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In September 2012 Indian government has passed the Act to allow Global Retailers to set up multi-brand retail operations in India. Are you ready to take advantage of the recent changes in the retail policies of India and tap the large & growing Indian market?

Music Trades featured Top International retailers in their May 2012 issue. It featured European, Australian & Russian retailers and also 2 Indian Retailers of Musical Instruments. One was a Maverick e-tailer BAJAAO& other was India’s leading brick-motor retailer Sara-Trans. In these articles, Music Trades predicted that India (Non Indian entities were restricted to open Multi-Brand Retail shops) will soon open-up its Retail Industry to International Retailers. This prophecy of Music Trade has come true & India has opened up its Multi Brand Retail industry to foreign entities. Global retailers have welcomed this as they have been waiting for coming to India. Now they can explore this opportunity& grow exponentially as India is fast becoming the largest consumer market in the world. Global retailers are formulating plans, strategy to start retail operations in India& to launchretail stores in first half of 2013. Likewise this is an opportunity for Global MI retailers to start their retail operations in India. We have received couple of requests on exploring opportunities for setting up Indian retail operations in the Musical Instruments & Professional Audio industry.

Music Trades has listed India at 23rd position in country rankings as per revenues & at 2nd place in terms of growth (12% after Indonesia). Indian share is estimated at about 1% of the global trade. The above are based on official numbers & disclosures. India has a very prevalent grey market & also customers use other channels to buy. Hence we believe that the actual figures will be twice of the reported numbers. Taking cognizance of this along with a bit of discounting, perspective & prospects of the Indian market change & hold great significance not only for the Brands but for the Retailers to look at India in a different light.

Some known truths of the MI, Pro AudioRetail Industry in India:

ü Indian Music Trade industry has done a super job of developing & cultivating a market here in the past decade. India has changed and is growing at a fast pace. Due to their bottlenecks on economies of scale & lack of support from the Brands, the stakeholders in the industry are not able to ramp up operations as needed in todays times.

ü Indian Retailers don’t sell all brands/products/models. Import of the products is significantly less & retail stores carry limited inventory.

ü Almost 90% of retail operations are run by importers/distributors of the brands & hence only selected brands are present in these shops.

ü 50-60% of MI, Pro-audio brands are not even present in the Indian market.

ü Presently these retail stores are present in not more than 200 locations, which is too less for a big & diverse country as India.

The above has led to the demand more than the official supply. Thus Indian consumers are forced to use alternative channels for purchases. Mostly used channels by Indian consumers are the grey markets prevalent in major Indian metors, import on their own, asks friends & contacts abroad to ship the products or buy from the e-store of Global Retailers.Global retailers offer through their online stores shipping to India. However this form of e-tailing is not allowed as per the present Indian laws as Ecommerce selling to Indians can only be done by 100% Indian entity.

In September 2012, Indian Government passed an act allowing Global Retailers to set up their multi-brand retail operations in India via FDI (Foreign Direct Investment) route. This has now paved way for Global MI Retailers to enter India & set up shops.

Opportunities

Indian market potential: World’s second largest population (over 1.3 billion), average age being 12-25 yrs, Rising disposable income, Increase in standards of living&growing interest in music & entertainment. This ismusic to the ears of Global retailers who are seeing stagnant growth in their markets. The huge market potential of India for a Global MI retailer is the next big thing.Being in India, the retailer can explore the market potential of the entire Indian sub-continent including Burma, Bhutan, Nepal, SriLanka, Bangladesh, Pakistan, others. Already few Indian retailers do supply or have channel partners in these countries.

Indian Ml& Pro-Audio Industry:The industry isFragmented &disorganized with handful of players. Most importers & distributors also operate as retailers & have dealers in select locations. Hence a strong brand or loyalty amongst the Indian consumer is non-existing. Global MI retailer can establish its brand as the goodwill from their international operations will only lead to an effective start & building a strong brand in India. At the same time the Global retailer can bring in other ancillary services of rental, music school, artist relations, financing, camps, etc which is almost negligible in India.

MI, Pro-Audio Brands: Presently in India only about 30% of the Global brands are imported, distributed & retailed. A Global retailer that enters India with these new brands can immediately makes its presence felt and also provide the existing brands newer channels to sell their products.

