India Internet Goldman Sachs

INDIA RISING
May 4, 2015
India Internet
India is poised to see more people

join the Internet over the next
15 years than any other country.
The prospect of 1 billion people
online by 2030 sets the stage for
enormous growth in e-commerce. In
the latest report in our India Rising
series, we examine how a nascent
sector that is today dominated by
private unicorns and international
companies is likely to transform into
a US$300 billion hyper local, ondemand market.
Unlocking the potential of a billion digital users
Rishi Jhunjhunwala
+91(22)6616-9039
rishi.jhunjhunwala@gs.com
Goldman Sachs India SPL
Piyush Mubayi
+852-2978-1677
piyush.mubayi@gs.com
Goldman Sachs (Asia) L.L.C.
Venkat Surapaneni
+91(22)6616-9047
venkat.surapaneni@gs.com
Goldman Sachs India SPL
Goldman Sachs does and seeks to do business with companies covered in its research reports. As
a result, investors should be aware that the firm may have a conflict of interest that could affect the
objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision. For Reg AC certification and other important disclosures, see the Disclosure
Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not
registered/qualified as research analysts with FINRA in the U.S.
May 4, 2015
India: Technology: Internet
Table of contents
PM Summary: Transforming into a hyper-local, on-demand market
India internet market: Hyper-local and on-demand
17
Indian companies that are exposed to India internet themes
20
Six key ecosystem enablers
23
Ecosystem #1: Telecom infrastructure developing at a rapid pace
24
Ecosystem #2: Capital infusion accelerating as global firms enter
31
Ecosystem #3: Payment landscape evolving across channels
35
Ecosystem #4: Logistics Within the bottleneck lies the opportunity
38
Ecosystem #5: Government initiatives likely to pick up
40
Ecosystem #6: Talent driven start-up ecosystem fast emerging
43
Risks to our view: Execution is key
45
Addressable markets: US$300bn opportunity
47
TAM# 1: Indian e-tail market to reach US$220bn by FY30E
48
TAM# 2: Online travel market to reach US$40bn by FY30E
52
TAM# 3: Digital ad market to reach US$15bn by FY30E
54
TAM# 4: Electronic payments market to reach US$5bn by FY30E
57
Indias increasing importance for global firms
59
Google: Multi-pronged opportunities across verticals in India
62
Facebook: India set to become the largest subscriber base globally
64
Twitter: Picking up pace in India
66
Amazon: A giant with global expertise and balance sheet
67
eBay: Early entrant building a diversified portfolio
68
Samsung: Market leader facing stiff competition
69
Xiaomi: Unique marketing style, but going full throttle now
70
Apple: Growing shipments, but not significant strides in India yet
71
SoftBank/Alibaba: Strategically entering India through investments
72
Private companies dominant in the Indian market today
74
Appendix
80
Disclosure Appendix
83
The prices in the report are as of the market close of April 28, 2015, unless stated otherwise.
Goldman Sachs Global Investment Research
May 4, 2015
PM Summary: Transforming into a hyper-local, on-demand market

We believe India is at an inflection point of consumption moving online at a rapid pace
as digital transformation commences. This should see the country emerge as the secondlargest digital market in the world by 2020, based on connected smartphones. In our view,
India will leapfrog traditional tech themes and embrace new disruptive technologies with
greater ease facilitated by a currently underdeveloped landscape. We expect diverse
demographics and inadequate infrastructure to catalyze the transformation of the sector
into a hyper-local, on-demand market.
10 pulse points of the
Indian internet market
Over the next 15 years, we estimate India will have more than one billion digital users. This
would be a unique global phenomenon, witnessing arguably the largest shift online in a
countrys population. We summarize 10 pulse points of the India internet sector that make it
a unique market and potentially one of the largest opportunities in the internet space globally.
US$300bn addressable
market for e-commerce
by 2030E from US$20bn
currently
We forecast the Indian e-commerce market to grow 15X to 2.5% of GDP, or US$300bn, by
2030 driven by hyper growth in affordable smartphones, improving infrastructure, and a
propensity to transact online. Further, Indias attractive demographics the youngest
population in the world should lead to 300mn+ new online shoppers in the next 15 years,
making e-tailing the largest online segment. We outline the four key total addressable
markets (TAMs) which we think could potentially catalyze transformation of domestic
companies into multi-billion dollar businesses:
(1) E-tailing market: US$220bn by FY30E
Opportunity: We estimate the Indian e-tail market to reach about US$220bn by FY30E
in terms of gross merchandise value (vs US$7bn currently) driven by online shopping
penetration rising to 25% from 4% currently.
Catalyst: We believe lack of adequate infrastructure would potentially catalyze the

adoption of online retail in India. Further, e-tail companies are looking to address issues
(such as fragmented supply chain) by aggregating merchants via marketplace model and
debottlenecking infrastructure to enhance the internet shopping experience, in our view.
Comparison with US/China: We estimate the Indian e-tail market at US$220bn in

FY30E vs current US market at US$240bn and China at US$134bn.
(2) Online travel market: US$40bn by FY30E

T
Opportunity: We estimate the online travel agency (OTA) market to grow to US$40bn by
FY30E from US$8bn in FY14 driven by rise in online travel penetration from 41% in FY15 to
50% by FY30E.
Catalyst: We believe the underpenetrated hotels and packaging segment would be the key
growth driver in the OTA space. At present, the OTA market is dominated by airlines which
contribute 55% of the total revenues. However, we expect other categories such as hotel
bookings, railways and car rentals to grow at a faster pace.
Comparison to US and China: We estimate the Indian OTA market at US$40bn in FY30E
vs current US market at US$137bn and China at US$23bn.
(3) Digital ad market: US$15bn by FY30E

