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Thasmai Automation & Consumer Electronics plan


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Small description of our Franchising model, the large gap we see in the Consumer electronics market in India, and our plans to address the same. This document is primarily aimed at the investing public.

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Thasmai Automation & Consumer Electronics plan

  1. 1. Part I Journey from Single Store to 12 store Multi state operationand building the Franchise Model Thasmai Automation • Background • Franchise Model • Expansion Plan • Investments Needed
  2. 2. History- Background & Early Mistakes/Learning Ѻ THASMAI- one of the Earliest Automation/AV/Security System Integration companies ,team of Engineers + MBAs from Manipal group institutions, first time entrepreneurs with no seed money or industry mentors • Karigirish Murthy, TAPMI, Over 13 years of sales and leadership experience in companies like Honeywell, Crompton Greaves, WCC and founded Thasmai. Currently CEO • Vijay Chengappa, TAPMI, 11 years of finance, project management experience in companies like NovoNordisk, Infosys, Philips and Thasmai. Currently Director. • Have pivoted from Corporate to residential, security to Automation/AV while building a 12 branch 50 member company • High cost of Capital for several years (hand loans, money borrowed from friends circles) • Intensive marketing campaigns over several years to build brand and attract influencers • Top of the line pay structure to attract best talent from the market (getting people from Tier 2 colleges, who’d otherwise be going in IT) • Prime real estate and overheads in Bangalore & other cities for 6+ years
  3. 3. History- Movement into Asset Light Franchise Model Ѻ Over 12 physicalbranches in 3 southernstates, with plan to ramp up to 22 by mid 2019. Portfolio of over 1000 projects executed across 3 states. Have worked with most top architects/Builders across Karnataka/TN Ѻ Brand name built and continually invested in • Promotions in trade shows such as Acetech/ConstructionExpos/What Hi-Fi • Top position for Home Automation & Theater related keywords online & huge Social media engagement • Natural Step up into product launch once retail presence and Pan Indian Integration model is refined Ѻ Movement into Asset Light Franchise Model • Total costs of Branches borne by Franchisees, so no capex for brick and mortar. • Deleveraging Expenses- Mitigating the risk of Fixed Assets and Monthly Overheads • Only central service delivery models to be set &perfected • Selection of Franchisees who meet earlier criteria, Immediate Traction can be gained. Leadgen is assured, only order conversion & Execution to be focused on.
  4. 4. . Franchise Model & Criteria to Appoint Franchisees • Training and Deployment of Sales Engineers • Technical and sales support to close bigger orders • Ownership of the order (design/quotation/execution/service) • Tie up with brands and supply chain management • Timely Execution and Service. Centralized Marketing efforts to build brand Thasmai Thasmai • Invest on retail store, Demo Items and Interiors • Build a marketing model to ensure customer traffic • Completing the sales cycle for routine orders • Responsible for monthly store and sales overhead • Profit sharing from Thasmai for every order closed as per initial terms Franchisee Criteria to appoint Thasmai Franchises Local Entity/ Business House Should be into non technical trading business for products in Infrastructure field (Ceramics/Sanitaryware/Cement/Paints) Existing business (minimum 5 yrs old) and should own a showroom Should agree to run Thasmai Franchise in his existing showroom, or an extension to the original space
  5. 5. . Thasmai Circle of Competence & Vision OurCoreCompetence Training Modules Quality Execution process and standardization Tech Enabled Processes and Systems Quality service Marketing efforts to build “Brand Thasmai” Network of Franchises (50+ across India) Assets owned by Third parties (No overheads) Pan India Presence with multiple product lines & over 100 brands
