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    Final report Final report Document Transcript

    • NCC Telecom Pvt. Ltd.Financial ProjectionReportGrowth path for NCC Telecom Private Ltd.Shashank,B.Tech. Birla Institute of Technology, RanchiMBA, NITIE, Mumbai
    • Table of Contents1. Executive summary ............................................................................................................................... 32. Market Analysis ..................................................................................................................................... 4 2.1. Residential market demand analysis ............................................................................................ 5 2.2. Commercial Market demand analysis........................................................................................... 7 2.3. Hospitality Market demand analysis............................................................................................. 9 2.4. City wise market analysis ............................................................................................................ 12 2.5. Demand Forecasting ................................................................................................................... 13 4.5.1. Time series projection......................................................................................................... 13 4.5.2. Qualitative methods ........................................................................................................... 14 4.5.3. Diffusion of innovations ...................................................................................................... 145. Technical Analysis ............................................................................................................................... 186. Strategy ............................................................................................................................................... 23 6.1. What markets would NCC Telecom would like to be in?............................................................ 23 6.2. What share would NCC like to have in each market? ................................................................. 24 6.3. What products/technologies does NCC Telecom require? ........................................................ 24 6.4. What geographies does NCC Telecom want to operate in? ....................................................... 25 6.5 What type of people and skills does NCC Telecom need? .......................................................... 25 6.5. What financial targets would NCC telecom wish to achieve? .................................................... 26 6.6. Strategy Formulation .................................................................................................................. 277. Financial Projections ........................................................................................................................... 288. Risk analysis ........................................................................................................................................ 309. Conclusion ........................................................................................................................................... 3210. Attachments.................................................................................................................................... 32 10.1. Market Analysis ....................................................................................................................... 32 10.2. Revenue Projection ................................................................................................................. 32 10.3. Risk Analysis ............................................................................................................................ 32NCC Telecom Private Limited Page 2
    • 1. Executive summaryNCC Telecom private Ltd. is pleased to provide this detailed Financial Projection Report (FPR) tochart its financial future. The FPR enables the partner organization to review its financialcondition as it continues to offer exceptional product and services that meet its customerexpectations while continuously expanding into new markets.The foundation of FPR focuses on a review of past financial trends along with forecasting arealistic view into NCC Telecom’s financial future. Our financial issues and struggles demand a“microscopic” assessment and analysis of current financial conditions, practices, and trendsalong with “charting a course of action” that will enable the partner organization to have a well-thought out and well-developed long term financial plan. The primary objective of the FPR is toidentify the potential business that can be created by taking proactive steps. Also, it providesour partner organization the confidence that comes from making well informed, data-drivendecisions.No one can predict the future with absolute certainty; however, the information contained inthis report will enable the partner organization and NCC Telecom to take proactive steps toreap in the opportunity created by the new product line. This will be accomplished by applyinga logical set of economic assumptions to identify the future financial projections throughvarious strategies, and making a comparison among them and identifying the most suitablestrategy.The FPR is based upon the analysis of home automation market in India. Depending upon thecurrent market position and the target market share of NCC Telecom, strategy was formulated.Financial analysis of the strategy revealed the necessary investment amount along with thetimelines.The FPR reflects the mission of NCC Telecom to become market leader in field of buildingautomation by providing fully integrated solutions, latest in technology with quality andcustomer satisfaction as the only goal. The report is based upon the most accurate financialdata currently available. These initial figures indicate that NCC Telecom must implementsuggested strategy to take full advantage of the current product line.NCC Telecom Private Limited Page 3
