient
throughoput..

Security assurance Scalability and

Flexibility Speed with control interoperability
 Innovation @ Google

Google Google Google

Maps Health GH on
flu trends
Earth iPhone
Manage
Medical Mobile phone Digital
Health
Consultation health access Outbreak
records
online detection

Many companies like Google, have innovated and taken technology a step
further by coming up with a whole range of medical technological
applications such as predicting epidemic trends and also making healthcare
advice available on cell phones
 Impact of Warehousing

Technopak estimates that for most organisation’s, 6-8 locations will

have mega warehouses with complex operations in the near future.
Thus, modernization of key warehouses is strongly recommended on
account of:

Large sizes, high through outputs and more complex operations.

Increasing level and variety of service required by customers,

especially organised retailers.

Increasing scarcity of skilled labor and real estate requiring

vertical and mechanized warehouse.
 Freight Savings Due to GST
Case 1 : CST at 2% State Border Old Warehouse

1000 Kms

Plant Customer 2
Customer 1
Illustrative freight distance (and hence cost0 saving of 400 Kms for Cutomers1
Case 2 : GST State Border
Old Warehouse

Plant 200 Kms

Customer 1 Customer 2
New Warehouse

In Case I, the source is State A (left) and the customer is in State B(right). Due to CST barriers,
the customer can only be served from a warehouse in State B but by back-tracking in the direction
of the source.
In Case2, after the introduction of GST, the network linkage is re-defined and the back tracking is
saved substantially by serving the customer directly from the factory, or a warehouse “on the way”
in State A itself. The freight distance saving translates directly into freight cost saving.
 Impact on Service Level

The key fallout of GST aligned networks is fewer warehouses but this also has
two implications on customer service:

 Longer Lead-times to Customers: This would not be an issue as

long as the network redesign exercise puts a minimum lead
time/distance constraint while serving customers in the new network.
 Improved Assortment : Often SKUs needed by customers are not
available at the ware house meant to serve them although they may
be idling at another warehouse.

The Key to improve service to customers is to undertake a

professional scientific exercise as opposed to manual
experience based methods that many firms have used for
designing their legacy networks
 Our Methodology for GST Solutionsz

Impact Analysis Model Warehouse Implementation

•Audit of Current •New Network rollout
Engineering
•Design & Layout. •Change
Setup.
•Future Scenario •Modernisation Management
impact

Distribution Setup Design Change Management

•Network modeling based on MILP Planning
Programming. •CST transition planning,
•Minimise cost subject to service level & other •Vendors.
constraints •Employees, Systems &
Processes
 Impact of GST on the Supply Chain

GST Characteristic Impact on Supply Chain Implication

Extended Central GST• At present, service tax on logistics servicesThis will boost outsourcing in supply
Chain consumed during distribution and retail are not chains and provide greater impetus
off-settable against CENVAT to 3PL's

  • Extended Central GST chain will allow the offset 

in post manufacturing networks

  This will lower the cost of logistics outsourcing as the 

10.3% service tax charged by logistics
companies can be largely offset against the
Central GST liability

Affected Inventory ● Post GST, inventory will also carry Central GST &Organisations need to study GST's final
inter-state GST input credit, the tax rates may mechanisms and plan inventory
also get changed for many products transition very carefully for
themselves, suppliers and
customers
  ● Unless the GST rates go up for its product, the 
firms would be encouraged to minimise pre-GST
inventory which has less input credits

  ● As the GST implementation date approaches 

closer, one could expect uncertainty and panic
regarding pre-GST inventory as was seen during
VAT introduction
Subsuming Octroi & Entry Tax ● Octroi and entry tax are not in line with the Organizations will be encouraged to
spirit of GST although in some cases locate warehouses and hubs in
entry taxes are VATable entry tax and Octroi zones and
stock more inventory there

  ● Once these taxes are paid reverse flow of  

goods becomes difficult, hence
companies prefer postponed and uni-
directional flow of goods across entry tax
and Octroi borders