First mover advantage:The Multi Brand FDI policy has significant deterrents (more on this later) that will only allow or make it possible for only few serious players with deep pockets to open up their India operations. Hence if you fit the bill & can overcome the challenges you stand to gain the BIG 1st mover advantage & gain significant market share in few years.

Challenges:

Government Regulations on the minimum investment: The minimum investment required to open retail operations in India via FDI is USD 100 million. This amount is to be invested in period of 3 years in setting up retail shops, backend infrastructure, inventory, manpower, training & promotion. This minimum investment criterion will ensure only few serious players can set up Indian operations. Though the amount seems high its easy to recover as the market size is huge & getting 1 million customers for profits of 100 USD. At the same time, the retailer can use this amount to buy inventory for India operations from its Global Retail operations. Thus you can reduce the burden of carrying inventory by distributing it to India. Hence those retailers who have pockets to invest such amounts will easily overcome this challenge& enjoy the first mover advantage.

Selecting the right partner for your operations in India: Though FDI has been allowed in Multi-brand retailing, its with the clause that 49% will be held by an Indian entity. This restrictive clause is actually a boon in disguise as the Foreign retailers can acquire the local expertise & knowledge in form of an Indian partner by giving minority stake of 49% in their Indian entity. There are multiple opportunity from different type ofentities as there are private limited companies, partnership firms, family concerns & even public limited companies wanting to partner with the right Global Retailer for India. You can choose the right type of partner for yourself depending on which type of entity suits you.

Government Regulations on local sourcing requirements: One of the other seemingly restrictive clauses of the Multi brand retail policy is a minimum sourcing requirements from local industries. In India there are small-scale industries manufacturing local Indian instruments. These Indian instruments retail in the North America & western countries for more than 1000% margins. Thus being in India will enable you to source these Indian made instrumentsdirectly from manufacturer, which will benefit your Global retail operations of the Indian musical instruments.

Regulatory compliance & procedures:India has been infamous for its laws, procedures, compliances, regulatory provisions and red tape. These are errant factors for foreign companies to set up Indian operations. FDI policy in multi brand retail has been the favoriteof the present government and they are encouraging by giving red carpet welcome to the Global Retailers. In the last 3-4 months more than 15 FDI proposals have been cleared. An experience Indian partner along with professional consultants can handle these issues & make your Indian operations happen easy & smooth. Many Global companies, MNCs have engaged them for a quick and effective start of their Indian operations.

India holds a great potential & is an untapped market for the MI & Professional audio. India will emerge in the top 10 destinations for MI & pro audio in next 2-3 years. It is also clear that only select Global retailers will be able to seize this Multi Million dollar opportunity. By playing the strategy right & supported with the right Indian partner, If you are here, you will ride the Indian consumption growth story and lead your company to a new & exciting horizon. Borrowing the sound track from the famous movie “Slumdog Millionaire”. Come to India. Jai Ho. Jai Ho!!

 

Friday, 07 September 2012 15:31

Auriga Logic Services

 

Auriga Logic is an International Management & Business Advisory firm headquartered in Mumbai, India having a diversified services portfolio and international clients:

We provide the below exclusive services:

  1. Business Advisory
  2. ICT Advisory (Human & Technical Advisory)
  3. Investment Advisory
  4. Venture Capital & Seed Funding
  5. Financial Advisory
  6. Legal & Tax Advisory
  7. Setting up Indian Operations

 

Friday, 07 September 2012 15:28

Cross Border Tax Advisory

In today's constantly changing global scenario, capital is always in search of lucrative opportunities and businesses always aspiring to convert their potentials into capabilities. With liberalization playing a key role in Indian policies, it has led to a multitude of multinational companies entering India. Simultaneously Indian companies have established their presence in global markets and several companies have also been listed on overseas bourses such as the NASDAQ etc. The interplay of domestic and international taxes incident on these companies often results in complex situations. Converging on an optimum solution requires taking a holistic view on the "total" tax impact rather than a country specific examination. International Services offered by us include:

  • Transnational Capital Flow Advisory
  • Transfer Pricing
  • Taxation of Non Residents