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Opportunity: We forecast digital ad spend market to grow to US$15bn by FY30E from

c.US$0.5bn now, driven by the shift from offline advertising (such as print) to online
with mobile (US$4.6bn) and social media (US$4.5bn) being the largest contributors.
Catalyst: With increasing online adoption and expanding e-commerce market, time
spent by consumers on online media is set to rise, in our view. We believe this is likely
May 4, 2015
to shift the advertising spend to online media such as social and mobile. Further,
significantly lower digital ad rates in India are likely to rise driving the online ad market.
Comparison to global ad-spend penetration: As per our US team, the global online
ad spend stands at 23% currently and is expected to go up to 36% over the next five
years. We also assume a similar online ad-spend penetration in India by FY30E.
(4) Electronic payments market: US$5bn by FY30E
Opportunity: We estimate the electronic payments market in India to grow from just
US$80mn in FY15E to US$5bn by FY30E, largely driven by migration of offline retail to:
(1) electronic modes of payments and (2) e-commerce as data penetration improves.
Catalyst: We believe emergence of innovative payments mechanisms such as e-wallets

and social payments, helped by the potential launch of payment banks, will boost the epayments market. Further, continuing shift of payments from offline to point of sale
mode (credit/debit cards) would help increase adoption of electronic payments.
Government push: Governments initiative to extend banking facilities to its

previously unbanked citizens through the Jan Dhan Yojna scheme has added
significant number of debit cards (over 110mn in 5 months to Jan 2015), thereby
providing these customers access to electronic payments.
We look deep into the various ecosystem enablers that are likely to propel growth of online
adoption in India. We focus on six key areas:
Six enablers to provide

the launch pad
1)
Telecom infrastructure: Developing at a rapid pace: Launch of 4G services in India

and availability of sub-US$200 4G handsets are likely to compress data prices in 2015.
2)
Capital infusion: Accelerating as global firms enter: Inflows from private equity funds/
public listings will support aggressive expansion, M&A, and price competition.
3)
Payments landscape: Evolving across channels: Reduced entry barriers through

payment banks launch and initiatives by traditional banks to facilitate digital payments.
4)
Logistics: Within the bottleneck lies the opportunity: Logistics/last mile delivery
bottlenecks may be deterrents, but potential introduction of GST may lower barriers.
5)
Government initiatives: Likely to pick up: Government would likely be a key enabler
through its initiatives (Digital India) and reach (India Post, IRCTC, JAM trinity).
6)
Talent availability: Driving the start-up ecosystem: With abundant supply of engineers
from the IT sector, India has enough specialists to enable the digital shift.
Increasing importance
for global internet giants
Key risks to the internet

opportunity in India
We highlight how India is fast becoming one of the most important markets for global
internet and telecom giants as they look beyond China for opportunities. US giants are
targeting ad revenues (such as Google, Facebook) and the e-tailing pie (Amazon); Asian
majors such as Samsung, Xiaomi are eyeing significant smartphone shipments, while
Alibaba/Softbank look for strategic stakes in the India internet opportunity, helped by low
entry barriers compared with some of the other markets, in our view.
While the Indian internet opportunity looks compelling, we see some risks around
execution. Some of the key challenges faced by the industry are: (1) lack of investment in
telecom infrastructure, delayed rollout of 4G services and Digital India initiative, (2)
regulatory uncertainty over taxation, listing, and foreign investment restrictions, (3)
continuous cash burn by companies resulting in fragmented business models, (4) lack of
logistics and technology infrastructure that may slow the pace of online adoption, and (5)
language diversity may be a deterrent to online adoption.
4T
May 4, 2015
1) What is so unique about India?

Did you know these facts about India, which make it unique: (1) India has one of the
youngest populations in the world with 68% below 35 years, and median age of 27 years vs.
37/38 for China/US, (2) India has a very diverse population, speaking 22 different languages
and the second-largest English speaking population in the world at 125mn+, (3) Only 30%
of the population have bank accounts and only 3% file their income tax returns, (4) Just 9%
is covered by digital fiber and only 20mn people own a credit card. All this, along with suboptimal infrastructure are key triggers for the online economy to develop, in our view.
YOUNGEST/MOST DIVERSE ECONOMY IN THE WORLD
PIN CODES SERVED BY INDIA POST
850
25,000
MILLION
/ 1.25
BILLION
68% of the population is under the age of 35

key target market for global internet companies is
the largest in the world. Diverse population
speaks 22 different languages and has the
second-largest English speaking population in
the world at 125mn+.
INTERNET PENETRATION
CREDIT CARD HOLDERS < WALLET HOLDERS
20%
243mn internet users/57% via mobile

3rd largest internet user base in the world behind
China. We estimate 673mn Indians to be online by
2020. Since June 2012, 76% of incremental internet
users are from the mobile channel. Indian internet
usage leapfrogging PCs and tablets.
BANK ACCOUNTS
30% OF POPULATION
400mn people in India have bank accounts. The
Prime Ministers flagship program Jan Dhan
Yojana has opened 125mn bank accounts and
issued 111mn debit cards in 5 months since its
launch in Aug 2014. We estimate that 2/3rd of this
was previously unbanked.
FIBERIZATION
9%
There are over 150,000 post offices in India with

90% of them in rural areas. Amazon, Snapdeal &
Shopclues have all tied up with India Post to
expand their reach. India Post also planning to
launch its own e-commerce portal by CY2015 end.
OF INDIA IS CONNECTED BY FIBER
20mn credit cards outstanding vs.

50mn registered users for Paytm,
Indias largest mobile wallet firm.
US$2.2bn avg. monthly value
transacted on credit cards in 2014.
CASH ON DELIVERY (COD)
60% OF E-COMMERCE SALES

60% of Indian e-commerce transactions are COD
vs. 30% in China and 2% in US. We estimate COD
deliveries to come down to 45% by 2025 and 30%
by 2030 as mobile wallet penetration improves to
25% by 2030 from the current 2% levels.
LOGISTICS BOTTLENECK
WAREHOUSING & DISTRIBUTION
COSTS
10%-18%
Only 9% of India penetrated by Fiber vs. 40% in

China. However, 3G coverage is available in 2530% of the country currently. We believe the
introduction of 4G services with new companies
coming in will improve 4G coverage in India.
Warehousing & distribution cost

is 10%-18% of sales in India.
Multi-tax structures hampering
centralized warehousing
expansion. GST (Goods &
Services Tax) rollout, expected
in April 2016, key to bottlenecks.
SMARTPHONE SHIPMENTS
INCOME TAX PAYERS
CHEAPEST SMARTPHONE
$40
With smartphone costs coming down,

significant pickup is witnessed in their
shipments. Incremental smartphone
shipments in 2014 (38mn) is more than total
mobile phone shipments in 2013. Cheapest
3G handsets are available for as low as $40.
2.89% OF INDIANS PAY INCOME TAX