    • 2. Market AnalysisMarket analysis would encompass, estimating the potential size of the market for the productproposed to be manufactured and get an idea about the market share that can be captured.Since home automation is a derived product drawing its demand from the newly constructedreal estate, we would be focusing on growth of real estate in India.There can be two different ways of acquiring data required for analyzing the market size of theproduct, i.e. primary source of information and secondary source of information. Primarysource of information refers to information that is collected for the first time to meet thespecific purpose on hand. However, secondary sources of information are gathered in someother context and are already available. FPR for NCC Telecom would be primarily dependentupon the secondary information sources. For estimating the supply of real estate in India, wewould be using the research reports of real estate consultancy firm, Cushman & Wakefield. Excerpts from the research report of Cushman & Wakefield:Cushman & Wakefield Research revisits the demand estimates post the economic crisis whichresulted in weakening business sentiments and demand contraction. The pan India cumulativedemand during 2009-2013 is estimated to be 196 million sq. ft. for office and 43 million squarefeet for retail. While demand for the hospitality segment is likely to be over 690,000 roomsnights, that for the residential segment is expected to be 7.5 million units for the period underconsideration.The estimates for various asset classes were arrived at by considering variables which form theprimary demand drivers or major Demand Forecast influential factors of that particular assetclass:Office: The variables considered for demand forecast are the Gross Domestic Product (GDP),historical demand trend in the real estate sector and anticipated future commitments.Residential: The growth in income, increase in the number of urban households, and the growthin loan disbursement were some of the considerations for residential demand forecast.Hospitality: The demand estimate for the hospitality segment, referred to as “AccommodatedDemand”, is computed based on the estimated supply and anticipated occupancy levels duringthe years under consideration.NCC Telecom Private Limited Page 4
    • Since NCC Telecom would be primarily targets three unique sectors, i.e. Residential, office andhospitality. Among the residential sector, NCC Telecom caters to both the new homes comingup as well as the revamped houses targeted through architects and interior designers. Wewould be analyzing the supply of real estate in these three segments individually. 2.1.Residential market demand analysisThe pan India residential demand is estimated to be over 7.5 million units by 2013 across allcategories including Economically Weaker Sections (EWS), affordable, mid and luxury segments.The residential demand for top seven cities is estimated to be 4.5 million units by 2013. Of thetotal expected demand across India, 43% is likely to be generated in tier 1 cities, i.e., Bangalore,Mumbai and NCR. Mumbai is likely to witness the highest cumulative demand of 1.6 millionunits by 2013 due to various development projects and increasing urbanization in the city.Hyderabad and Bangalore are likely to have the highest compounded annual growth of 14% inthe next five years. The affordable and mid segment category, likely to constitute 85% of thetotal residential demand, will be the primary focus of most developers.Based upon our experience at NCC telecom, we are making some basic assumption:  Average revenue realized per house installation = Rs. 1 Lakh  Level of penetration of home automation in Tier-I cities of India o Mumbai: 1% o NCR Delhi: 1.5%NCC Telecom Private Limited Page 5
    • o Chennai: 0.6% o Pune: 1% o Hyderabad: 0.6% o Bangalore: 0.8% o Kolkata: 0.6%City wise breakup of revenue in home automation market in Tier-I cities can be derived fromthe combination of research report and our assumptions. City-wise breakup per year Penetration Revenue in Revenue through Total Revenue City Million units level new homes architects (in Rs. Cr.) Mumbai 0.34 1.00% 34 10.00 44.00 NCR 0.23 1.50% 34.5 10.00 44.50 Chennai 0.07 0.60% 3.96 3.00 6.96 Pune 0.09 1.00% 9 3.00 12.00 Hyderabad 0.06 0.60% 3.6 2.00 5.60 Bangalore 0.12 0.80% 9.6 5.00 14.60 Kolkata 0.06 0.60% 3.6 2.00 5.60Rest of India 0.55 0.20% 11.08 5.00 16.08 Pan India 1.52 0.72% 109.34 40.00 149.34Since, the research report contain the information regarding the newly constructed homesonly, we have estimated the market size of renovated homes on our deep knowledge of thehome automation sector. Also, the expected revenue realization from the renovated homes isexpected to be around Rs. 2 Lakh.NCC Telecom Private Limited Page 6