Organisations will be encouraged ● There are two possible scenarios through Organizations can and should
to locate warehouses and which tax barriers would be removed: design their networks purely
hubs in entry tax and Octroi supply chain considerations
zones and stock more and not tax considerations
inventory there

  ›› Scenario 1: CST rates would reduce to  

zero with no carry-over of input credit
across states

  ›› Scenario 2: Stock-Transfers are  

disallowed/taxed and inter-state sales
are taxed with carry-over allowed

  ● In both cases, companies would no longer  

be required to have a warehouses in
every state just to facilitate stock
transfers and avoid CST
 Details of the Tables mentioned in next slide

• Table 1 : Suppose a firm currently does a stock transfer from State A to State B,
before selling in State B to avoid paying CST . It thus gets a margin to US$0.50 per
unit and incurs local VAT only when it sells in State B to its distributor through its
depot. The distributor charges a margin of US$ 0.14 per unit and charges the final
price by adjusting the input credit ( Which is available since the sale from depot was
intra-Stat). In this case, Price to Retailer = (Distributor landed cost + Distributor
Margin – Distributor Input Credit)* (1+VAT Rate).
• Table 2 : In today’s 2% CST scenario, the firm incurs US$ 0.08/unit loss in margin. If
it were to do a cross-border sale to the distributor, without going through transfer at
the depot. The calculations are based on the premise that the US$/unit retailer
margin, distributor and MRP are maintained at the same level.
• Table 3: If CST rates were to become zero then the firm can do cross border sale (at
0% rate) directly to the distributor without any loss of margin to itself, the distributor
or the retailer and yet charge the same MRP to the consumer.
• Table 4: If CST is abolished and inter state sales or stock transfers are taxed with
input credit allowed at the destination then also the margin and MRP remain intact for
everyone
 Detailed Impact of Removed Tax Barriers on Cross-
border Sales
Table1: Current - Stock Transfer Sale (All figures except VAT and CST are in
US$/unit)
Stock Landed Margin Input VAT Price VAT CST Tax Net Tax Final Price
Transfer Cost Credit Before
Sale Tax

Source 100.0 24.2 - 124.2 0% 0% - - 12.4

Depot 124.2 - - 124.2 12% 4% 5.0 5.0 129.2
Distributor 129.2 6.5 5.0 130.6 12% 4% 5.2 0.3 135.9
Retail 135.9 13.6 5.2 144.2 12% 4% 5.8 0.5 150.0
                5.8  

Table2: Current -2% CST Sale

Stock Landed Margin Input VAT Price VAT CST Tax Net Tax Final Price
Transfer Cost Credit Before
Sale Tax

Source 100.0 21.8 - 121.8 0% 2% 2.4 2.4 12.4

Depot - - - - - - - - -
Distributor 124.2 - - 124.2 4% 0% 5.0 5.0 129.2
Retail 12.9.2 6.5 5.0 130.6 4% 0% 5.2 0.3 135.9
                7.7  
 Commercial Impact of GST
Table3: GST-Zero CST Sale

Stock Landed Margin Input VAT Price VAT CST Tax Net Tax Final Price
Transfer Cost Credit Before
Sale Tax

Source 100.0 24.2 - 124.2 0% 0% - - 124.2

Depot - - - - - - - - -
Distributor 124.2 6.5 - 130.6 4% 0% 5.2 5.2 135.9
Retail 135.9 13.6 5.2 144.2 4% 0% 5.8 0.5 150.0
                5.8  

Table4: GST - Inter State Sale Taxed with Offset Allowed

Stock Landed Margin Input VAT Price VAT CST Tax Net Tax Final Price
Transfer Cost Credit Before
Sale Tax

Source 100.0 24.2 - 124.2 4% - - 5.0 129.2

Depot - - - - - - - - -
Distributor 129.2 6.5 5.0 130.6 4% - 5.2 0.3 135.9
Retail 135.9 13.6 5.2 144.2 4% - 5.8 0.5 150.0
                5.8  
Impact of GST on the Supply Chain