3% or 36mn people in India pay income tax vs. 45%
in the US and 20% in China. Only 42,800 people have
filed taxes with taxable income exceeding Rs10mn.
Source: CIA Fact book, IAMAI, CNNIN, comScore, RBI, Holisol Logistics, Ministry of Finance, News articles (including The Economic Times, Business Standard),
Goldman Sachs Global Investment Research.
India is on the way to becoming the country with the second-largest digital population in the world by 2020, in our view. This would
be a unique global phenomenon, witnessing arguably the largest shift in a countrys population towards the online segment (to
reach 1bn by 2030 vs. 280mn for US and 640mn for China currently). We believe India will leapfrog traditional tech adoption themes
(such as accessing internet through PC and broadband), and move towards online mobile penetration. The current e-commerce
market size in India is c.US$20bn vs. US$675bn for the US and US$200bn for China, but we expect it to reach US$300bn by 2030 .
May 4, 2015
2) Why look at the Indian internet market?
Exhibit 1: Comparison of population of individual Indian states vs. top 20 countries in terms of the internet population in the world (excluding China)
Indian Census (2011), Internet statistics (July 2014)
6T
InternetusersinCountries
Thailand
PopulationinIndiaStates
Canada
Italy
Spain
Argentina
Australia
Nigeria
United
States
of
America
France
Brazil
Philippines
Vietnam
Russia
Turkey
S.Korea
Japan
Indonesia
United Mexico
Kingdom
50
100
150
*MadhyaPradeshgroupedin100mngroupasitandUttarPradesh
>=100mn
50100mn
2550mn
<=25mn
Source: India Census, Data from respective countries, ITU, World Bank, Goldman Sachs Global Investment Research.
togetherrepresentequivalentinternetusersintheUS
200
Germany
Millions
UttarPradesh
MadhyaPradesh*
Maharashtra
Bihar
WestBengal
TamilNadu
Rajasthan
Karnataka
Gujarat
AndhraPradesh
Odisha
Telangana
Kerala
Jharkhand
Assam
Punjab
Chhattisgarh
Haryana
Delhi
JammuandKashmir
Uttarakhand
HimachalPradesh
Tripura
Meghalaya
Manipur
Nagaland
Goa
ArunachalPradesh
Puducherry
Mizoram
Chandigarh
Sikkim
AndamanandNicobar
India may prove to be a different market from China, especially from the perspective of a new addressable market for global internet
giants. China has higher entry barriers for foreign companies, potentially helping homegrown Chinese companies to develop
successful business models in China. However, India could potentially become one of the largest markets for the foreign companies,
beyond China. While India has one of the youngest populations in the world, its online market lags that of the US and China
significantly with the largest Indian company (unlisted) valued at US$13bn (vs US$380bn/US$220bn for US/China) and total listed
market cap of only US$4bn (>US$1tn/US$550bn for US/China).
May 4, 2015
3) How does India compare with the US and China?
Exhibit 2: India vs. USA vs. China
Population
Demographics
320
mn
2G/3G User
China
India
USA
MedianAge
PerCapita
Income
Population
38
yrs
$54K
1.25bn
27
yrs
Timespent
Timespent
DataUsage
2G/3GUser
74
mins
1,450
mb/mth
243
MedianAge
PerCapita
Income
$2k
DataUsage
Population
1.35bn
2G/3GUser
MedianAge
37yrs
Timespent
PerCapita
Income
$7.5K
DataUsage
640
Internet
Penetration
280m
n
254
mn
Market
Market
size
$675
bn
Mcap
>$1
trillion
Largest Co
$380
bn
24
Market
$15
bn
32
158
256
403
73
Mcap
$4
bn
Largest Co
$13
bn
Market
$200
bn
Mcap
>$550
bn
Largest Co
$220
bn
Source: CIA Fact book, IAMAI, CNNIN, Cisco, iResearch, Statista, comScore, News articles (including The Economic Times, Business Standard), Goldman Sachs Global Investment Research.
Note: Data as of 2014 or latest available. For India, the largest company is unlisted and its valuation is based on the latest round of funding raised.
May 4, 2015
4) Is the ecosystem available for internet to develop?

India currently has enough spectrum and telecom infrastructure to provide 3G data
coverage to 25%-30% of the population. 3G enabled smartphones are available for US$40
with more than 900 phone launches last year, helped by the China 4G regime. The potential
R-Jio launch in 2015 (with pan-India 4G services) and Digital India (government initiative to
connect 250,000 villages by broadband) may help improve fiberization from the current 9%
country coverage. The payments landscape is also evolving fast with the launch of digital
wallets and payment banks, despite 60% of e-commerce transactions currently in cash on
delivery mode. Logistics and infrastructure are bottlenecks, but also indirect drivers for
online adoption, in our view. Finally, US$6bn+ of private funding has come into India in
2014 and significant funds are still waiting, implying a potent ecosystem is in place.
4T
Exhibit 3: Indian telecom infrastructure ecosystem is evolving fast, creating a launch pad
for higher internet penetration
Network of forces coming together
Post spectrum auction in Mar,
2015, India telcos now have
spectrum to enable pan-India
3G coverage
Cheapest 3G/4G handsets are

available for US$40/150
4G ecosystem in China will
provide enough supply of 4G
handsets in India
Government expects National

optical fiber network will cover
250k villages by Dec 2016
Spectrum
Devices
Fiber/
Towers
Tariffs
9% Fiber coverage and 25%30% 3G/4G coverage currently
Data tariffs have reduced by

c.20% in the past 2 years
Capex ramp up by telcos/R-Jio

and govt.s Digital India will
help ramp up capacity and
coverage
Introduction of 4G by RJio/telcos could reduce data

tariff further in the next 3 years
Source: Company data, TRAI, DoT, Goldman Sachs Global Investment Research.
Exhibit 4: Large capital inflows accelerated in the past 6-9

months enabling start-ups to grow scale
Exhibit 5: We think the grant of payment bank licenses to

wallet companies would improve trust, penetration
Capital flows (US$ mn) into e-commerce industry
Key bank applicants
$2,000
$1,800
mn
$3.4bn
$1,600
$1,457
$1,400
$1,200
$1,000
$800
$503
$600
$400
$200
$94
No
Applicant
JVPartner
1
2
3
AdityaBirlaNuvo
BhartiAirtel
Cholamandalam
InvestmentandFinance
FinoPaytech
Futuregroup
GITechnology
Oxigen
Paytm
RelianceIndustries
VakrangeeLtd
Vodafone
IdeaCellular
KotakMahindraBank
NA
$1,757
$181
$322 $304
$115
$0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2013 2013 2013 2013 2014 2014 2014 2014 2015
Source: News articles (including The Economic Times dated Apr 16, 2015,
Business Standard dated Jan 16, 2015), Crunchbase.
4
5
6
7
8
9
10
11
NA
IDFC
NA
RBLBank
NA
StateBankofIndia
NA
YesBank
Source: RBI.
May 4, 2015
5) What is the life cycle of the internet economy in India and at