    • City-wise breakup per year for renovated homes Number of Number of Penetration City architects projects level Revenue (in Cr.) Mumbai 50.00 10.00 1.00% 10.00 NCR 50.00 10.00 1.00% 10.00 Chennai 15.00 10.00 1.00% 3.00 Pune 15.00 10.00 1.00% 3.00 Hyderabad 10.00 10.00 1.00% 2.00 Bangalore 25.00 10.00 1.00% 5.00 Kolkata 10.00 10.00 1.00% 2.00 Rest of India 25.00 10.00 1.00% 5.00 Pan India 200.00 1.00% 40.00 2.2.Commercial Market demand analysisThe pan India demand for office space is estimated to be 196 million sq. ft. by 2013, with sevenmajor cities accounting for approximately 80% of the total demand. Hyderabad, Pune andKolkata are expected to witness the highest compounded annual growth of approximately 28%during 2009-2013, highlighting the growing prominence of tier 2 cities in the India growth story.However, Bangalore is likely to have the highest cumulative demand of 34 million sq. ft.through the period under consideration, followed by Chennai, owing to renewed interest fromthe corporate sector, post the economic crisis. Established commercial centers, however, areexpected to remain slower in growth than their tier 2 counterparts. Cumulative demand amongthe tier 1 cities of Mumbai, NCR and Bangalore will account for 42% of total demand, withNCC Telecom Private Limited Page 7
    • Mumbai and NCR accounting for 24 and 25 million square feet of office space demand through2009-2013, respectively.Based upon our experience at NCC telecom, we are making some basic assumption:  Average revenue realized per office installation = Rs. 3 Lakh  Average area of office per unit of installation = 1000 Sq. Feet  Level of penetration of home automation in Tier-I cities of India o Mumbai: 2% o NCR Delhi: 3% o Chennai: 1.5% o Pune: 2% o Hyderabad: 2% o Bangalore: 2.5% o Kolkata: 2% City-wise breakup City Mn sq. ft. Office units Penetration level Revenue (in Cr.) Mumbai 5 5000 2.00% 3.00 NCR 5 5000 3.00% 4.50 Chennai 5.6 5600 1.50% 2.52 Pune 4.6 4600 2.00% 2.76 Hyderabad 3.4 3400 2.00% 2.04 Bangalore 7 7000 2.50% 5.25 Kolkata 2 2000 2.00% 1.20 Rest of India 8.15 8150 0.50% 1.22 Pan India 40.75 40750 1.84% 22.49NCC Telecom Private Limited Page 8
    • 2.3.Hospitality Market demand analysisThe increasing contribution of in bound and domestic travel and tourism to the Gross DomesticProduct (GDP) of India has provided the necessary impetus for the growth of the hospitalityindustry. According to the Travel & Tourism Competitiveness Report 2009 by World EconomicForum, the contribution of travel and tourism to GDP is expected to be approximately 6% in2009 and the real GDP growth for travel and tourism economy is expected to be at 0.2% in2009 with a potential of increase to an average 7.7% per annum over the next 10 years.The pan India accommodated demand for the hospitality sector is estimated to be over 690,000room nights by 2013. Tier 1 cities are likely to drive the demand in the hospitality segment ledby NCR which is estimated to constitute 15% of the total demand by 2013, followed closely byMumbai at 14%. The upcoming Commonwealth Games in 2010 is one of the main demanddrivers of room nights in the NCR. Bangalore, however, is expected to register the highestcompounded annual growth of about 26% in demand, followed by NCR at 24% and Pune at23%.Tier 2 and 3 cities are also likely to generate demand for 242,000 room nights by 2013 owing tovarious initiatives taken by the Indian government to promote commercial and tourism activityin these locations.Based upon our experience at NCC telecom, we are making some basic assumption:  Average revenue realized per Hotel room installation = Rs. 0.25 Lakh  Average occupancy rates in India = 61.76%  Level of penetration of home automation in Tier-I cities of IndiaNCC Telecom Private Limited Page 9
    • o Mumbai: 10% o NCR Delhi: 20% o Chennai: 10% o Pune: 10% o Hyderabad: 10% o Bangalore: 10% o Kolkata: 8% City-wise breakup City Room night in 000 Total room in 000 Penetration level Revenue (in Cr.) Mumbai 20 32.38 10.00% 8.10 NCR 22 35.62 20.00% 17.81 Chennai 12 19.43 10.00% 4.86 Pune 6 9.72 10.00% 2.43 Hyderabad 12 19.43 10.00% 4.86 Bangalore 16 25.91 10.00% 6.48 Kolkata 6 9.72 8.00% 1.94 Rest of India 52.88 85.61 0.50% 1.07 Pan India 146.88 237.82 8.00% 47.54NCC Telecom Private Limited Page 10
    • Summing up the market demand analysis from these four sectors for the year 2009-13 would yield a comparative figure represented through histograms below. New revenue opportunities per year 300Revenue in Rs. Crore 250 200 150 100 50 0 Average 2009 2010 2011E 2012E 2013E Business Residential 73 82 92 104 113 92.77 Office 17.62 19.57 24.79 30.67 35.23 25.58 Hospitality 27 33 44 51 57 42.40 Renovated Homes 35 35 35 35 35 35.00 Total 153 170 196 220 240 196 The market size for the home automation products is shown with major contribution coming from the newly built residential sector. Due to the lack of accurate figures for the renovated homes we are taking a pessimistic figure, and assuming the renovated home segment to remain constant. Residential, office and hospitality have maintained their ratios of revenue contribution constant y-o-y and are showing a healthy growth rates. For years 2009-13 in consideration, we determined the average revenue from these four sectors to determine the breakup of market potential. Revenue potential sector-wise 18% 47% Residential 22% Office Hospitality 13% Renovated homes NCC Telecom Private Limited Page 11
