The Securities and Exchange Board of India (Sebi) may soon issue rules for setting up stock exchanges dedicated to small and medium enterprises (SMEs). “Sebi is working on the concept paper on SME exchanges. It may soon release the guidelines,” Minister of State for Micro, Small and Medium Enterprises (MSMEs) Dinsha Patel said at a seminar organised by MCX-SX and the Society for Capital Market Research and Development here today. He said SMEs were not able to raise capital through the market since they could not meet the listing and trading requirements of BSE and NSE. Hence, a separate exchange for them was required, he added. He said India could use experiences of SMEs listed on stock exchange in countries like the US, the UK, Japan and China. MSME Secretary Dinesh Rai said there should be more than one exchange for SMEs. “Sebi is working on the guidelines keeping in mind the nature of SMEs. I feel strongly that we need to have more than one SME exchange,” he said. There are over 13 million MSMEs in the country employing about 42 million people. BSE, NSE and the new entrant, MCX Stock Exchange (MCX-SX), had shown an interest in setting up an SME exchange, said an industry source. MCX-SX Vice-Chairman Jignesh Shah said India did not have mature venture capitalists to fund small and medium firms and the stock exchange was the only place where they could raise capital. “We are waiting for Sebi guidelines to offer services to SMEs on our platform,” he said. Speaking on the sidelines of the seminar, the minister said the ministry had approached defence and railways ministries asking them to procure 20 per cent of their requirements from MSMEs.

SMEs’ share in GDP may increase up to 22% by 2012: study

The study said the sector contributes 40% to the country’s exports and with the help of modernised technology its share would increase to over 44%

New Delhi: The contribution of small and medium enterprises (SMEs) to India’s GDP is likely to increase up to 22% by 2012 from about 17% at present on account of an increase in production due to technological upgradation, says an industry chamber survey.

“SMEs’ contribution to Gross Domestic Product (GDP) is projected to go up by a minimum of 5% and touch 22% by 2012, since over 60% of them are aggressively upgrading themselves technologically,” Assocham survey said.

It said, the technology modernization would not only help in increasing production but also bring down the input costs.

The study said, liberalisation and deregulation in the industry would also contribute to the sector’s growth, adding that the sector, which has grown at the rate of 35% in the last two years is likely to register 40% growth in the next five years.

Further, the study said the sector contributes 40% to the country’s exports and with the help of modernised technology its share would increase to over 44%.

“With technology modernisation, the share of these units in the country’s exports would also surge to over 44% in the next five years from about 40% at present,” Assocham secretary general D S Rawat said.

Numbering about 32 lakh, there are various hurdles in the growth of these units as they face problems like non-availability of credit facilities and high interest rates, it added.

WPP Digital, the digital arm of world’s second largest ad agency WPP, announced Monday that that it has acquired a 75 per cent stake in Quasar Media, Delhi based online media buying company. They haven’t disclosed the financial terms, though. WPP Chief Executive Martin Sorrell had told Reuters on the sidelines of conference last week that they would be acquiring stake in Quasar. Quasar, founded in 2005, is India’s largest online media buying company. It also offers digital media, creative, ebusiness solutions, search marketing and optimization, mobile marketing, ecommerce, social media and eCRM among others. The company employs 73 people and has clients like LG Electronics, MakeMyTrip.com, Microsoft, Monster.com, VISA, Motorola, Zapak and Airtel.

Quasar will continue to be managed by its founding team, led by CEO Harish Bahl, and Chief Business Officer, Manish Vij. The company’s revenues for the year ended 31 March 2007 were Rs 10.36 crore with gross assets at the same date of Rs14.95 crore. This would mean a billing of more than Rs 100 crore.WPP is betting on the future of digital advertising, which is expected to become a $560 million industry in India by 2009. This will be about 7 per cent of the total advertising market in the country.

7% of total adSpend- that is cool!!!

Internet usage in India has grown more than 11 times over the last seven years. The boom is being driven not by metros, but by smaller and non-metro towns, where the number of users has risen by a whopping 69 times and 33 times respectively since 2000.

The number of users has grown in all socio-economic categories, as well as in all metros and non-metro towns. In absolute terms, the top eight metros still have the largest numbers. However, the growth has been the fastest in the smaller and non-metro towns. In fact, small towns have the second largest number of total users after the top eight metros put together, where the total number has grown by just over five times.