which stage are we now?
We believe the Indian internet landscape is evolving into a hyper local, on demand market.
In the first few phases of the life-cycle, as online adoption improves and private equity
money flows in, we see two themes playing out:
4T
(1) Consumer is king: The consumer will benefit from heavy discounting and incentives
as we are currently witnessing, funded by the significant flow of private equity funds.
(2) Survival of the richest: Companies with better balance sheets, not necessarily better
business models, would survive in the first round of consolidation.
We are currently in between both these themes. As the market matures, firms will go
public and consolidate once profitability is established for 2-3 years. Horizontal firms will
standardize their offerings while vertical firms will specialize to personalized offerings.
Firms with better data will be able to build better brands by analyzing consumer behavior,
interests and spending patterns, in our view.
Exhibit 6: We are currently between the Consumer is king and Survival of the richest phases
Life cycle of the India internet sector: A hyper-local and on-demand market
Survival
of the
"Fittest"
US$300
Going
Public
M&A in public space
India E-Commerce Market (bn)
Major IPOs
hit markets
Survival
of the
"Richest"
M&A in private space
Start-ups
bloom as PE
money flows in
Consumer
is
"King"
Firms with
better data
will build
better brands
Horizontals will
standardize;
Verticals will
personalize
Flipkart vs. Myntra
Heavy discounting
To Be or Not To Be
US$10
Online adoption begins
100
200
300
400
500
600
700
800
900
1,000
Online Consumers (mn)
Source: Goldman Sachs Global Investment Research.
May 4, 2015
6) What are the opportunities for global internet giants in India?

Global technology giants have made inroads into the Indian market already and are eyeing
a larger share of the pie. For most, India is already a top-3 market in terms of users, but in
terms of revenues it has yet to materialize. For the potential revenue opportunities, we see
three major avenues:
1)
Digital ad revenues: Google, Facebook/Whatsapp, and Twitter with already a large user
base in India are likely to target this pie.
2)
Smartphone shipments: Apple, Samsung, Xiaomi are eyeing this market.
3)
E-tailing: Amazon is already the third-largest e-tailer in India.
Apart from this, we note that other major companies such as Alibaba/Softbank have made
strategic investments in several unicorns such as Snapdeal, Olacabs, and Paytm. Recently,
Mr. Ratan Tata announced buying stake in Xiaomi (source: The Economic Times, April 27,
2015) as it plans to aggressively expand operations in India with a first India-specific
handset model Mi4i at Rs12,999 launched in India on April 23, 2015.
Exhibit 7: India emerging as a key market for global companies

Global companies website positioning (latest rank) in India in the past 3 months
T
Note: Size of bubble represents unique visitors from India for global websites
*For Samsung, Xiaomi and Apple: X-Axis = market positioning in India based on smartphone shipments in 4Q2014, Y-Axis =
Market share of smartphones in India in 4Q2014. Size of bubble represents smartphones shipments in India in 4Q2014.
Source: Alexa, comScore, Gartner, Goldman Sachs Global Investment Research.
10
May 4, 2015
7) What are the challenges in the country?

While the Indian internet opportunity looks compelling, we see some risks around execution.
Some of the key challenges faced by the industry are: (1) lack of investment in telecom
infrastructure, delayed rollout of 4G services and Digital India initiative, and debates around
net neutrality that may affect capex from telcos, (2) regulatory uncertainty over taxation,
listing, and foreign investment restrictions, (3) continuous cash burn by companies resulting
in fragmented business models, (4) lack of logistics and technology infrastructure that may
slow the pace of online adoption and (5) language diversity may be a deterrent to online
adoption.
4T
Exhibit 8: No separate regulator in place for e-commerce yet, still governed by existing rules/laws
Regulatory landscape for e-commerce and related businesses in 2014
6T
Category
ReserveBankof
India
Dept. ofIndustrial
Policyand
Promotion,Dept.
ofCommerce
Regulation
AffectedCompanies
2factorauthenticationismandatoryforcard/online
payments
PaymentsLandscape Allowingpaymentbankslicenseswhichwillallow
acceptanceofdepositsuptoRs100k,issuanceofdebitcards,
offeringfinancialproductslikeMFs,Insurance.
ForeignDirect
Investment(FDI)
Listing/IPO
ValueAddedTax
Dept.ofRevenue
M&A
Logistics
100%inB2Becommerce
100%insinglebrandretail(offline)
51%inmultibrandretail(offline)
AllB2Cecommerce
companies
Mobilewallets,payment
gateways,ecommerce
companies,telcos
Dept.of
Information
Technology
Alletailingcompanies
Completerestrictiononforeignonlineretailerstosell
Foreignecommerce
productssourcedbythemselvesshouldrelyonmarketplace
companies
modelwhichis100%allowed
Distributableprofitsinatleast3outofpast5yearsand
positivenetworthinthepast3years
Ministryof
Corporate affairs
Lossmakingecommerce
companies
ForgoodssoldbyonlineretailerslikeAmazonundertheir
ownrisk(fulfilment),theyshouldbepayingVATratherthan Alletailingcompanies
themerchant
CurrenttaxregimeandunclearM&Aregulationsforonline
Allecommercecompanies
companiesmaketheM&Aprocesscomplicated
Dept.ofConsumer
affairs
LackofGSTleadstoinefficienttaxationofsalestaxandVAT
ineachstateandresultinginmultiplewarehousesindifferent Alletailingcompanies
locationsandlackofeconomiesofscale
Ministryof
Statisticsand
Programme
Implementation
Dep.Of
Information&
Broadcasting
Ministry ofHome
&Finance
Source: News articles (The Economic Times, Business Standard etc.), Goldman Sachs Global Investment Research.
Exhibit 9: Most logistics companies do not have enough

pan-India reach, except India Post
Exhibit 10: Challenges to Fiberization through Digital

India initiative
Key logistics solutions providers in India and their reach

Company
eCommerce
solution
Type
Shipping solutions
Aramex
REDe
B2B and B2C
Blue Dart
E-business solutions B2B and B2C
Delhivery
Delhivery
DTDC
Dotzot
FedEx
FedEx
India Post
Express Parcel
India Post
Business Parcel
Logistic aggregators
KartRocket ShipRocket
Zepo
ZePost
B2B
B2B and B2C
B2B and B2C
B2B and B2C
B2B and B2C
B2B
B2B
Source: Company data.
CoD
Pre-paid
offered
reach
(Pincodes) (Pincodes)
1,900
3,300
2,200
4,100
2,600
7,100
2,650
50 cities
25,000
2,600
8,000
5,550
50 cities
25,000
9,000
6,100
16,000
8,220
ChallengestoFiberizationinIndia
1. Complicated Right of way procedures and high ROW charges. Different
rules in different states for getting clearances
2. Lack of investments in infrastructure by private telecom operators.
Copper wire network mostly owned by PSUs
3. Low smartphone and PC penetration
4. Lack of digital literacy and consumer awareness in rural areas about
advantages of internet
5. Lack of data spectrum. Paucity of spectrum leading to low speeds
6. Poor network coverage. BTS: population ratio in India much lower than in
China
11
May 4, 2015
8) Which companies have biggest exposure to the internet story?