    • 2.4.City wise market analysisHome automation market is prevalent across the Tier-I cities. Therefore, analysis of the marketsize of these cities is important to determine the strategy for NCC telecom. Secondary sourcesof market analysis yielded city-wise figures for real estate, which were analyzed to determinethe market-wise analyze for the Tier-I cities. Revenue potential across cities 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Mumbai NCR Chennai Pune Hyderabad Bangalore Kolkata Rest of IndiaRevenue potential from the Tier-I cities were summed up to determine the relativeattractiveness of the cities. Bigger the market sizes, more attractive it becomes for NCCTelecom. Residential Office Hospitality Total Weightage Mumbai 44.00 3.00 8.10 55.10 25.12% NCR 44.50 4.50 17.81 66.81 30.46% Chennai 6.96 2.52 4.86 14.34 6.54% Pune 12.00 2.76 2.43 17.19 7.84% Hyderabad 5.60 2.04 4.86 12.50 5.70% Bangalore 14.60 5.25 6.48 26.33 12.00% Kolkata 5.60 1.20 1.94 8.74 3.99% Rest of India 16.08 1.22 1.07 18.37 8.38% Pan India 149.34 22.49 47.54 219.37 100.00%NCC Telecom Private Limited Page 12
    • Rest of India, 8.38% Kolkata, 3.99% Mumbai, Bangalore, 25.12% 12.00% Hyderabad, 5.70% NCR, 30.46% Pune, 7.84% Chennai, 6.54%NCR Delhi shares the largest pie among all the top seven cities of India at 30.46%, followed byMumbai at 25.12%. NCR Delhi and Mumbai alone share more than half of the homeautomation market in Tier-I cities, which themselves comprises more than 90% of homeautomation market in India. This clearly shows that targeting these two cities would be ofprime importance for NCC Telecom. Rest of the five tier-I cities share a small pie of market sizeranging from 4% to 12%. 2.5.Demand ForecastingAfter gathering data about various aspects of the market from the secondary sources ofinformation the secondary sources, an attempt has been made to estimate future demand.Depending upon the information resources for the home automation sector which we have, wewould be using the following three methodologies:1. Time series projection2. Qualitative methods3. Diffusion of innovations 4.5.1. Time series projectionTime series projection methods generate forecasts on the basis of an analysis of the historical timeseries. Since we have a detailed data for a very short span of five years for forecasting, i.e. 2009-13,usual methods of time series of projection would fail. Therefore based upon the lifecycle stage of realNCC Telecom Private Limited Page 13
    • estate market in India, we are assuming a linear growth equivalent to the average market size of eachsegment for given five years. Basic assumptions of market growth Assuming a linear growth of market Average revenue added in residential sector in Rs. Cr. 975.00 Average revenue added in office sector in Rs. Cr. 202.50 Average revenue added in hospitality sector in Rs. Cr. 61.53 Potential Home Automation Market in India 35000.00 30000.00 25000.00 20000.00 15000.00 10000.00 5000.00 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 4.5.2. Qualitative methodsQualitative methods rely essentially on the judgment of experts to translate qualitativeinformation into quantitative estimates. It involves soliciting the opinions of a group ofmanagers on expected future sales and combining them into sales estimate.Almost all the figures related to market size have been verified by the executives at NCCTelecom, who have decades of experience in the field of home automation market in India. 4.5.3. Diffusion of innovationsDiffusion of Innovations is a theory that seeks to explain how, why, and at what rate new ideasand technology spread through cultures. Diffusion of an innovation occurs through a five stepprocess. This process is a type of decision-making. It occurs through a series of communicationNCC Telecom Private Limited Page 14
    • channels over a period of time among the members of a similar social system. The five steps arecategorizes as: awareness, interest, evaluation, trial, and adoption. An individual might rejectan innovation at any time during or after the adoption process.For an innovation to succeed and grow, the rate of diffusion of innovation holds primeimportance. There are many factors leading to diffusion of innovation across society leading toits success. These factors are represented in the schematic diagram mentioned below:Since, the product offering by NCC Telecom through Digital Living is a revolutionary product inthe field of home automation, especially in India. Going by the theory of diffusion of innovation,home automation market is expected to spread by a natural rate. Penetration growth ratesymbolizes the spread of innovation to common masses with time. Historically every innovationin the field has suffered various diffusion rates. Based on their acceptance and product lifecycle,we expect home automation market on to diffuse at particular rates.NCC Telecom Private Limited Page 15
    • Penetration growth rates Growth in rate of penetration of residential 20.00% Growth in rate of penetration of office 22.00% Growth in rate of penetration of hospitality 10.00%Home automation market is dependent upon the electronics industry, which itself dependslargely on the level of innovation. Due to the continuous innovation in the field of electronics,we expect the profit margins to decrease with time. Based upon our experiences at NCCTelecom, we would expect the prices of electronic components used into the manufacturing ofDigital Living to depreciate, leading to decrease in the expected revenue from homeautomation by around 8% per year starting from year 2013. Penetration growth rates Growth in rate of penetration of residential 20.00% Growth in rate of penetration of office 22.00% Growth in rate of penetration of hospitality 10.00% Decrease in revenue due to technology Decrease in price due to technology improvements 8.00% All figures are in Rupees CroreNCC Telecom Private Limited Page 16
