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Micromax Mobile Devices Business Plan November, 2009

Contents Company Profile Indian Handset Market Overview Micromax Value Proposition Business Model Competition Way Forward Capital Infusion: Disbursement Plan & Key Milestones

, 2000 2005 1994 2009 ,[object Object],[object Object],[object Object],[object Object],[object Object],Started its operations with design, development & distribution of fixed wireless terminals, Micromax has been in the Indian telecom industry close to ten years ,[object Object],[object Object],[object Object],Source: Company Information, IDC - Indian Mobile Market Report

Micromax Senior Management Team Classification by Functional Expertise Engineering & R&D 23% Sales & Distribution 18% Marketing 18% Finance 18% Other Support Functions 23% Source: Company Information, Industry Inputs Currently, the company has well balanced team with experienced professionals managing key functions of the organization Function Key Responsibilities Engineering & R&D ,[object Object],Sales & Distribution ,[object Object],Marketing ,[object Object],Finance ,[object Object],Support Functions ,[object Object]

Number of Pan-India Mobile Services Licensees Incremental Mobile Subscribers Share (Jul - Oct ‘09) Others 77% Tata DoCoMo 23% ,[object Object],[object Object],[object Object],Source: TRAI In 2009, the increase in the number of carriers has led to competition to acquire incremental subscribers, with many of them launching attractive tariff plans

[object Object],[object Object],[object Object],[object Object],[object Object],Wireless Subscribers Base Rural Vs. Urban – India (mn) 865 828 779 716 626 498 347 Source: Industry Inputs With carriers focusing on rural areas to increase their subscriber base, the share of mobile handset sales has also increased in these areas

Global OEMs that currently dominate the Indian handset market are expected to face difficulties in sustaining their market share, especially in rural areas Indian Mobile Handset Market Share by Value (Oct ‘09) ,[object Object],[object Object],[object Object],[object Object],Source: ORG-Gfk India Mobile Handset Report, Nov ‘09 Total Nokia Samsung Sony Ericsson LG Others

Going forward, the Indian mobile handset market is expected to grow to 161mn devices by 2012, with sub USD 100 contributing to about 80% of sales Indian Mobile Handsets Market Projections (mn, 2009 – 2014) ,[object Object],[object Object],[object Object],Source: Industry Inputs 128 137 148 161

Micromax’s key strengths include offering affordable, feature rich handsets with wide availability and heavy marketing support Optimized Solutions Product Portfolio Micromax Key Strengths Marketing & Distribution Feature / Price Tradeoff Higher Channel Margins Brand Building Time To Market Source: Industry Inputs

Micromax identifies and caters to the unique requirements of Indian mobile consumers Description Micromax Solution Long Battery Life Dual SIM FM Radio & Multimedia Key Requirements Source: Industry Inputs, TRAI, Company Information ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Also offering more features at significantly low price as compared to global brands Micromax X360 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Price: INR 3,558 (USD 77.4) Nokia 7210 Supernova ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],VS. Price: INR 4,587 (USD 99.7) With comparable specifications for basic features, Micromax often offers a compelling price benefit over leading global brands ,[object Object],[object Object],[object Object],Source: Industry Inputs, Company Information

Significantly short product development cycle and time to market offers a unique competitive advantage to Micromax over the incumbent players Comparison of Product Development Cycles of Micromax Vs Nokia (Months) ,[object Object],[object Object],[object Object],Micromax Nokia (Low Tier) Nokia (Mid Tier) Nokia (High Tier) Source: Industry Inputs, Company Information

Micromax also invests significantly in distribution channel and 360 0 marketing, in order to ensure both channel support and consumer mindshare Distribution Channel Margins of Mobile OEMs Operating in India (%) 6% - 8% 8% - 10% 15% - 20% ,[object Object],[object Object],Marketing Strategy ,[object Object],[object Object],TV Print Outdoor Roadshows Exhibitions Events & Conferences Source: Industry Inputs, Company Information

These efforts have not only resulted in constantly increasing sales for the company, but also in significantly high devices sell through percentage Monthly Import Volumes of Micromax Mobile Devices (‘000) ,[object Object],[object Object],[object Object],Source: Company Information

[object Object],[object Object],MTK Handset Chipset Annual Shipment (mn Units) MTK Chipset Based Handset Exports from China (mn Units) Source: Industry Inputs, Company Information Micromax partners with a leading Taiwan-based chipset manufacturing firm, Mediatek, to power its devices with their unique solution

The company has been able to leverage its MTK partnership to drive down the Bill Of Material (BOM) costs of its products BOM Cost Comparison for Micromax & Leading Global Brand of a Multimedia Phone (USD) ,[object Object],[object Object],Source: Industry Inputs Component Micromax X310 Nokia 7210 % Delta (Nok/ MX) Baseband Module 20.59 28.49 38% Display Module (2.4”) 5.59 6.32 13% Power Management Module 1.47 1.79 22% Camera Module 1.32 3.45 161% Keyboard 0.88 1.21 38% Charger 0.59 1.35 129% Earphone 0.44 0.45 2% Speaker 0.29 0.32 10% Microphone 0.29 0.35 21% RF Transceiver 1.05 1.55 48% Vibration Motor 0.29 0.45 55% Plastic Casing 2.35 2.32 1% Others 4.41 6.43 46% Total BOM Cost 39.56 54.48 38%

Focusing only on essential expenditure allows the company not only to grow the business, but also ensure healthy margins Micromax Expenditure Summary (FY ’09) Source: Company Information Note 1: Others include depreciation, amortization, interest & finance charges Micromax Mobile Devices Revenue Split (2009) Gross Margins 25% to 30% Other Expenditure 70% to 75% ,[object Object],[object Object],[object Object],Total Expenditure Goods Personnel Sales & Distribution Admin Others 1

Agility, responsiveness to consumer needs and cost efficiencies are the key advantages of Micromax over both global and Indian mobile handset brands Source: Industry Inputs, Company Information Very High High Medium Low Very Low Relative Position: Comparison of Various Strategic & Operational Parameters of Global & Indian OEMs Parameter Product Portfolio Distribution Network Brand Agility & Time To Market Responsive to Consumer Needs Cost Efficiency

Going forward, Micromax plans to leverage its existing strengths to emerge as a leading Indian mobile handset manufacturer Description Future Plans Strong Product Portfolio Market Understanding Efficient Operations Key Strength Source: Company Information ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Also expand into emerging industries and international markets 1 Mobile VAS End User Revenues (USD mn) ,[object Object],[object Object],Source: Industry Inputs, Ovum Mobile Connections Report - 2009 Region-wise Mobile Connections Projections (mn, 2010) ,[object Object],[object Object]

Micromax intends to utilize the funding to grow the existing business as well as foray into new industries and markets Disbursement Plan for Capital Infusion Sought NPD 1 Marketing M’facturing Facility Intl Expansion Q2 2010 Q1 2010 Q3 2010 Q4 2010 Appointment of Brand Ambassador Monthly sales over 1mn units Launch of international operations VAS 3 foray Manufacturing facility setup No. 2 brand in India by sales & GRPs 2 Tentative Timelines for Key Milestones to be achieved in 2010 ,[object Object],[object Object],[object Object],Source: Company Information Note 1: New Product Development; 2: Gross Rating Points; 3: Value Added Services Total Capital Current Business

Thank You Prepared By – Jayanth Kolla E-Mail ID - [email_address] Mobile - +91-9873094602

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