These are the findings of an internet usage survey, done by the e-technology group of IMRB International. The I-Cube 2007 survey was conducted across 30 cities and towns covering 65,000 people.

The usage profile was prepared by studying active internet users, defined as those who accessed the internet at least once in the past one month.

Where do people access the net? Using the internet in schools and colleges is the fastest growth category — 22 times what it was in 2000 — indicating increasing computerisation of educational institutions. This is followed by internet access from home computers — a segment that has grown over 15 times. However in absolute numbers, cybercafes have the largest numbers accessing the internet, about 57 lakh, followed by those logging on from home. Surprisingly, accessing the net at office comes in only third.

In terms of activities on the net, email and information search are still the biggest drivers of internet use. More than 78.5 lakh people use the net for email compared with less than half that number, nearly 37 lakh, for information search. With the highest jump of 27 times in the number of users since 2000, the entertainment segment comprising games, ring tones, music and video downloads has caught up with the chat segment. Both have about 15.4 lakh users followed by e-commerce — including online travel, share trading, banking and buying products — which has grown nearly 25 times since 2000.

More than 60% of information seekers look for general information on the net and 45% look for educational information. About 27% search job sites and 17% seek financial information. Interestingly, at 8%, the number of people looking for astrological information is double that of those searching online matrimonial sites, a mere 4%.

What makes India Unique? For one, this is the only country where Internet connections are falling!!!! This is also the only country where more mobile phones are accessing the net than PC’s. Read on..

In Q2 07, no. of connections went down from 9.27M to 9.22M – largely due to the 2.93% decline in subscriber base of the largest Indian ISP; BSNL. The 2^nd largest ISP, MTNL also registered a decline of 0.5% in its subscriber base. The two companies account for 53% of the Indian subscriber base. Now before we all think that Internet is doomed in India; take a step back. The reason for this downfall is because dial-up subscribers are moving out; broadband connections went up 3.55% to rise to 2.42M connections, end Q2 07.

The other more heartening trend is that, mobile net connections went up by a whopping 7M to 38M subscribers. This shows that number of people using mobile to access the net TODAY is 4X the number of people using a PC. With total mobile penetration at 200M, a healthy 20% of that base is using the mobile phone to access the net. Introduction of 3G, will add 10M incremental to this according to the Indian Cellular Association.

So what does this mean… couple of things

1.       Mobile is the primary device of internet usage: 4X than PC. Total Mobile Web usage: 38M users versus 9.22M PC connected users.

2.       20% of mobile users (200M) are using the mobile device to access the net. India adds 7M new users on the mobile front every month. The caveat is that most of this is around VAS (ringtones, caller tunes etc etc) which is all coming off the net.

3.       Of the 7-8 million handsets sold in the country every month, over four million are Internet-enabled- whether they use it or not. If somebody launches relevant apps – then you can see where this number is going.

Bottom line: As handsets grow more powerful, as more users are getting on the mobile bandwagon, mobile internet is where the action will be….and not the PC. That is why the decline does not worry me atleast!

Firefox passes 400 million downloads

Firefox just passed the 400 million download mark, according to the Spread Firefox site for promoting the open-source, extendable Web browser.

That number shouldn't be confused with actual installations, Mozilla's public relations folks rightly caution. (I'm sure I've downloaded it at least a dozen times this year, and I'm only using copies on three computers at present. On the flip side, there are any number of other ways to get Firefox, including Linux installations.) Nevertheless, 400 million is an achievement worth noting, given that just a few years ago it looked like Microsoft had the market locked up with Internet Explorer.

However, not everything is going swimmingly in Firefox land. Mozilla had hoped to release a Firefox 3 "Gran Paradiso" beta in July. Instead, Mike Schroepfer, Mozilla's vice president of engineering, now says it's due "this fall.

The Landscape

There are different media options available to an advertiser today in India. 70M Cable TV homes, 200 M newspaper readers, 40M Internet users and now 200M mobile phone users. So very soon mobile phones will be the biggest medium that ad folks will have to reach consumers. However if we look at ad spends it is the other way round. adSpend on print media is at Rs 7000 cr and that on TV is Rs 6000 cr. Internet is about 200 cr and outdoor adspend  is 700cr. Mobile surprisingly is just 8cr.