    • Forecast for Home Automation Market in India Residential Office Hospitality Total Year Penetration Potential Actual Penetration Potential Actual Penetration Potential Actual Penetration Potential ActualNCC Telecom Private Limited 2009 1.02% 10700.00 108.84 2.17% 810.00 17.62 12.21% 220.21 26.89 1.31% 11730.21 153.35 2010 1.02% 11600.00 117.99 2.17% 900.00 19.57 12.21% 272.02 33.22 1.34% 12772.02 170.79 2011 1.02% 12500.00 127.15 2.17% 1140.00 24.79 12.21% 362.69 44.30 1.40% 14002.69 196.24 2012 1.02% 13700.00 139.35 2.17% 1410.00 30.67 12.21% 414.51 50.62 1.42% 15524.51 220.64 2013 1.02% 14600.00 148.51 2.17% 1620.00 35.23 12.21% 466.32 56.95 1.44% 16686.32 240.69 2014 1.22% 14329.00 174.90 2.65% 1676.70 44.49 13.43% 485.62 65.24 1.73% 16491.32 284.63 2015 1.46% 14079.68 206.23 3.24% 1728.86 55.96 14.78% 503.38 74.39 2.06% 16311.92 336.58 2016 1.76% 13850.31 243.45 3.95% 1776.85 70.17 16.26% 519.71 84.48 2.47% 16146.87 398.10 2017 2.11% 13639.28 287.68 4.82% 1821.01 87.74 17.88% 534.74 95.62 2.94% 15995.03 471.04 2018 2.53% 13445.14 340.31 5.88% 1861.63 109.43 19.67% 548.57 107.90 3.52% 15855.33 557.63 2019 3.04% 13266.53 402.94 7.17% 1899.00 136.18 21.64% 561.29 121.44 4.20% 15726.81 660.56 2020 3.64% 13102.21 477.54 8.75% 1933.38 169.15 23.80% 572.99 136.37 5.02% 15608.58 783.06 2021 4.37% 12951.03 566.44 10.67% 1965.01 209.74 26.18% 583.76 152.82 5.99% 15499.80 929.00 2022 5.25% 12811.95 672.43 13.02% 1994.11 259.67 28.80% 593.67 170.96 7.16% 15399.72 1103.05 2023 6.30% 12683.99 798.86 15.89% 2020.88 321.05 31.68% 602.78 190.94 8.56% 15307.65 1310.84 2024 7.56% 12566.27 949.73 19.38% 2045.51 396.45 34.84% 611.16 212.96 10.24% 15222.94 1559.13 2025 9.07% 12457.97 1129.85 23.65% 2068.17 489.03 38.33% 618.88 237.21 12.26% 15145.01 1856.09Page 17
    • 5. Technical AnalysisThe Digital Living series provides a unique experience to its customers in a cost effective andcompetitive way. The following chart shows a comparative analysis between major firms in thefield of home automation across the globe. Core technology Digital It is developed in current trend of Technology with mix of IP and RS 485 protocol at Dreams required level, without any Native app it supports almost all browsers to use automation from any of WIFI device. On-Q Proprietary wired bus. Extremely reliable and constantly polls status of devices. Difficult retrofit. Lutron Proprietary wired bus. Extremely reliable and constantly polls status of devices. Difficult retrofit.Centralite Proprietary wired bus. Extremely reliable and constantly polls status of devices. Difficult retrofit. Clipsal Proprietary wired bus. Extremely reliable and constantly polls status of devices. Difficult retrofit.NCC Telecom Private Limited Page 18
    • Features DIGITAL DREAMS On-Q Lutron CentraLite Clipsal Max number of devices per network 2048 248 64 (see 1) 4096 (see 2) 1024 (see 3) 200 24 48 255 255NCC Telecom Private Limited Dimmer Switches YES Yes Yes Yes Yes Yes Yes Yes Yes Yes Can set default level for local operation of YES Yes Yes Yes Yes dimmer Can set default ramp rate for local operation YES Yes Yes Yes Yes of dimmer True Relay On/Off Switches YES Yes Yes Yes Yes Yes Yes Yes Yes Yes Any switch can link to any other switch Yes Yes Yes Yes Yes Yes YES No No No (virtual n-way) Switches report status when operated Yes Yes Yes Yes Yes Yes YES No No No locally Yes Yes Yes Yes Yes Yes Yes Keypads with status LEDs for each button Only with Back Lit Yes Yes Devices are immune to FALSE activation Yes Yes Yes Yes Yes Yes Yes Yes No No from noise Devices are immune to FAILED activation Yes Yes Yes Yes Yes No No No No No from noise Switch and Keypad firmware is field Yes YES No No No No No No No No upgradeablePage 19
    • Critical Retrofit Features Features DIGITAL DREAMS On-Q Lutron CentraLite Clipsal Retrofit "no neutral" devices Yes Yes Yes No No No No No No No (return through load or return to ground) Shallow form factor for tight wiring spacesNCC Telecom Private Limited YES No No No No No No No No No and wiremold boxes Keypads that are also a dimmer for a local Yes Yes No No No No No No No No load Note Keypads that are also a relay for a local load No No No No No No No No No (Not CFL) Dual Load Switches No No No No No No No No Yes RF "Stick-a-Switch" No No No No No No No No No No Screw-in Dimmer module No No No No No No No No No No Screw-In Relay module (for CFL bulbs) No No No No No No No No No No 2-pin Lamp Modules with local control No No No No No No No No No No (required for decorative lamp ext. cords) Yes 3-pin Lamp Modules with local control No No Yes (see 4) Yes (see 4) Yes (see 4) No No No No Lamp modules w/o or can disable local Yes No No No No No No No No No control function (to prevent self-activation) Lamp modules w/o or can disable local YES No No No No No No No No No control circuit (to prevent CFL flicker) Yes Appliance modules with local control YES No No No No No No No No Appliance modules w/o or can disable local Yes No No No Yes (see 5) No No No No No control function (to prevent self-activation) Appliance modules w/o or can disable local Yes YES No No Yes (see 5) No No No No No control circuit (to prevent CFL flicker) Outlet Replacement relay module NCC No No No No No No No No NoPage 20