Evolution of Key Indirect Tax

Reforms
GST Introduction
GST

2nd Level Reforms CST

CENVAT
Reduction

Introductory Reforms
Sales VAT MODVAT
 Network Re-engineering for GST

 The move towards fewer Delivery Lead Time for

warehouses would 80% Urban Customers
require many
Annual Turnover 24 Hrs 48 Hrs
warehouses to combine,
(US$ Mn)
close and re-locate.
 Required capacity of
many warehouses will < 600 24 – 28 20 -24
undergo changes. With 600 – 1500 22 – 26 18 - 22
fewer warehouses, the > 1500 20 – 24 16 - 20
average size of the
warehouse will go up.
 Hubs are not directly impacted by CST considerations. However, fewer
& larger warehouses may make throughputs. Thus, the size and
number of hubs could get affected.
 The linkages between factories-hubs-warehouses-customers for various
products will get re-aligned.
 Pros & Cons of Network Re-engineering for GST
Clearly, the benefits
outweigh the disadvantages.
Besides providing a simpler
and more manageable times
r lead
network, Technopak ced fix
Redu using cos
ed
ts Hig h e
tomer
s
o to Cus
estimates between 5% to War e h
in
ry
vento oot s ib ly high
er
ce d r P o s
10% net savings in logistics _ Redu e Square t cost
e r s freigh lly
( inv ia
espec ry freight
inventory carrying costs of law)
d plann
ing
secon
da
l if i e
an organisation through this Simp duced
e
and r use and nt
exercise. ho
ware managem
e
C&FA
Fewer warehouses would
mean a straight saving on
warehousing costs.

The inverse root law states

*Safety Inventory α 1/Sqrt ( Number of Stocking
that : Points)
This also means that the safety stock requirement would also go down.
Prime-facie, it would appear that some of these savings would be offset
by the increased cost of freight.
Transforming the Business Landscape- Social Media
Sites

• The increase in penetration and usage of internet in developing countries

has led to the emergence of a new trend – the growth of social media.

• People are now spending significant part of their internet time on social
networking/ blogging sites.

• As the popularity of the medium, the nature of consumer-business

relationship is getting redefined.

• The balance power is shifting towards the consumer with their voice
becoming more powerful than marketers.

• Many companies , especially in the developed economies have recognized

the value of consumer generated content and built their presence on
social media, where the consumer is more active.
 The Multiplier effect – Usage Across Business Areas

Product &
Brand Awareness Customer Service
Service Promotion

Customer Product Employment

People Understanding Development

Promotion of Knowledge
Brand Building
Social Causes Sharing

According to Aberdeen Group 63% of the best-in-class companies

surveyed across the world plan to increase their social media
marketing budgets in 2009. In USA alone the social media spend is
expected to increase from US$ 716 Mn to US$ 3113 Mn in 2013.
 In India around 82% of the top 500 marketers in India spend close to
5% of their total advertising budget online.
26% of this online spend is targeted towards development and
maintenance of brand specific websites and another 13% goes on
 Obama – Success through social media

Facebook You Tube

My space page 100m+
Twitter
page 32000 Vedio view,
291000
1.26 Mn active 164K
followers
friends application Subscribers
users
 Indian Co’s on Social Media

Customers Support
Seeking Feedback Hiring New
Kingfisher Airlines,
- Titan Talent – E & Y
PVR Cinemas

Brand Awareness Brand Promotion – Brand Promotion

Apollo Hospitals Tata’s Nano - MTV India

The use of social media is now gaining popularity in India. Leading

companies are leapfrogging in the social media space with their own
social networking sites and spreading multiple legs across various social
media platforms.