  6. 6. . Potential Revenue Forecasts Each Branch (averaged) will hit 1.5CR order bookings Average gross Margin (including Installation) of 30%. 15% split with Franchisee owners Central overheads of 3 to 3.5CR (Including compliances GST/TDS) Revenues- 45 Crores from 30 branches + 5 Crores from special orders 7.5 CR gross margin on items excluding Franchisee Commissions Potential Net profits of 4-4.5CR per annum 2018 2019 2020 2021 Total Revenue 1,400 2,280 4,980 8,160 Material Costs & Franchisee Fees 1,092 1,894 4,156 6,868 Gross Margins 308 386 824 1,292 Overheads 120 130 281 422 EBITDA 188 256 543 870 Loan/Interest Repayments 25 25 150 60 EBT 163 231 393 810 Corporate Tax 49 69 118 243 Net Profit 114 162 275 567 2018/19- Consolidation of Existing Branches & ReEntry into BMS segment ₻ 14-15branches already setup in progress to be completed by end 2018 or early 2019 ₻ Conservative Order Booking (OB) estimates in Tier 1 cities (marked in Bold) taken as 15L per month for the first year and 25L from Year 2 Onwards ₻ Conservative Order Booking (OB) estimates in Tier 2 cities taken as 10L per month for the first year and 15L from Year 2 Onwards 2019/20- Entry into 8 new branches and BMS in all states ₻ Branches #20-32 branches to be set up ₻ BMS Segment gradual presence in other states as well 2021 onwards- Entry into 8 new branches and BMS in all states ₻ Branches #32+ to be set up ₻ BMS Segment gradual presence in other states as well
  7. 7. . Investment Scenarios • 8 cities, 12 branches • Sales target-10 Cr annually with pending OB of 18 Crores • South India’s biggest dealer for Harman, Crabtree, Denon etc • Over 50 branches across India • Accumulated Ordersof over 100 Crores,net profits of close to 8 Crores • India’s Biggest dealer for many brands • Own solution tailored for Indian Marketplace • Prime Acquisition target for any new playersentering the market 2018-19 2021-22  Sales & Distribution Channels built for Pan- India  Huge customer and Architects base  Brand equity  Working system with all processesset  Valuations of at least 120-190 Cr in Market Up to 30% Di;utionAll Equity • Equity offering at 10 CR valuation, 50L at 5%, 1CR for 10% and 2CR – 20% Own a Piece of the Business + Fixed returnsEquity + Debt • 1CR with 5% ownership, EMI mode of repayment in 4 years • 1.8 CR with 10% ownership, EMI mode of repayment in 5 years
  8. 8. PART II The Bigger Picture Single Pan-India Integration for Small Ticket projects Consumer Projects • Landscape • Problem • Current scenario • Potential • Why us? • More details...
  9. 9. Opportunity Identified Do you want to create a new Genre (CONSUMER PROJECTS) Consumer Durables Interiors & Fabric Consumer Projects Characteristics & Players • Big ticket, Higher involvement. Customer needs Look-Touch-Feel (DEMO) • Pre-installation planning needed, Execution time of 1-2 days (integration/ programming/prefixing), Needs specialized after sales service. • Custom specifications; >1 Visit(s) and Coordination needed • Training for Personnel needs to be more technical ? • Ticket Size- < 1.5L and single unit purchases • Simple Installation (less than 1-2 Hrs) • Not Much technical know-how needed, • Well defined AMC and warranty/replacement model • Ticket Size- Large & Varied, usually >2L • Raw Material Supplies & being sold as a Brand • Non-technical and design based • Satiated market with fragmented & Organized Players
  10. 10. Integrationin small ticketprojects (B2C) Outsourced to local contractor/electrician/Mason Outsourced to Large regional players and City players References, Through PMCs & Advisory firms Contracting in Mid-Sized projects Outsourced to regional EPC players Well Defined, Professional, Contractual Outsourced to large EPC players such as L&T, NCC and GMR Closed Club: Massive Entry Barriers & stringent vetting Projects Landscape in India Contracting in Large & Mid-Large Sized projects Outsourced to largeEPC players such as L&T,NCC and GMRLarge projects range from 50 CR to over 300 CR, mostly Institutional, Corporate and Govt projects • Base of the pyramid, with over a million Millionaire households • 9000+ Luxury villa/Apartments in each large city (Bangalore) • World’s 3’rd largest economy, mostly Consumer driven and off the mainstream (just 3% of IT payees, and 13L registered businesses) • Tier 2 cities amplify the trend further with huge number of agricultural HNIs, small business owners Mid Range projects, mostly center around companies and institutional orders. Order sizes can be from 1CR to 20 CR. Some MInor government orders also come in this range Massive Opportunity for a Single player to bring in scale, Processes and Uniformity!
