4. ^Investment activity (1/2)
Deal Volume
Deals by Segment Volume Value ($ Mn)
4%
E-tailing and Deals 39 485 9% E-tailing
Travel 4 109 Travel
Online Services
Online Services 14 87 15% 42%
MVAS
MVAS 6 28 Entertainment / Content / Classifieds
Entertainment / Content / Classifieds 14 61 Online and Mobile marketing
7%
Payments
Online and Mobile marketing 8 287
17% 6%
Payments 3 10
Total (Jan 11-Feb 12) 85 1,067
E-tailing investment landscape Digital consumer companies funded in Jan 11 – Feb 12 by categories
Gross margin * Size of the bubble indicated total amt invested during Jan’11 – Feb ‘12
Fashion - Mass e-tailing
High Private Label
Apparel e-tailing
Fashion- Fashion- Deals
Medium Deals Apparel
e-tailing Fashion -Private Label
Mass e-tailing
Baby Deals
Low Electronics
products
Baby Products
Travel
Low Medium High
Addressable market size
Marketing
Segments that enjoy healthy margins have found favor with investors Others
even if it is at the cost of slower scale-up
Private & Confidential
-4-
5. ^Investment activity (2/2)
E-Tailing – Deals Volume breakup
Apparel -
Handicrafts Deals Private
3% 13% Label Apparel as a category in E-tailing gained high traction with various categories
10% such as Multi-label, Private label and Flash salesportals accounting for 38%
Apparel - of the deal volume
Flash Sales
Mass 13% Despite being of the largest segments, only one deal happened in
Home 15%
furnishing /
independent electronics portal (Letsbuy,com ) while a number of new Baby
Bed and Apparel e- Products portals were funded during the period
Bath tailing
3% 15% Untapped categories like Home furnishing, Bed and Bath, Lifestyle etc. may
Baby become early stage investment avenues for this year along with growth
Health Products funding of the existing models
products Lifestyle / 13% Elec
5% Beauty Jewellery 3%
3% 5%
Deals by Rounds
Jan 2011 -
2010
Feb 2012 With the increase in deal volume, the average deal size has increased
Round 1 47 16 for the investments from Round 2 onwards
Round 2 17 12
Round 3 13 3 Large size transactions happened in Digital Marketing, E-tailing & Travel
Round 4 and > 8 0
InMobi ($200 Mn), Flipkart ($150 Mn),
Ybrant ($48 Mn), Yatra ($45 Mn), Snapdeal ($40 Mn), FnY ($40 Mn)
Average Deal size by Rounds ($ Mn) MapmyIndia ($30 Mn), HomeShop18 ($22 Mn), Myntra ($21 Mn)
Jan 2011 -
2010
Feb 2012
Round 1 4.0 4.5
Round 2 12.1 5.9
Round 3 21.3 4.8
Round 4 and > 56.9 ---
Private & Confidential
-5-
7. ^Connectivity: Access & quality
Internet connections by Type (in Mn) Connectivity likely to hit an inflection point in the next 12-24 months
PC Dial-up (Mn) PC Broadband / Cable (Mn)
Mobile 2.0 - 2.5G (Mn) Mobile 3G-4G (Mn) Internet users in India are estimated to reach 376 million by 2015 – close to 5X the
current number. PC broadband penetration is estimated to reach ~16% by 2015
- 0
1 2
2
2
3 13 Mobile connectivity (3G and 4G) is expected to drive internet connectivity in the
4
51 coming years and is estimated to reach 22% penetration
6 120
7 196 288
11 Increasing penetration of smartphones / tablet devices, affordable 3G data plans and
7 11
introduction of 4G in 2012 to drive the premium data consumption
7 15
15
6 19
6
20 21 Challenge include lack of affordable and accessible broadband services and the
26 32 39
6
5 4 4
potential risk of lack of regulatory clarity dethrottling investments in the sector
5
2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: TRAI,Avendus estimates
The stakes are high.. Telcos will push for monetization
3G Penetration in India PC broadband connections in India (mn) Airtel has more than 7 Mn 3G
Telecom and internet services
Cable providers paid nearly $23 bn to the subscribers out of which ~26% use
22% 45 39
Wireless fixed Govt. for 3G/4G spectrum data on a daily basis
40
4G - PC 32 2
35 Dongles
15% 9 Launch of 3G services, network TATA DoCoMo – 1 out of 7
30 DSL 26 2
4 deployment by new operators & rollout subscribers is a 3G customer
10% 25 20 1
1 13 of long distance network will drive an
20 15 1 12 Reliance claims more than 3 Mn 3G
9 investment of around $55 bn over the
4% 15 11 0 subscribers with plans starting at