    • NCC Telecom Private Limited Look and Feel Features Features DIGITAL DREAMS On-Q Lutron CentraLite Clipsal True Rocker or Toggle (Top On/Bottom Yes No Yes No Off) Rocker/Toggle Color Change Kits No Yes Yes No Colour Selection YES Standard Size (decora/accenti/?) Yes Yes Yes Dimmers have LED level bar No No No No No No White LED with color change filters No Programmable full spectrum LED No No No No No No No No No Programmable bi-color or tri-color LED No No No No No No No Yes Yes Brightness controlled/Dimmable LED Yes Yes Engraved label option Yes No Double tap for fast on (or other special Yes Yes Yes Yes functionality)Page 21
    • Other Features Features DIGITAL DREAMS On-Q Lutron CentraLite Clipsal Wired Tabletop Controllers YES Yes Yes Yes No Yes No RF remotes YES No Yes Yes Yes No No No No Yes RF Keyfobs No No Yes Yes Yes Yes No No No No Wireless motion sensors No No Yes Yes Yes Yes No No NA No Yes Yes Yes Yes Wired motion sensors YES No No No No NANCC Telecom Private Limited Companion switch available for use with YES No Yes No Yes No No No NA No traditional traveler wires Companion switch looks exactly like master YES NA No NA No NA NA NA NA NA Any Switch can trigger a scene YES No No No No Yes No No Yes Yes Solid State On/Off Switches No NA No Yes Yes Yes Yes Yes Yes Yes Yes No IR Bridge YES Yes Permanent Device Addressing No No No No Yes No No Yes Yes (required for remote enrollment and remote factory reset) Assignable Device Addressing YES Yes Yes Yes Yes Yes Yes Yes Yes Yes (required for simplified device reference in No No No No No No No No No Reports load changes (bulb failure) No Continuous device status polling (as opposed No Yes Yes Yes Yes Yes Yes Yes Yes Yes event driven device status table which to an Remote Link/Scene Programming YES No No Yes Yes Yes Yes Yes Yes Yes Remote device enrollment YES No No No No No No No Yes Yes Remote programming of local settings YES No No Yes Yes Yes Yes Yes Yes Yes Remote factory reset / hard reset YES No No No No No No No Yes Yes Remote device diagnostics YES No No Yes Yes Yes No No Yes Yes Vacation Mode YES No Yes Yes Yes Yes No No No No Timeclock functions YES No Yes Yes Yes Yes No No Yes No Security Mode No No Yes Yes Yes Yes No No No No Shade/Blind control YES No Yes Yes No No No No Yes NoPage 22 Conditional programming No No No Yes Yes No No No Yes No No No Yes Yes No No No Yes No Sequence programming YES
    • 6. StrategyNCC Telecom Pvt. Ltd. as an organization has few desired milestones, which it would like toachieve using its current potential capabilities. We would be translating NCC’s strategicbusiness plans into a set of drivers and requirements that our strategy will address: 1. What markets would NCC Telecom would like to be in? 2. What share would NCC like to have in each market? 3. What products/technologies does NCC Telecom require? 4. What geographies does NCC Telecom want to operate in? 5. What type of people and skills does NCC Telecom need? 6. What financial targets would NCC telecom wish to achieve? 6.1.What markets would NCC Telecom would like to be in?NCC Telecom has been a leader in the field of intercom, video apartment and security systemswhile in the realm of home automation products we have come with products such as videodoor phones and security solutions and communication solution through the EPABX systems.However very recently, we have started looking at developing a new product line of homeautomation primarily due to following reasons:  Markets for intercom have matured  Venturing into newer products with much more promising revenue  De-risking our product offering to customers using multiple products Intercom, video apartment and security systems Home automationNCC Telecom Private Limited Page 23
    • NCC telecom would like to look into newer businesses of home automation which are morepromising as well as more in growth stage, thereby providing immense potential to perform.We would like to take advantage of having the necessary product line for home automation 6.2.What share would NCC like to have in each market?Observing the matured markets for Intercom, video apartment and security systems, NCCtelecom won’t invest further into this segment. Regarding the home automation market, wewould like to have a commanding market share in the regions of Mumbai and Pune. In the restof Tier I cities, we would like to have at least 15% market share. Level of Digital Living presence Year Mumbai NCR Chennai Pune Hyderabad Bangalore Kolkata 2009 0% 0% 0% 0% 0% 0% 0% 2010 0% 0% 0% 0% 0% 0% 0% 2011 20% 0% 0% 10% 0% 0% 0% 2012 20% 0% 0% 15% 0% 0% 0% 2013 25% 15% 15% 15% 15% 15% 15% 2014 30% 15% 15% 15% 15% 15% 15% 2015 30% 15% 15% 15% 15% 15% 15% 2016 30% 15% 15% 15% 15% 15% 15% 2017 30% 15% 15% 15% 15% 15% 15% 2018 30% 15% 15% 15% 15% 15% 15% 2019 30% 15% 15% 15% 15% 15% 15% 2020 30% 15% 15% 15% 15% 15% 15%Above figures represents the targeted market share of NCC Telecom every year. Dependingupon our future experiences, we would revise our targets. 6.3.What products/technologies does NCC Telecom require?Currently, NCC Telecom is competent in all the major technologies being currently used in thefield of home automation. However, large part of the technology development is dependentupon its one of its directors. In order to cater future technology and product requirements,necessary Research & Development structure needs to be setup.NCC Telecom Private Limited Page 24