  11. 11. Consumer Projects – Market Overview in India Home Automation Estimated 30,000CR market in India by 2020 Sunrise sector with handful of serious integrators in market Home Theater & AV 8000 CR market for dedicated HTs, and 4500 CR market for Multipurpose room solutions Fragmented market, over 30 worldwide hi- fi brands operational Home Security 18,000 CR market in India by 2020. Prices freely available & all local vendors technical equipped to serve Tertiary Services (Central Vacuuming/AC/Lifts/ Motors) Passenger Elevators- 500CR HVAC market- 12,000 CR Several Unexplored industries (Central Vacuuming/Gate Automation/Wireles s Charging) Visible market of 75,000 CR (15$ Bn) with another potential 20,000 CR ($4 Bn) unexplored
  12. 12. Current Ecosystem – Small project System Integrators Highly fragmented Market with several Drawbacks ӧ Lack of Systems & Processes (Also not Technology enabled) ӧ Unorganized& Poor communication with customers ӧ Smaller teams who can’t scale quality (Single Person Shows/Family shops) ӧ Unreliable and often not open to feedback ӧ No options of AMC or systematic service ӧ Lack of uniform pricing for services ӧ No forum to validate quality of work ӧSafety issues as much of the work is One-time only Services in Scope - Check Appendix I Electrical/Electronics(Home Security/Automation/AudioVideo/Central Vacuuming)/Elevators/AlternatePower/CentralizedAC) GeographicalScope- Especiallyfocussing on the BurgeoningTier 2 Market & LeveragingSmart Cities Initiativeby GOI
  13. 13. Possible benefits for a Single Pan-India STC Handling small ticket-bigger volumes needs a totally different model, which hasn’t been developed yet. --------------------------------------------------- Ѻ Cross movement to all related areas without much capital investment (appendix I) • UPS/Automation/Central Vacuuming/Security/AudioVideo Ѻ AMC Goldmine (appendix II) Ѻ First Mover Advantage- Tier 2 cities are hugely underserved. Ѻ India is a hardcore ‘Anti DIY’ Market (appendix III) Ѻ Bulk Small orders (Gated communities/LargeVilla projects etc)
  14. 14. Where will investments be needed? (Further explained in Appendix IV) ₹ Building Quality+ Service team • Uniform Quality & Service delivery Model • Training Centre of excellence for employees ₹ C-SAT framework and implementation (using Tools/Apps) • Ensuring consistently high CSAT with framework/monitoring for delivery ₹ Building common web interface/App to link to Physical locations • Leadgen CRM • ERP procurement & finance ₹ Marketing efforts (Events & Promotions) • Shows like Acetech, What Hi-Fi. Local media promotions, and customer loyalty programss Overall Investment of INR 10-14 Cr ($1.4-2M) Potential Revenues in 3 years – Rs 300- 400 CR across 50 branches with ~8-10% PAT
  15. 15. Investment Proposal for Phase II 95000 30000 12000 120013200 TAM (in INR CR) India Market Size South India Big 4 (BLR/HYD/CHN/KOC) Target 10% Market Share Approaching PE/VC firms with a firm eye on rapid expansion Investmentof $500k @ 10% Equity Holding Potential revenues of Rs 1200 CR in 3- 4 years, with 8-12% PAT Potential 10-12X Exit by 2021 Seat on the Board,to drive strategic direction of the company
  16. 16. APPENDICES I. Potential Product Segments II. AMC Goldmine III. Anti DIY Culture in India IV. Investmentsneeded I. Quality + Service Delivery Model II. Marketing efforts III. Perfecting Delivery + CSAT
  17. 17. Ѻ Security & Access: Commercial CCTVs, Boom Barriers, premises access control, video surveillance, Fire, heat, water, and/or entry alarms, Remote status alerts and management, Attendance systems, Ѻ Telephony & Networking: EPABX, Networking, Audio & Video Conferencing, VOIP Ѻ BMS: Energy management of HVAC systems (heating, ventilation and air conditioning), control lighting, and power-on and -off and designated equipment Ѻ Commercial A/V: Speaker systems, Projectors, AV for Auditoriums, offices and other commercial I. Potential Segments to Cross Sell