The single biggest reason for this is in the intrusive behvaiour of SMS ads. Rememeber how we cringe every time we get an SMS saying win a Scorpio !!!. While the mobile market has evolved significantly in terms of mobile advertising the technology is not simply there to do sophisticated pull marketing or profile based marketing on the mobile. However the mobile medium also has some advantages

1.       The user looks at his phone every 5 mins or so. That is huge eyeball potential

2.       The message  stays there with the user till the time he wants. No other medium does that..you can argue even newspaper allows you but I don’t look at my paper every 5 mins J

Well so mobile operators are looking at in a big way. You have operators today who are signing up with corporate for specific profile based advertising. Here is an example of what might happen in the future. In Hong Kong whenever a user nears a pizzahut outlet, he gets an sms for a 20% discount. If the user says Yes, a bar code SMS is sent to the mobile who can then walk in present the barcode on his mobile and gets the discount !!

Click through rate in the mobile world (8%) is also higher than internet, making it more lucrative.

So bottom line: We will see mobile emerge as the top 2 medium for advertisers

ROI on Advertising

Well Indian advertisers have the 3^rd best ROI across all Asian countries when it comes to TV medium. If we look at the Net, India again is set to have 60% growth (best in APAC) on ad spends on the Net. Outdoor advertising is the most expensve in India across all the countries surveyed.

Heres a tip I learnt: Marketers tend to lag behind the speed with which the consumer adopts to new media.

Well out of the 165 M odd mobile users in thr country (there are now over 200M), 20% or so connect to the net through the mobile device.  If you look at device sales in 2006, 65M handsets were sold out of which 35M were GPRS enabled.  The cheapest GPRS enabled phone comes at 2500 rupees!!!!!  I have been repeatedly hearing that GPRS is a limitation etc etc .. but with this figure it is easy to see that mobile internet access is the way its going to be in the future.

Now at a recent conference I learnt that there are only *M active GPRS users in the country. That means there are people buying GPRS enabled phones but are not using it.

Now if we only get relevant apps which target this segment, I amsure we will see more and more of these handset buyers turning on GPRS and changing the way internet accessed in the country. The other thing which is holding us back is the bandwidth issue. If the govt is to allocate spectrum and high capacity bandwidth for high end data services then it will fuel the mobile access further.

Currently the popular apps are chat and email. Now when you think about high end smartphones, those are about 5% of the total handset sales. Windows has about 17% of this market and is growing 100+% yoy.

Value Added Services (VAS) in india is an awesome Rs 8200 crores growing 65% YoY. Out of this the ringtone market alone is growing at 50% and is valued at 180cr. Some of the major earners in VAS are ringtones, billing info, contests, exam results, alerts from banks, railways etc.

So I learn that there is a new kind of convergence taking place – between social networking and gaming. The idea is to create more interactive games by building communities around games and letting members of these communities interact with each other. The concept actually is not new.. if you have ever heard of MMORPG  (Massively Multiplayer Online Role Playing Games) that is. MMORPG facilitates creation of communities around a game and then lets gamers interact with each other trhought chatting, profiling, avtaars etc.

Now why this is interesting is because when you have people with like-minded interests (gaming) and passion coming together (social networking)… it lends itself easily to do targeted advertising to these people and generate more revenue or ROI. Hence you will see an evolution of more and more “in game advertising” like you see in TV today (back after a break kinds). Learnt from today’s article in ET that  companies are also exploring “advergaming” which means games based on popular ads. Recent examples can be seen from Zapak’s advergame based on Akshaye kumar’s Thums Up ad.

Wonder what will be the appeal of advergaming!

The online gaming market in India is pegged at INR 21 crores (~$5M) in 2006. This money comes basically from 3 sources – advertising, subscriptions and cyber cafes.

·         Advertisement: This includes both in game advertising as well as website advertising. It accounts for 11% of the total industry revenues.

·         Subscriptions: This is the monthly amount you pay to the game publishers both Indian and International. Typically this is around MMORPG games. This is about 31%.

·         Cyber Cafes: This implies the revenue you pay to organized cyber cafeplayers like Sify or Reliance when you indulge in online gaming from their cyber cafes. Makes up for the bulk of revenues for the industry (58%)

In US, Ads constitute 40% of the total gaming revenues and as is evident from above it is low in India. Going forward, ad revenue is expected to contribute the major bulk of revenue in this sector.