next 5 years (Crisil Research)
10 0 INR 65 and has recently launched
12 14 15 15
5 10 free mobile TV service
8 Govt. has launched a National
2012 2013 2014 2015 0 Broadband plan through which it would
2010 2011 2012 2013 2014 2015 As a comparison, China’s 3G mobile
spend ~$45 billion to build National
Source: TRAI, Avendus estimates Source: TRAI, Avendus estimates subscriber base is already at 128 Mn
Fiber Optic Network
Private & Confidential
-7-
8. ^Internet Users
Unique Internet Users (In Mn) Penetration (%)
100% Internet Penetration - 2011
400 30% 35% 82%
78% 78%
350 30% 80%
22%
300 376 25%
250
20%
60%
15% World Avg : 31%
200 273 36% 37%
10% 15% 40%
150 7%
5% 190 10%
100
120
5%
20% 7%
50
60 80
0 0% 0%
2010 2011 2012 E 2013 E 2014 E 2015 E India China Brazil US Japan UK
Source: Avendus estimates Source: Internet world stats, Comscore
World’s youngest internet population with >75 percent of all
users under the age of 35 years
2011 2015
Age group
Internet connections in India – geographic breakup 80 Mn 376 Mn
55+ 2 14
Top 8 metros* Other Metros 0.5 - 1 Million Less than 0.5 million
45-54 4 34
29% 30% 36% 37%
35-44 10
12% 12% 63
12% 11%
21% 21% 18% 18%
25-34 25 104
38% 37% 34% 34%
15-24 22 101
2007 2008 2009 2011
Source: IMRB I-Cube 2010-11 0-15 17 60
Source: Comscore , 2011 Avendus estimates
Private & Confidential
-8-
9. ^Payments: At an inflexion point, still requires a significant push
Transitioning towards emerging payment modes..
Debit Cards (Mn)
Credit Cards (Mn) 260
228 Will continue as the significant payment
182 Credit cards haven’t grown and e- acceptance mode. 360Buy has >90%
137 payments have largely been driven COD Transactions
102
through Credit cards
28 25 18 18 18 In-store prepaid e-wallets / vouchers
Will gain acceptance with trust
2007-08 2008-09 2009-10 2010-11 2011-12* Banks have given a good thrust on issuing
Large merchants will push this
Debit cards and there has been gradual
adoption towards debit card payments
Spending by cards Multi-purpose Prepaid Cards
Debit Card (USD Bn) Credit Card (USD Bn) Net banking has grown seven fold in last 4 Freedom Card: Itz Cash, DCB, Visa
years. 7% of the account holders access Can go the GreenDot route as well
Net Banking – This translates in to a user
15 14 17 21
13 base of ~15-20 million
4 6 9 12
3
2007-08 2008-09 2009-10 2010-11 2011-12*
Mobile wallets will gain momentum
Spend per card holder p.a. has been
NGPay has experienced good traction
increasing steadily. Spending through
UK player Wonga has ambitious plans
Debit cards has been on the rise
Telcos could give this a thrust
Spend per card holder per annum
INR 2009-10 2010-11 2011-12* Market outliers:
Debit Cards 1,452 1,698 1,992 •OTAs primarily operate only on e-payments Hybrid Kiosks / Trust Points
•BookmyShow will sell tickets worth Rs 190 Touch models could drive the growth in
Credit Cards 33,728 41,860 52,997 Cr this year only through Cards Tier II / Tier III centres
*2011-12 – Annualized data as per Nov’11 figures
Private & Confidential
-9-
10. ^Online Advertising
Share of Online Advertising Online advertising market (USD Mn)
Online advertising is leading consumption and several leading
Time spent (%) Ad spend (%) advertisers in India are now spending 5-10% of their
15% advertising budget on digital advertising
9%
7%
1600
2%
410 Some of this difference can be attributed to the extra-ordinary
success of online classifieds and the visibility in evaluating
2011 2015 2011 2015
digital advertising performance
Online advertising includes online classifieds which contributed $167 mn in 2011 Other factor is the favorable demographics of the online
population – most of whom are the focus target group for
marketers
Current composition of Indian advertising market (% share of total revenues)
Major portion is occupied by Google and Facebook, and a
Includes: Includes: significant portion of the remaining is through advertising
Yahoo! Naukri networks
Rediff Bharatmatrimony
Web 18 Shaadi
Times group Jeevansathi
Cricinfo Carwale
MSN Motorexchange
HT Media Justdial
The dominance of these players seems to suggest that there is
29% Sulekha
a significant untapped potential for advertising lead content