    • 6.4.What geographies does NCC Telecom want to operate in?As analyzed in the market analysis segment, home automation business in primarilyconcentrated in Tier I cities of India, which are in growth phase. A much bigger markets exist inthe Europe and America also, but in mature stages. NCC telecom would like to venture intonewer markets while enhancing reach in our current markets. Increasing our Creating presence Increasing our reach in Mumbai in newer Indian presence in Tier I and Pune markets cities of India Creating presence Increasing our in international presence in foreign markets countriesIn order to accomplish that goal, we would be having a multi-pronged strategy, depictedthrough the flow diagram. Our expansion strategy for venturing into newer markets wouldprimarily depend upon our previous experiences. 6.5 What type of people and skills does NCC Telecom need?Currently NCC Telecom currently being a small sized company, with job profiles of itsemployees being highly unorganized. In order to meet the manpower requirements for thegrowing needs of the organization, large scale manpower needs to be recruited for necessaryprofiles.  Sales in Marketing  Administration & HR Department  ManufacturingDepending upon the size of the target market and our future experiences, we will recruitnecessary manpower in each area of operation.NCC Telecom Private Limited Page 25
    • 6.5.What financial targets would NCC telecom wish to achieve?NCC Telecom targets certain financial milestones which are imperative for further futuresuccess of the firm. Our growth strategy involves different stages which are highly dependentupon the success of our previous stages. Currently, we would be working on first stage of ourgrowth phase using finances from our consolidated reserves. However to fund furtherexpansion stages, we would require necessary external financing. We expect NCC TelecomDigital Living series to achieve a billed order of at least Rupees 40 Crore by 2015. Financial projections for NCC Telecom in Rs. Crore 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2011 2012 2013 2014 2015 Billed orders Revenue ExpectedOnce the reliability and viability of NCC’s strength is proven with successive expansion intonewer markets, figures would be further refined.NCC Telecom Private Limited Page 26
    • 6.6.Strategy FormulationNCC Telecom has a very limited sales force which is active into selling and marketing of homeautomation products. All the sales force is active in Mumbai and Pune region only, which havebeen traditional markets for NCC Telecom. Moreover, the limited sales force has not beenactive in all the sales transaction happening in Mumbai and Pune. We expect our presence ofonly 20% of all home automation in sales pitch in Mumbai and around 10-15% in Pune. Being a small sized company and the direct involvement of director in sales pitch has led tohigh conversion rate of bids. NCC Telecom historically has a bid conversion rate of around 70%.So, out of each 100 events of sales pitch, NCC Telecom gets business in around 70 events.However with increasing size of the organization, we expect conversion bids to drop sharply.Increasing competition in home automation segment would also lead to decreasing bidconversion rate.NCC Telecom is exposed to a very small segment of the home automation market in India. Eventhough NCC Telecom has excellent sales leadership, it is having relatively small revenuecompared to its peers. We believe that expansion into newer markets with a much larger salesforce would create a much larger sales pitch opportunity. So even though our bid conversionrate drops due to decreased monitoring, our overall sales are expected to shoot up drastically.In order to accomplish that goal, we would be having a two pronged strategy:  Increasing our reach in Mumbai and Pune  Creating presence in newer marketsWith increased sales force in Mumbai, we expect our reach to increase from 20% to 30% by2014. Since Pune being a smaller market and NCC having a decent reach, we would not furtherinvest to increase our sales in that region.We would establish our presence in the remaining Tier I cities, i.e. Delhi, Kolkata, Bangalore,Hyderabad and Chennai. Adequate sales force with necessary infrastructure would beestablished in these cities. NCC telecom expects to achieve a market share of 15% in thesecities by 2014. Depending on our experiences in these cities, further strategies would beformulated for each city.NCC Telecom Private Limited Page 27
    • 7. Financial ProjectionsThe Financial Projections have been prepared on the assumption that the Effective Date is July20, 2011, and are based on, and assume, among other things, which will be discussedhereafter. We have used the historical earning figures to arrive at major assumptions for ourfinancial projections. Actual Financial summary of Digital Living and NCC Telecom Ltd. combined In Rs. Cr. Revenue Pending orders Digital Intercom Digital Intercom Net profit Selling & Year Living & VDP Total Living & VDP Total admin costs 2008-09 0 1.8 1.8 0 0 0 0.40 2009-10 0 2.5 2.5 4.17 0 4.17 0.50 16.90% 2010-11 1.09 2.73 3.82 7.6 0 7.6 1.00 17.24%Some of the basic assumptions which can be derived from the historical figures are:  Profit margin for intercom & VDP market remains constant.  Profit margin for digital living market remains constant.  Marketing and administrative costs as percentage of market size to remain constant with time. Average marketing & administrative costs as percentage of market size 5.78% Average profit margin from Intercom & VDP 21.11% Average profit margin from Digital Living 38.87%NCC Telecom doesn’t realize the booked orders in the year of their consumption as revenue.Depending upon the nature of the client and project requirements, the time lag varies.However, we have assumed the following revenue realization from the year of their bookings. Realization of billed orders as revenue 0 1 2 3 0.00% 30.00% 70.00% 0.00%NCC Telecom Private Limited Page 28