Infosys, TCS, Rediff, HCL, Cleartrip, Fritolay and Naukri and India arms
of MNCs like Microsoft, IBM, and Hindustan Unilever are few names that
launched their social media presence with corporate blogging.
 Successful Use of Social Media
Company Activity Undertaken
Area
Increasing Brand Adobe Activity holding consumer
Awareness interest through engagement
ads on social networks - set up
of an online game
Product promotion MTV India Capitalizing on social media to •
keep the show buzz alive -
creation of an online and highly
interactive model of the real
game show
Product Dell Partnering with customers to
Development contribute to, and integrated
into, Dell's product development
Employee IBM Multiple in-house versions of
Engagement web 2.0 with the intention of
brining employees, alumni,
partners, vendors, and
customers together
Impact
 The game was played more than
14,000 times during the 1 month
campaign.
 Rise in page view by over 48,000
a week
Over 40000 fans on facebook
 12511 ideas contributed to
community, with 86255
comments.
 366 ideas implemented leading
to launch of ‘Latitute’ Laptop
 60000 blog users, 17000
different blogs, 1 Mn page views
per day on internal wikis.
 Launch of corporate social
networking visualisation and
analysis tools like 'Atlas’
 Social Media Maturity Spectrum

Type of social Customer Customer

Customer Reach
media Initative Engagement Empowerment

Customer Low Medium High

Involvement

Establishing Building Building

Impact
Presence Connections Relationship

Value Generated Consideration Sales Loyalty

Maturity Index
Identify the Target Consumer : Examine the ‘socio-technographic’
profile of target customer.
Set Objectives: Decide what the company wants to accomplish with
social media and how the results would be measured.
Make a Plan: Plan for how relationships with customers will change
and build a strategy around changing relationship with customers.
Adopt Technology: Pick the appropriate platforms, tools and
technologies to implement.
 The Social Media Influencer Model

Its essential for a company to adopt a systematic approach towards

social media- the mantra is – Listen, Understand and Engage.
Even before embarking on a social media journey, it is important for
companies to explore the medium and listen to the company or brand
specific ‘conversations’ on the web – understand what consumers are
thinking and saying about their brand.
 They should identify and segment the consumers as shown in social
media influencer model.
 Evolution of shopping centers in the US

Shopping
Garden City
Phase 1 Center
(1920-1950)
Development
Of shopping
center Retail Development Development of
Operational process

Regional Center

Phase 2 Customer Dissonance Differentiation

(1950-2000)
Era of
modern Theme / Festival
Factory Outlets Bigger Malls
shopping mall Centers

Cost Competition from discounters & super centers

Focus on
Lifestyle Centers Community Participation
Entertainment
 Changing dynamics of retail Real-Estate business
Liquidity Crunch

Organised retail’s
Lower than Shortfall in Correction in rentals
Anticipated growth supply of mall

Uneven distribution
Of mall space
Unsatisfactory
performance of Growing trend towards
Showdown in mall space revenue sharing
consumer spending

High Opr. costs Retailer’s vacancy

Largely due to Careful planning,
high rentals Position &
management
of mall space –
Poor Mall Retailer’s lowering
yet to happen !
Management profitablity

Commoditization of
Mall space

The Outlook for Indian retail looks quite promising in the near
future and the current turmoil should be over in 2 to 3 quarters.
The retail center of the future-whether it is enclosed or open-air,
big or small, themed or general – would also be designed to resemble
a community, not just a place to shop and entertainment would
emerged as vital component in the development of new malls.
 Education Industry

The enrollment in higher

education is currently at 17 Mn
Total Current and Projected
at a Gross Enrollment Ratio
Growth in Higher Education
(GER) of 13%. Enrollment are
Enrollment (Mn)
projected to grow at a CAGR of GER
21%
5.6%, reaching 22 Mn by the
GER
year 2013 and 29 Mn by the 17%
year 2018. GER
13%
Enrollment
in Higher
As per these estimates, 12 Mn 17 22
22 29 Education
additional seats in the higher
education would need to be
created by the year 2018 as
shown in the Exhibit 2.