portals to expand
22% *Available advertising pie
100%
for rest of the players There continues to be opportunities for Indian advertising
41% service providers which include advertising networks and
9% agencies
Total Facebook + Google Portals Classfieds Others*
Direct + Google Adsense
Private & Confidential
- 10 -
12. ^E-Commerce: $24 billion market opportunity by 2015
E-commerce is expected to leapfrog in India due to increasing broadband penetration leading to high number of transacting users
Increasing PC broadband and Mobile 3G and 4G penetration to enable higher e-tailing penetration
Correlation between broadband and e-tailing India – Transacting Users
5% India
China 2% Users transacting online (mn)
Broadband penetration (% of households) % of total internet users
E-tailing/ Total retail (%)
4% Broadband penetration (% of households)
1.4%
E-tailing/ Total retail (%)
14% 14%
2010 2% 40 16%
2015 13%
3%
11% 10%
0.9% 30 38 12%
1%
2% 2008 2014
0.6% 20
2009
2010 2011 28 10% 8%
2009 0.4%
1% 2006
1% 2013 21
0.2% 10 15 4%
2005 2007 0.1% 0.1%
2012
9 11
0% 0%
2006 - 0%
0% 10% 20% 30% 0% 5% 10% 15% 20% 2010 2011 2012 E 2013 E 2014 E 2015 E
Source: CNNIC; Worldbank;, 2011 Source: TRAI, Avendus Estimates Source: TRAI, Avendus Estimates
Total Online Consumer Revenues (USD Bn) India
% of share of Online Travel E-tailing (USD Mn)
15,000 Penetration of e-tailing (%) 2%
30 90% 87% 100% 1.4%
78%
69% 80% 0.9% 11,778
60% 10,000
20 51% 60% 0.6% 6,933
0.4% 1%
24 40% 5,000 0.1% 0.2% 3,844
10 17
12 20% 1,933
9 800
467
5 6
- 0% - 0%
2010 2011 2012 E 2013 E 2014 E 2015 E 2010 2011 2012 E 2013 E 2014 E 2015 E
Source: IAMAI digital commerce 2011; Avendus estimates
Source: IAMAI digital commerce 2011; Avendus estimates
Private & Confidential
- 12 -
13. ^Evolving landscape – how the e-tailing industry will hit the $12 bn mark by 2015?
Top 5-10 players
Horizontal market leaders and select
could command a
vertical leaders will grow rapidly
40-50% market
Consolidation is on the anvil share
Offline players / Brands will come-up in a 80% of the Top 20
strong way with respect to their online US e-tailers are
strategies offline retailers
Marketplaces /
Marketplaces and e-commerce platforms
platforms will hand-
will help bring a large population of mid
hold retailers to
size merchants online
come online
Non Internet users /
Inclusive e-commerce could potentially
non card holders
take-off
need to be covered
Regulatory
Key risks to the growth Subsequent capital infusion
Eco-system keeping pace with the growth
Private & Confidential
- 13 -
14. ^Information : Search, Portals, Classifieds
Share of Search websites in Search
Market Size of online
Online advertising - 2010 advertising on search
57% websites (USD Mn)
60% Google rules the Indian search market with >90% market share leaving
42% 46%
few opportunities for local players
40% 300 -
24%
100 470 Mobile and Vernacular Search may emerge as next growth opportunities
20%
but Google is well covered on these fronts as well
0%
India Japan US UK 2010 2015
Market Size of Portals Portals
(USD Mn)
180
110 Portals continue to attract high traffic, ~46% of total internet users access
the top portals with concentration of users in top 5
With over 200 million mobile-only Internet users in India in 2015, there will
2010 2015 be several opportunities for mobile based portals
Market Size of online Composition of investments in online Classifieds
classifieds (USD Mn) classifieds space in India (2006-11)
Jobs sites with $90 Mn in revenues and Matrimonial sites with $55 Mn
100% 55% revenues in 2010 accounted for 65% of overall classifieds market
220 510 Horizontal classifieds are growing and seeing the entry of foreign players
18% Local search presents a sizeable opportunity and is dominated by local
players
27%
Mobile classifieds, currently at $45 Mn market size are growing rapidly
2010 2015 Total Local Horizontal Vertical
Private & Confidential
- 14 -
15. ^Online Services : Financial Services, Education, Healthcare
Online Insurance Urban Online Insurance Demand Financial Services
(Demand v/s Internet Density)
Personal Loan