    • Major risks to our previous assumptions are:  Increasing inflation  Decrease in profit marginsIn order to remove the vulnerability of risks to our estimates, we incorporate their effect whileforecasting the funding requirements. Rate of inflation (leading to higher costs for the company) 4.00% Percentage decrease in profit margins with time 1% Expected profit margins 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 38.87% 38.48% 38.10% 37.71% 37.34% 36.96% 36.59% 36.23% 35.87% 35.51%Since NCC Telecom would primarily expand in the field of marketing and administration, wewould be expecting our funding requirements based upon the expenses incurred to expandthem. Funding requirement estimates Percentage of Marketing & Conversion Billed Revenue Year market Administration funding Net Profit of bids orders Expected harnessed required (in Rs. Cr.) expected 2009 0.00% 0% 0.0 0.0 0.00 0.00 2010 0.00% 0% 0.0 0.0 0.00 0.00 2011 5.81% 70% 8.0 0.0 0.66 0.00 2012 6.20% 70% 9.6 2.4 0.82 0.92 2013 16.26% 70% 27.4 8.5 2.45 3.22 2014 17.51% 65% 32.4 14.9 3.24 5.63 2015 17.51% 60% 35.4 28.9 3.98 10.79 2016 17.51% 55% 38.3 33.3 4.90 12.30 2017 17.51% 50% 41.2 36.3 6.03 13.27 2018 17.51% 45% 43.9 39.2 7.43 14.21 2019 17.51% 40% 46.3 42.1 9.15 15.08 2020 17.51% 30% 41.1 44.6 11.28 15.85NCC Telecom Private Limited Page 29
    • 8. Risk analysisNCC Telecom’s revenue forecasts are based on various parameters which have beendetermined with inputs from our experienced directors. However, our forecasting must beguarded against overstating customer size and revenue generation potential while avoidingbeing too conservative. Performing sophisticated risk assessment and sensitivity tests on keyinput parameters is a prudent solution to this forecasting dichotomy and thus reducing the riskin planning, designing, and financing NCC Telecom.Sensitivity tests are performed to determine the impacts of changes to key input variables.However, in order to make informed decisions, it is imperative that input parameteruncertainties are estimated and risk assessment is performed to quantify key input impacts onthe sales estimates and the probabilities associated with the long-term funding requirements.Estimates for the key assumptions of our estimates have been suggested by our directors whohave long experience in this sector. Scenario analysis of funding requirements to variations in the value of key assumptions Key assumptions Pessimistic Expected Optimistic Residential 10.00% 22.00% 30.00% Growth rate of penetration in Office 10.00% 20.00% 25.00% Market specific Hospitality 5.00% 10.00% 15.00% Decrease in price due to technology improvements 20.00% 8.00% 4.00% Rate of Inflation leading to higher costs 8.00% 4.00% 2.00% Residential 500.00 975.00 1500.00 Potential revenue addition in Office 100.00 202.50 300.00 Hospitality 20.00 61.53 100.00 Marketing and Administrative costs w.r.t. market Firm share 20.00% 5.78% 3.00% Specific Decrease in profit margins 5.00% 1% 0.50%Expected revenue from all three situations, i.e. pessimistic, optimistic and expected resulted innet profit for NCC Telecom. This shows the expected revenue being assured and strong enoughto withstand deep shocks created by poor market condition.NCC Telecom Private Limited Page 30
    • Optimistic Expected PessimisticNCC Telecom Private Limited Marketing & Marketing & Marketing & Administration funding Administration funding Administration funding Year Revenue Revenue Revenue required (in Rs. Cr.) required (in Rs. Cr.) required (in Rs. Cr.) Net Profit Net Profit Net Profit 2009 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2010 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2011 0.00 0.34 0.00 0.00 0.66 0.00 0.00 2.28 0.00 2012 2.39 0.42 0.93 2.39 0.82 0.92 2.39 2.95 0.88 2013 8.46 1.22 3.25 8.46 2.45 3.22 8.46 9.13 2.97 2014 14.92 1.84 5.71 14.92 3.27 5.63 14.92 9.62 4.97 2015 31.34 2.56 11.94 29.72 4.05 11.10 27.19 9.48 8.61 2016 44.68 3.51 16.94 37.00 5.01 13.67 25.92 9.44 7.79 2017 59.65 4.79 22.50 43.44 6.21 15.90 23.38 9.48 6.68 2018 78.99 6.51 29.65 51.00 7.70 18.48 21.29 9.64 5.78 2019 103.95 8.80 38.82 59.89 9.55 21.48 19.58 9.92 5.05 2020 136.12 11.87 50.57 70.33 11.86 24.97 18.22 10.33 4.46Page 31
    • 9. ConclusionFinancial projection report has been created to provide insights into the future financialposition of NCC Telecom based upon the current financial position and the expected marketsituation. It is an unbiased review of the expected future position that NCC Telecom wouldachieve after following necessary steps for growth.Wherever necessary assumptions were required, we have arrived after consultation withpeople in relevant field. All the supporting files which were used to arrive at the conclusionhave been attached along with the output files, i.e. “Revenue projection” and “Risk analysis”.10. Attachments 10.1. Market Analysis 10.2. Revenue Projection Revenue Projection.xlsx 10.3. Risk Analysis Risk Analysis.xlsxNCC Telecom Private Limited Page 32