Friday, 07 September 2012 15:28

Domestic Direct Tax Advisory

Sound business decisions need to be backed by the right tax advice. Today's dynamic environment has led to fierce competition. Corporate entities have realized the importance of innovative tax strategies and proper planning to reduce the tax incidence, provide the much-needed cutting edge over competitors and meet the challenges of global avenues. We offer expertise on all aspects of Indian Direct tax, while rendering quality control assurance in tax compliance, returns preparation and filing. At the corporate level, we advise on the development of tax efficient international corporate structures, strategies and in negotiating local tax incentives. We provide advance planning to minimize future taxes and evaluate the tax implications of major business decisions. The Domestic Direct Tax services offered by us are:

  • Corporate Taxation Consultancy
  • Corporate Taxation Compliance
  • Corporate Tax Litigation
  • Specialized Tax Compliance for Mergers and Acquisitions
  • Tax Reviews (Due Diligence)
  • Cross Border Transaction Advisory for Double Tax Avoidance Agreements
  • Personal Taxation Services
  • Miscellaneous Tax Services

Friday, 07 September 2012 15:27

Non Resident Tax Advisory

Indirect taxes pervade every area of business across all industries. Indirect tax encompasses a host of taxes on consumption, manufacture and trade - value added tax (VAT), goods and service tax, sales and use tax, customs duties, property taxes, environmental levies and many more. Businesses are facing profound change, including the impact of the “Connected” economy, the globalization of market, and governments increased reliance on indirect taxes. In today’s global market, the effects of a transaction undertaken in one country can be felt all over the world. It’s like a domino run: hit the first domino, and trigger a reaction all the way down the line. We believe that offering clients technical tax knowledge is no longer enough. Our clients want demonstrable, implemented value and the latest information using the most efficient communication media, as well as fresh ideas that address their business issues.

Thus the following services are emerging areas of our practice:

  • State Value Added Tax
  • Service Tax
  • Internal Audit & Compliance Review

Friday, 07 September 2012 15:26

Legal & Tax Advisory

Through our internally developed approaches and methodologies, vast knowledge, expertise and experience assimilated by our associates & partners in the last 5 decades, we believe that we have a good understanding of our client’s needs and requirements. We are well equipped to meet the fast changing and evolving requirements, so as to provide our clients with effective solutions that would exceed their shareholder value creation expectations. We at Auriga Logic. are focused to bring sizeable value to a client's drive for growth, competitiveness and profitability. Our dedicated associates, partners & team of accountants, company secretaries and lawyers specializing in their respective areas, work closely with the various other functional experts within the team. We are driven by the objective of creating shareholder value and synergies for our clients through corporate strategy.

Friday, 07 September 2012 15:23

Investment Advisory

Services rendered by us include under Investment Advisory:

Target Search and Opportunity Assessment

Financial Modeling & Valuation

Business and Financial Due Diligence

Capital Raising Assistance

Portfolio Performance Enhancement

Target Search and Opportunity Assessment

Based on client requirements, we provide assistance in sourcing investment and joint venture opportunities. We offer preliminary validation of the opportunity in form of an Opportunity Evaluation Report that takes into consideration macro industry variables and investment rationale together with identified risk factors.

Financial Modeling & Valuation

We prepare flexible and comprehensive financial models for our client’s business, incorporating past and projected financial statements, complex business situations and sensitivity analysis. Our valuation assistance includes estimating the valuation range using different methodologies and arriving at the indicative returns to various stakeholders of the company.

Business and Financial Due Diligence

Our business and financial due diligence service offering enables our clients to undertake an in-depth analysis of various qualitative and financial parameters, highlight potential areas of concern and quantify its impact on the identified target company.

Capital Raising Assistance

We provide comprehensive end-to-end assistance to our clients seeking to raise capital. This includes short-listing of potential investors (private equity and strategic investors) from our network, showcasing the opportunity to them, assisting in negotiations and structuring the transaction.

Portfolio Performance Enhancement

We offer post-transaction advisory services including regular performance reporting and ongoing advisory services to the investee company in the areas of corporate performance improvement. Where the investor has a wider Indian portfolio, monitoring and performance improvement services are provided.

Friday, 07 September 2012 15:23

Venture Capital & Seed Funding

Auriga Logic provides & arrange funding for early stage businesses and startups in India. Auriga Logic, is committed to grow the entrepreneur ecosystem in India and is looking for young companies & bright ideas to incubate and grow them.

Thursday, 10 May 2012 15:51

Case study

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