In this section, we highlight six Indian unicorns in the private space that are reportedly
valued at US$1bn+ and are creating a market leading franchise in their respective verticals
through differentiated business models and strong moats Flipkart and Snapdeal (etailing), Olacabs (taxi-hailing), Paytm (wallet and m-commerce), InMobi (digital ad) and
Quikr (C2C classifieds). Some of the global companies are also making a mark, such as
Amazon, Uber, and Xiaomi.
Within the listed space, we highlight sectors and stocks which are exposed to the online
adoption and India e-commerce opportunity.
Exhibit 11: Six unicorns have emerged in India, room for more
Last reported valuations and investors in each of the companies; Indian companies exposed to India internet themes
6T
US$ 12.5bn
Tiger Global
Management
US$ 5bn
US$ 2.4bn
US$ 2bn
SoftBank
DST Global
SoftBank
Kalaari Capital
SoftBank
Kleiner Perkins
Naspers
Nexus Venture
Partners
Tiger Global
Management
Sherpalo
Ventures
DST Global
eBay
Intel Capital
Steadview
Capital
Mumbai Angels
T Rowe Price
Singapore GIC
Temasek
Holdings
Accel Partners
Others
Matrix Partners
Ant Financial
(Alibaba Sub)
SAIF Partners
Intel Capital
Silicon Valley
Bank
Others
US$ 1bn
Tiger Global
eBay
Steadview
Capital
Matrix Partners
Omidyar Network
Others
Sequoia Capital
Others
US$ 700mn
Others
US$ 1.5bn
Others
US$ 400mn
US$ 300mn
US$ 300mn
US$ 250mn
US$ 165mn
Newshunt
Sequoia Capital
Tree Line Asia
Info edge
Sequoia Capital
Vy Capital
Cisco
investments
Others
American
Express
Falcon Edge
Capital
Sequoia Capital
Matrix Partners
Hillhouse Capital
SoftBank
Accel Partners
Tybourne Capital
Nexus Venture
Partners
SAIF Partners
Sequoia Capital
Others
Omidyar Network
Network 18
Others
Falcon Edge
Darby Overseas
Investments
Others
Helion Venture
Partners
Others
Others
Indian companies exposed to internet themes in India
Internet
Telecom
Banks
Logistics
Real Estate
Consumer
Info Edge
Bharti Airtel
ICICI Bank
GATI
Phoenix Mills
Titan
Just Dial
Idea Cellular
HDFC Bank
DLF
Shoppers Stop
MakeMyTrip
Reliance
Industries (R-Jio)
State Bank of
India
Snowman
Logistics
Pantaloons
Blue Dart
Bharti Infratel
Dish TV
Source: Crunchbase, News articles (including The Economic Times, VC Circle, Forbes, Business Standard), Goldman Sachs Global Investment Research.
12
May 4, 2015
9) What is the total addressable market opportunity in 15 years?

We estimate the total addressable market (TAM) for e-commerce in India to reach
US$300bn by 2030E, growing at 19% CAGR over 2015E-2030E, driven by increasing online
data penetration (71% ) and shopper penetration (25%). This compares with China/US at
US$200/US$675bn currently with 22%/60% online shoppers penetration. We forecast etailing to be the biggest share of this pie at US$220bn and reach 1.8% of Indias nominal
GDP and many domestic companies may emerge as multi-billion dollar revenue business
models. In the medium term, we forecast the overall e-commerce market to grow at 30%
CAGR to reach US$80bn by 2020E, with e-tailing growing at the fastest rate of 47% CAGR
to US$47bn.
Exhibit 13: primarily driven by e-tail where we estimate

GMV to reach c.US$220bn by FY30E
Exhibit 12: We estimate e-commerce market to reach

c.US$300bn by FY30E, growing at 19% CAGR
e-commerce market breakdown
GMV= gross merchandize value
6T
Otherfinancialservices
GMV(US$bn)
250
12% CAGR
144%
US$bn
$300
$300
$17
$8
16% CAGR
$15
$40
$250
$220
44%
$0
FY15E
FY20E
FY25E
FY30E
$3
$7
$12
$19
$27
2018E
50
$21
50%
57%
2017E
$50
$220
2016E
$81
90%
71%
100
30%CAGR
$100
110%
70%
$169
$150
130%
150
2015E
$200
150%
CAGR
20152020:47%
20152025:32%
20152030: 26%
200
2014
$350
Growth(%)[RHS]
36%
$37
29%
$47
30%
$112
19%
13%
10%
10%
2030E
Mobilerecharge
2025E
Adtech
2020E
OTA
2019E
ETail
6T
Source: Company data, PhoCusWright, RBI, IAMAI, IMRB International,

Source: Company data (Flipkart, Snapdeal, Amazon), Goldman Sachs Global

Investment Research, media reports (such as The Economic Times).
Exhibit 14: We estimate OTA penetration to reach c.50%

by FY30E resulting in c.US$40bn market
Exhibit 15: Digital ad market to grow at 24% CAGR to

US$15bn by FY30E driven by offline to online shift
Penetration online shoppers as % of population
6T
Totalonlinetravelmarket(US$bn)
Totaltravelmarket(US$bn)
Totalonlineadspend
Onlinepenetration(%)[RHS]
55%
90.0
79.5
50%
80.0
49%
70.0
60.0
50.0
40.0
41%
43%
40%
30.0
20.4
22.8
20.0
10.0
42%
8.1
9.4
25.5
10.7
28.5
12.3
44%
31.9
14.1
45%
46%
50%
62.5
13%CAGR
40.0
40.0
12,000
30%
10,000
25%
19%
8,000
40%
35%
4,000
FY30E
FY25E
FY20E
FY19E
FY18E
FY17E
FY16E
FY15E
30%
Source: PhoCusWright, Goldman Sachs Global Investment Research.
15,043
36%CAGR
6,000
18.4
0.0
FY14
40%
35%
31%
20%
15%
7%
8%
452
596
2,767
FY14
FY15E
FY20E
2,000
37%
24%CAGR
30.5
16.2
US$mn
14,000
45%
35.8
16,000
Onlineadas%oftotal[RHS]
8,093
10%
5%
0%
FY25E
FY30E
Source: IMRB International, IAMAI, Goldman Sachs Global Investment