The cost per seat in a regular higher education institution is UD%$ 8300.
Therefore, the total investment that India required for higher education alone
would be US$100 Bn.
 Total Current and Projected Growth in K-12
Enrollment
Currently, the total number of
students enrolled in K-12
Total Current and Projected
schools in the country is 317 400 Growth in K-12 Enrollment
Mn and expected to grow to (Mn)
Age
328 Mn by 2013 and further to 300 10
Group
97 0
351 Mn by year 2018. 97
1 4-1 8
200 74 80
Clearly, India will need to add 72 1 1-1 4
at least 34 Mn additional seats
6 -11
in K-12 segment in the next 10 100 14 15 17
7 8 1
years to cater to the education
needs of its continuously 0
growing population, as shown 2008 2013 2018
in the Exhibit 1.
The cost per additional seat, at a conservative estimate is US$ 2400
(cost of land included at US$ 1 Mn per acre). This translates into a
minimum investment requirement of US$ 80 Bn of investment over the
nest 10 years to establish these 34 Mn seats.
 Vocational Streams of Education
Parameters Health & Counseling English
Speaking
Beauty
No. of Students 1380 560 1180
Capex- 1 Centre (US$) 195,800 133,333 100,000
Cost Per Seat (US$) 145 240 84
Cost per Seat Estimation in Few Vocational Streams of Education
The vocational education and training landscape of India is extremely
underdeveloped. India currently has 5,500 industrial training institutes and
1,745 polytechnics as compared to 500,000 similar institutes in China. This
infrastructure cater to only 2.5 Mn people annually. There are 175 trade training
programs in India as compared to 1,500 in the USA. Clearly there is a
pronounced skill gap in terms of both quality and quality in the
country.

As estimated 85-90 Mn people with vocational skills would be requited in

various sectors between 2008-2013. According to industry sources, the split of
people intake sector-wise over the next 5 years will be 44.8% from the service
sector, 31.2% from agriculture and 12.6% from manufacturing.

 Cost per seat will very vary significantly in this segment depending on the
location, scale, positioning of training service and investment by private players
 Ayurveda Marvel

• The world today has come to understand Ayurveda as a wonderful

system of herbal healing. During the last 3 decades, there has
been a worldwide ‘back to nature’ trend.

• There is a great interest in Ayurveda in many countries, prompting

studies and scientific research to assess its worth.
 Global and Domestic Market for Ayurveda

There is an increasing demand for alternative medicines and

herbal products.
. The growth rate of herbal
beauty care business is at
around 40%. India is one of
the largest markets in the
world for personal-care
products
The growth of the Ayurvedic service
industries, like Ayurvedic center for
Panchkarma, Dhara and Kairali
massage, Ayurvedic skin and hair care,
as well as Ayurvedic Spas can be
developed

To attract tourism due to the growing worldwide interest in these

treatments. Both Ayurvedic products and services can enter the
international market through the franchise system.
 Coming of Spas
 With concept of “total well being” gaining
ground spa treatment are becoming
popular. Nowadays salons are being
converted in today spas and offering both
saloon and spa treatments.
 Ayurvedic treatment are ideal for Spa
treatments.
 Shahnaz Husain group has tied up with the
Hyakumata group of Japan and setup the
world’s largest Ayurvedic health resort,
based on the franchisee system, on the US
island of Saipan, off the pacific coast.
 Today Ayurvedic beauty treatments have
become an important component of
cosmeseuticals. Extension of our franchise
ventures branding are very much a part of
our future plans.
 The Road Ahead

According to the latest Tourism Satellite Accounting (TSA) research,

released by the World Travel and Tourism Council (WTTC) and its
strategic partner Oxford Economics in March 2009:

• The demand for travel and tourism in India is expected to grow by 8.2 per cent
between 2010 and 2019 and will place India at the third position in the world.
• India’s travel and tourism sector is expected to be the second largest employer in
the world, employing 40,037,000 by 2019.
• Capital investment in India's travel and tourism sector is expected to grow at 8.8
per cent between 2010 and 2019.
• The report forecasts India to get capital investment worth US$ 94.5 billion in the
travel and tourism sector in 2019.
• India is projected to become the fifth fastest growing business travel destination
from 2010-2019 with an estimated real growth rate of 7.6 per cent.
• Preparing for the 2010 Commonwealth Games in Delhi, the Tourism Ministry is
exploring the provision of tented accommodation to tourists in Faridabad and
Suraj kund in nearby Haryana.
Thanks
Yogesh Kende
Navi Mumbai, India

Write to – yogesh.kende@gmail.com