Online Enquiries Claimed Internet users There is potential for movement of simpler products like credit cards,
Home Loan
42% personal loans and term insurance to the online medium
35% 37%
In (USD Mn) 580
22% 25% Utility payments including online payments for home utilities and online
18%
244 11% 11% mobile recharge sites have seen a good traction over the last 6 months
310
44 410
170 Banks, Financial Institutions and third party sites are all making a run for
2010 2015 E Top 8 Other Big 5-10 lac Less than 5 the online insurance market. This market is expected to double by 2015
Metros Cities towns lac towns
Source: Insuring India Report
Education
Global E-learning Supplementary education segments - tutoring, test preparation and
market (USD Bn) distance education are the ones that have gained the most traction in the
B2C e-learning segment so far
50
32 Early stage models (lead generation and hybrid teaching) are doing well,
but pure online models are still struggling for scale
At this stage, having an offline presence seems to be an important factor
2010 2015 to facilitate adoption of e-learning. Some players have integrated e-
learning with physical mediums such as tablets
Top health portals in India by unique visitors
- September 2011 (in‘000) Healthcare
WebMD Health 1,326 Top health portals in India are dominated by international players
Livestrong 763
Everyday Health 689 Telemedicine remains the Holy Grail. Several policy initiatives in this area
including the establishment of the National Telemedicine task force have
About.com Health 624 aided in the development of the private players
Caring.com Alliance 271
Your Total health 254 Hospital management and Electronic Medical Records (EMR) space has
been seeing some action as well
Source: Comscore ,
Private & Confidential
- 15 -
16. ^Entertainment : Gaming, Music
Gaming
Mobile Games Online Games With the growth of mobile Internet and the popularity of casual games,
mobile gaming is expected to lead the growth of the gaming market in
89
In (USD Mn) India
71
Online games with localized content such as Cricket and Bollywood are
56
509 being offered along with premium content licensed from EA, Mircosoft etc.
44
36 380
29 284 Online gaming is affected by the micro-payments problem. This has
158 211
118 meant that companies have had to depend on advertising as the primary
2010 2011 2012 E 2013 E 2014 E 2015 E revenue stream. Some of this problem is now being addressed by the top
players through COD and mobile based subscription
Size of Digital Music industry in India (USD Mn)
328 Music
262
202
161 Digital music’s share in the overall music market in India is expected to
115 grow from the current 49% to 79% by 2015
92
MVAS products such as Caller Ring Back tones and Mobile Radio
contributed more than 90% of the Digital Music revenues in 2010
2010 2011 2012 2013 2014 2015
Private & Confidential
- 16 -
17. ^Contact Information
AASHISH BHINDE KARAN SHARMA
Executive Director Associate Vice President
Email: aashish.bhinde@avendus.com Email: karan.sharma@avendus.com
Mobile: +91 98200 45814 Mobile: +91 77380 92973, +91 98677 37779
Landline: +91 22 6648 0901 Landline: +91 22 6648 0967
KANCHAN MISHRA ANSHUL AGARWAL
Associate Associate
Email: kanchan.mishra@avendus.com Email: anshul.agrawal@avendus.com
Mobile: +91 77381 56368 Mobile: +91 77381 56367
Landline: +91 22 6648 0030 Landline: +91 22 6648 0040
SANCHIT SUNEJA
Analyst
Email: sanchit.suneja@avendus.com
Mobile: +91 98670 30991
Landline: +91 22 6648 0995
Avendus Capital Pvt. Ltd.
Mumbai Bangalore New Delhi New York London
IL& FS Financial Centre # 1 & 2, The Millenia Suite 22A/B, The Aman 100 Park Avenue, 16th fl. 32 Brook Street
B Quad, 5th fl, Bandra Kurla Complex Tower A, 10th Fl, Murphy Road, Lodhi Road New York London W1K 5DL, UK
Bandra East, Mumbai, India 400051 Ulsoor, Bangalore, India 560001 New Delhi – 110003 NY 10017 Phone: +44 20 7647 7700
Phone: +91-22-6648 0050 / 0950 Phone: +91-80-4115 0000 Phone: +91-11-4535 7500 Phone: +1-212-351 5066 Fax: +44 20 7647 7710
Fax: +91-22-6648 0040 / 0940 Fax: +91-80-2555 0868 Fax: +1-484-231 2343
www.avendus.com
Private & Confidential
- 17 -