Research.
13
May 4, 2015
10) When will they be profitable and how much funding is needed?
Companies in India are currently burning cash at an average rate of 1.35X of the GMV sold,
through heavy discounting, marketing, free shipping and handling, cash incentives and
various other incentives that e-tailers give to attract consumers. We believe this is likely to
continue till the online shopper penetration reaches a steady state, in about 5 years from
now. As such, we estimate that e-tailers are likely to continue their cash burn to keep their
growth intact, while slowly working towards lowering and eventually eliminating
aggressive consumer incentives. We estimate that the e-tail industry will need at least
US$20bn of incremental cash infusion to sustain before it reaches a steady state in FY20.
4T
Exhibit 16: Currently, companies are incurring almost 1.35X of their GMV as expenses,
driven by high discounting and promotions
Currentetailerrevenuesplit
160%
140%
120%
30.0%
100%
80%
12.0%
8.0%
5.0%
7.0%
3.0%
2.0%
3.0%
Payment
Gateways
Others
35.0%
65%
60%
40%
20%
0%
Vendors
Discounts
Marketing& Technology
Promotions
Logistics
Warehousing Packaging
Loss
Exhibit 17: We estimate that US$20bn of incremental cash burn is needed to sustain GMV
growth to US$47bn over FY15E-FY20E
Etailing:Incrementalannualfundingneeded(US$bn)
$25
$20
$2.4
$1.5
$20
2019E
2020E
FY15EFY20E
$4.3
$15
$4.7
$10
$4.0
$5
$2.9
$0
2015E
2016E
2017E
2018E
14
May 4, 2015
India: On your marks
15
USA
Amazon
US$ 174bn*
eBay
US$ 83bn*
eBay
Amazon
Trip Advisor
US$ 1.2bn
Trip
advisor
Google
LinkedIn
Expedia
US$ 5.8bn
Expedia
Overstock
US$ 1.5bn
Flipkart
US$ 3bn *
Snapdeal
US$ 1.5bn *
CHINA
Amazon India
US$ 1bn *
Overstock
Google
LinkedIn
Facebook
US$ 12.5bn US$ 52.5bn US$ 2.2bn
Facebook
INDIA
Yahoo!
US$ 4.4bn
Naukri
US$ 72mn
Zomato
US$ 10mn
Just Dial
US$ 100mn
Yahoo!
Uber
US$ 10bn #
Alibaba
US$ 365bn*
JD.com
US$ 41.9bn*
Dangdang
US$ 1.1bn*
Alibaba
JD.com
Dang
dang
Tencent
US$ 13bn
Tencent
Makemytrip
US$ 139mn
Yatra
US$ 60mn
May 4, 2015
Exhibit 18: Indian companies are just beginning to develop, still several years before they resemble their peers in the US and China
Ola Cabs
US$ 300mn #
UBER
Source: Company data, News articles (including The Economic Times, Forbes, Business Standard), Goldman Sachs Global Investment Research
Qunar
Baidu
eLong
US$ 200mn
eLong
SouFun
Holdings
US$ 688mn
SouFun
CTrip
US$ 1.2bn
CTrip
16
Note: Numbers represent revenue in US$ for 2014. For India, revenue for FY15 (ending Mar 2015)
* Gross merchandize value (GMV), # Gross transaction value (GTV)
Data as of 2014 or latest available
Qunar
US$ 285mn
Baidu
US$ 7.4bn
May 4, 2015
India internet market: Hyper-local and on-demand

The India internet landscape is evolving into a hyper-local and on-demand market. Key
reasons for this are the lack of infrastructure, significantly diverse demographics
culturally, geographically, and economically and relatively lower per capita incomes. As a
result, not only will the Indian internet market leapfrog many secular tech adoption trends,
but also adapt to new disruptive ideas as it is easier to change an underdeveloped tech
landscape, in our view. We analyze the life cycle of the Indian internet sector in various
stages below, which are somewhat different from how it played out in China.
We also point out that the Indian internet opportunity is a unique phenomenon which will
arguably see the largest shift in population towards the online community anywhere in the
globe, potentially the last shift of this scale for the next few generations as no other
country has a similar underpenetrated market.
To be or not to be online: This is the initial phase of the internet journey when most
4T
of the data access was through broadband and resulted in limited penetration. With 3G
auctions happening in India in 2010 and telcos rolling out 3G on mobile, it led to a
significant adoption of data services. Internet penetration has now reached 20% of the
population vs. 13% a year ago. Cheaper handsets and data tariffs have resulted in a big
shift towards being online.
Start-ups bloom on PE seed capital: This phase saw the initial success of some of the
online business models such as Flipkart selling books, and Bookmyshow/ Makemytrip
selling movie/air tickets. This was followed by PE funds flowing into India as investors
started looking for opportunities beyond China. As a result, start-ups started emerging
at a rapid pace and funding became more accessible.
Exhibit 19: We are currently between the Consumer is king and Survival of the richest phases
Life cycle of the India internet sector: A hyper-local and on-demand market
Survival
of the
"Fittest"
US$300
Going
Public
M&A in public space
India E-Commerce Market (bn)
Major IPOs
hit markets
Survival
of the
"Richest"
M&A in private space
Start-ups
bloom as PE
money flows in
Consumer
is
"King"
Firms with
better data
will build
better brands
Horizontals will
standardize;
Verticals will
personalize
Flipkart vs. Myntra
Heavy discounting
To Be or Not To Be
US$10
Online adoption begins
100
200
300
400
500
600
700
800
900
1,000
Online Consumers (mn)
17
May 4, 2015
Consumer is King: With significant amount of private equity money flowing into India,
4T
4T
it has created an environment where significant pricing and discounting competition

has begun among companies to acquire a customers time and wallet share. With
companies burning cash, the consumer has become the biggest beneficiary of the
trend and is enjoying heavy discounting and incentives.
Survival of the Richest: This phase marked the beginning of the first round of
4T
4T
consolidation in the internet space and is underway. The transactions are mostly in the
private space with the companies acquiring peers of somewhat similar size in order to
gain scale or technical know-how, and to fend off competition. This phase is not
necessarily driven by firms with better business models acquiring other companies,
but by firms with more cash. Hence, this phase will see the survival of the richest, not
necessarily the fittest. We have recently witnessed the Flipkart-Myntra, OlacabsTaxiforsure, Snapdeal-Freecharge deals.
Horizontals will standardize, verticals will personalize: As every company tries to