  18. 18. Ѻ Most Homeowners prefer peace of mind, regarding safety of expensive appliances/electronics and wouldn’t mind spending 1-2% annually on AMC plans Ѻ Outside product warranty, no OEM or product company offers any safety net for appliances post warranty period Ѻ Frequent power outages, spikes in voltage make Indian homes unsafe for High end precision devices Ѻ With Minimal annual fees, AMC is a huge profit stream if done on a Pan India scale II. AMC Goldmine
  19. 19. Ѻ Unlike developed markets like the US and Western Europe (Do-It-Yourself), the Indian market, with its abundance of cheap blue collar labour and erstwhile stigma associated with manual tasks, will continue will rely heavily on Middlemen/Integrators/Agencies for Construction/Interiors/Commissioning activities in the home. Ѻ Rising disposable incomes (especially in Urban India) along with fast paced lifestyles ensure People prefer outsourcing installation and maintenance tasks to a specialized third party. III. Anti- DIY Culture
  20. 20. I. Training COE Ѻ 6 Hub Based COEs across India (50L each)- 3CR Ѻ Setting up Training Team & Modules (90 L Yearly)-90L IV. Investments Needed Goals/Deliverables  Full Fledged practical demo setups with Items and test scenarios, enabling virtual job simulation and testing  Fully trained team involved in developing latest pedagogy and content  Training COEs to be established in 6 hubs across the country, staffed by specialized team
  21. 21. II. Service DeliveryModel & Quality Ѻ Centralized tracking & Monitoring system (75L Onetime) ₼ Monitoring Team (25L Yearly) – 25L Ѻ Quality + Audit Team (50L yearly)- 50L IV. Investments Needed Goals/Deliverables  Creating uniform service delivery model and central tracking of all projects on single platform  SOPs and Workflows for all customer interactions through project lifecycle  Create execution framework and governance model to manage efficient staffing/training/execution of operations personnel
  22. 22. III. CSAT & Post Sales service Ѻ Centralized After sales & AMC tracking system (75L) Ѻ Service Back Up items for Immediate replacements- 20L stocks per hub- 60L ------------------------------------------------- Ѻ Customer Loyalty programmes and events (40L Annually)- 40L Ѻ Referral Bonuses (25L)- 25L IV. Investments Needed Goals/Deliverables  Establishingrobust referraland customer loyalty by (in additionto excellent service) institutingreferral bonuses, networkingamongexisting base  Build AMC model which ensures 100% follow up of all customers for yearly payment schemes  Ensure adherence to TAT by havingkey SKU backups and ensuring immediate replacementof items till servicingis completed
  23. 23. II. Marketing Efforts Ѻ Print Media/Radio Marketing(10-15L)- Per City- 2CR Ѻ Google/Social Media FB, Insta, Twitter engagement (25L) --------------------------------------- Ѻ What Hi-Fi (20-35L)- Titular sponsorship+ Event marketing costs per City – 50L Ѻ Acetech (40-50L)- Main Hall + Event costs per City - 1 CR IV. Investments Needed Goals/Deliverables  Establishingmarketpresence by participatingin various shows and events, both Indian and internationally  Create top of mindbrand recallfor the new brandfor all Integrationrelated services in end customer minds  Engageindustry influencers directly (architects/electricians/contractors) on partnership or commissionsmodel
  24. 24. Interested in this journey? Contact us.. Automation-Pvt-Ltd-1 Primary Contacts: Karigirish: 9972418578, Vijay: 9880368001, More Reading