4T
4T
capture the limited time of an online consumer, we believe there will be space for both
horizontals and vertical specific companies. It will not be a market for just one business
model. Horizontal companies (e.g. Flipkart) would need to standardize their offerings
so that volumes will drive profits, while vertical companies (e.g. Myntra) would need
to personalize the user experience and get premium pricing despite lower volumes.
Going public: This is the phase when companies, looking to become profitable in the
4T
4T
next 18-36 months, would consider going public through the IPO route in India or the
US, depending on investor appetite, access, regulatory ease and addressable market.
Data will build brands: As consumers spend more and more time on internet for
social networking, shopping, entertainment, and services, consumer behavior and
usage patterns are likely to become increasingly important to gauge. Hence,
companies with proprietary access to data would be able to build much better brands
and prove to be a key differentiator.
Survival of the Fittest: We believe this would be last phase of the internet life cycle
before the market matures and peaks out. In this phase, companies would consolidate
as the business models with more powerful competitive advantage will survive,
whereas the weaker business models will suffer lack of capital and profitability. This
would end up in the weaker companies getting acquired and it becoming a winner
takes all market.
4T
4T
4T
4T
18
May 4, 2015
Several Unicorns have already emerged, more on the way

The six unicorns: Based on recent media articles quoting private equity investments into
4T
4T
some of the largest names in the Indian internet market, India is now home to at least 6
unicorns (US$1bn+ companies) including the largest e-tailers: Flipkart and Snapdeal; taxi
hailing app: Ola cabs; mobile classifieds company: Inmobi; wallet/mobile commerce
company: Paytm and online/mobile classifieds company: Quikr.
Potential billion dollar babies? Several other companies like restaurant finder Zomato,
4T
mobile wallet company Mobikwik, real estate classifieds company Housing.com, local
news aggregator NewsHunt and ticketing platform Bookmyshow have raised funds at
valuations of more than US$100mn.
Home for start-ups: We believe that besides these companies, there are several others
4T
4T
that may emerge to potentially become billion dollar companies in the near to medium
term. India is fast becoming a home for start-ups in the e-commerce space and private
equity funds are fuelling the hyper-growth of new ideas and technologies.
The ancillary technology unicorns: Apart from the regular internet firms, we are also
4T
4T
witnessing the emergence of multi-billion dollar ancillary firms which are disrupting the
technology landscape such as IPSoft in automation and Mu-Sigma in data analytics.
Exhibit 20: Six unicorns have emerged in India, room for more
Last reported valuations and investors in each of the companies
6T
US$ 12.5bn
Tiger Global
Management
US$ 5bn
US$ 2.4bn
US$ 2bn
SoftBank
DST Global
SoftBank
Kalaari Capital
SoftBank
Kleiner Perkins
Naspers
Nexus Venture
Partners
Tiger Global
Management
Sherpalo
Ventures
DST Global
eBay
Intel Capital
Steadview
Capital
Mumbai Angels
T Rowe Price
Singapore GIC
Temasek
Holdings
Accel Partners
Others
Others
US$ 700mn
US$ 400mn
Others
US$ 1.5bn
US$ 1bn
Ant Financial
(Alibaba Sub)
Tiger Global
SAIF Partners
Intel Capital
Silicon Valley
Bank
Others
Matrix Partners
eBay
Steadview
Capital
Matrix Partners
Omidyar Network
Others
Sequoia Capital
Others
US$ 300mn
US$ 300mn
US$ 250mn
US$ 165mn
Newshunt
Sequoia Capital
Tree Line Asia
Info edge
Sequoia Capital
Vy Capital
Cisco
investments
Others
American
Express
Others
Falcon Edge
Capital
Sequoia Capital
Matrix Partners
Hillhouse Capital
SoftBank
Accel Partners
Tybourne Capital
Nexus Venture
Partners
SAIF Partners
Sequoia Capital
Others
Omidyar Network
Darby Overseas
Investments
Helion Venture
Partners
Network 18
Others
Falcon Edge
Others
Others
Source: Crunchbase, News articles (including The Economic Times, VC Circle, Forbes, Business Standard)
19
May 4, 2015
Indian companies that are exposed to India internet themes

We highlight companies that are impacted by the various themes of the India internet
opportunity and are leveraging the online penetration in India.
1)
Info Edge: Info Edge is Indias largest online classifieds company with top 3 positions
in the recruitment listing (Naukri), real estate listing (99Acres) and restaurant listing
(Zomato) portals. It also has investments in matrimony, education, financial services,
deals and gifts portals. Hence, among the listed companies in Indian internet, Info
Edge has the most diverse and balanced mix of companies with steady state market
leadership businesses such as Naukri and hyper-growth global expansion business
such as Zomato (also refer to our report, Blend of steady-state and hyper-growth
business models; Buy, dated May 4, 2015).
2)
Just Dial: Just Dial is Indias largest online and voice search classifieds company with
more than 30% of Indias small enterprises listed on its portal (2014). Just Dial has a
dominant share in online local search classifieds and is now expanding its footprint to
23 other categories such as e-tailing, travel, tickets, foods through its search and
transact platform called Search Plus (to be launched in FY16) (also refer to our report,
Leveraging the competitive edge in Search Plus; maintain Buy, dated May 4, 2015).
3)
Makemytrip: MMYT is Indias largest online travel services provider with more than
40% share of gross bookings in the online travel market (2014). On one hand, it has the
air ticketing business which is a mature market with moderate growth, and on the
other it is expanding its footprint in the underpenetrated hotels and packages segment
(also refer to our report, Profitable growth key to re-rating in a maturing OTA market;
Neutral, dated May 4, 2015).
4)
Bharti Airtel (covered by Aditya Soman): It is Indias largest mobile operator with
market leadership in 12 of 22 regions and revenue market share over 30% (2014).
Bharti Airtel is a pan-India operator with the largest spectrum holding and offers
2G/3G/4G services. The Indian internet opportunity may have an impact on growth in
data demand, revenue mix, EBITDA margins and capital expenditure. In addition,
consolidation and some new entrants could potentially alter the competitive landscape.
5)
Idea Cellular (covered by Aditya Soman): It is Indias 3rd largest mobile operator
with a revenue market share of almost 18% (2014). Idea offers 2G and 3G services on a
pan-India basis. The Indian internet opportunity may have an impact on growth in data
demand, revenue mix, EBITDA margins and capital expenditure. In addition,
consolidation and some new entrants could potentially alter competitive landscape.
6)
Reliance Industries (covered by Nilesh Banerjee): One of Indias largest companies

Reliance Industries, through its telecom arm Reliance Jio, is gearing up for a 4G-LTE
launch over the next few months. Reliance Jio has the largest inventory of 4G-LTE
spectrum. The Indian internet opportunity may have an impact on growth in data
demand, revenue mix, EBITDA margins and capital expenditure. In addition,
consolidation and some new entrants could potentially alter competitive landscape.
7)
Bharti Infratel (covered by Aditya Soman): It is a tower company with a consolidated

portfolio of over 85,000 towers and over 175,000 tenancies. Bharti Infratel and its
associate company Indus towers (Infratel owns 42% in Indus along with Vodafone
which owns 42% and Idea which owns 16%) may potentially be impacted by the
growth in data demand which may lead to greater demand for infrastructure to
support the data bandwidth.
8)
Dish TV (covered by Aditya Soman): It is Indias largest satellite TV provider with a

market share over 27% and over 18.5 mn gross subscribers (as of Dec 2014). It may
20
May 4, 2015
potentially see a significant impact due to increased convergence and change in

content distribution platforms.
9)
ICICI Bank (covered by Tabassum Inamdar): ICICI Bank has been at the forefront of
innovation in particular in the retail digital space. Some of its product introductions
are: 1) first bank to launch Facebook banking, banking on Twitter and goal based
savings product iWish in a tieup with SmartyPig, 2) Launched Indias first contactless
debit and credit cards, 3) Recently launched Pockets (their e-wallet) the first Indian
bank to do so. The e-wallet allows users to instantly send/request money to/from any
e-mail id, mobile number, friends on Facebook and bank account and make payments
at e-commerce websites.
10) HDFC Bank (covered by Tabassum Inamdar): HDFC Bank seems to be ahead in
converting customers to the digital platform. It is one of the largest processors of online
banking transactions, and has now managed to notch up a 32% market share (9MFY15)
in mobile banking and c. 40% share in e-commerce transactions (as per the company).
Recently, it has focused on creating Hindi language apps and will be soon launching
mobile wallet. Management believes that its success is in the high usage of the channels
rather than launching too many products. Having said that, they too plan to launch on
social media, but would do so with more comprehensive banking products and services.
11) Blue Dart (Not Covered): It is one of the largest courier companies in the organized
air express segment in India. The company is looking to open multiple warehousing
centres (called e-fulfilment centers) across the country where sellers on e-commerce
portals can store goods and value added services are provided. Each time an order
comes in, the product is packed and shipped to the consumer, saving time as the
couriers do not have to go to the seller's location to pick up the item.
12) GATI (Not Covered): Prominent logistics companies in the Indian surface logistics
industry such as GATI are looking to capitalize on the e-commerce opportunity. In
1QFY15, Gati stated that it expected to sustain the trend of growing its ecommerce
volumes at 100%+ yoy for the next two years. It earmarked capex to invest in cold
chain warehouses to benefit from the online distribution of perishable goods. From
delivering over 5.5mn packages in a month currently, the company is targeting to
deliver 1mn packages per day by 2020.
13) Snowman Logistics (Not Covered): It is one of the largest temperature controlled
logistics service providers in India. Management wanted to use the IPO proceeds
(listed in Sept 2014) for expanding capacity from 25 depots currently to 37 depots in
the medium term as it expects strong growth in the segment. The company has
reported 40%-50% CAGR sales growth over the past 4 years.
14) Phoenix Mills (covered by Puneet Jain): It is currently one of Indias largest retail mall
companies having the largest mall in four key metros. 80% of its value accrues from retail
malls. As per our India consumer team, rental growth of malls are typically impacted due
to lower SSSG of tenants due to potential shift from offline to online retail, but this can be
partly mitigated if some area is occupied by restaurants and multiplexes.
15) Titan (covered by Puneet Jain): It is Indias largest specialty retailer selling jewelry
(80% revenues as of 2014), watches (15% revenues) and eye-ware/accessories. As per
our India consumer team, the watches segment is susceptible to large discounting on
Swiss watches by online retailers, although the Swiss Franc depreciation helps them.
16) Home and personal care (HPC) firms and offline retail (Shoppers Stop, Pantaloon
Not Covered): Over the medium term, emergence of large online grocery retailers
tends to alter working capital cycle of large FMCG firms, as per our India consumer
team. Currently HPC companies in India enjoy negative working capital due to the
unorganized distribution chain.
21
May 4, 2015
Entry barriers (moats) for different e-commerce categories

Framework for screening stronger business models: We are witnessing quite a few
4T
4T
companies emerging with new ideas that are spending significant amount of cash currently.
It is difficult to pick which companies would survive over the long term. We believe the five
factors that will decide which companies survive over the long term are: (1) management
quality, (2) business model, (3) moats or entry barriers, (4) potential addressable markets,
and (5) cash costs in the form of fixed vs. variable.
Scale, technology and capital are the most common moats: While moats may differ for
4T
4T
different verticals, there are three moats which are common for most:
1)
Scale: In most of the verticals, it's a winner-takes-all market with room for at the most
one or two more competitors apart from the leader. Hence, gaining scale quickly is
becoming quite critical even if it is coming at the expense of significant cash burns.
4T
4T
Technology: While a lot of the business models are replicable, especially when there
2)
4T
4T
is no underlying physical entry barrier to it (such as exclusive supplier tie-ups for an etailer), technology can potentially be a big differentiator. Companies that invest in
building franchise technology platforms and data mines will be able to maintain a
competitive edge.
3)
Capital: In the first half of the life cycle of the industry, availability of capital is a very
strong moat. Companies with strong investor backing and free capital available would
be able to buy out competition early if it proves to be disruptive and a challenge to
their own model, or they can use it to gain scale through burning significant cash on
customer acquisitions.
4T
4T
Exhibit 21: Entry barriers for different e-commerce categories
E-tailing
Merchant ecosystem
Digital Advertisements
Traffic
Higher the number of

merchants, higher the
customers (Virtuous cycle)
Distribution network
Higher the consumer

traffic, higher the listings
and vice versa
Data quality
Faster delivery times,

better customer service,
fewer product returns
Capital infusion
Ability to discount and
spend on customer
acquisition and retention
Technology / Data
Superior analytics, better
pricing algorithms, better
customization
Trust/Customer
loyalty Reward points,
Better the quality of

listings higher the
customer retention
Navigation/Interface
Ability to find
listings/services easily
Integration w/
payment systems
Seamless integration with
different payment
methods
Grievance redressal
better service, better return

handling
Consumer ability to report

grievances and
procedures to address
them
Clean navigation and

display is critical (customer
cant touch product)
Payments/Wallets
User base
Bigger the user base,
higher the acceptability
from merchants
Universal
acceptability
Payment method should
be merchant agnostic
Low charges
Lower the costs, higher
the acceptability by
merchants
Capital
Ability to discount to lure
customers to sign up
Ease of use
Pay in as many fewer
steps as possible
Security
Safety and security
policies, grievance
redressal
Online Travel
Footprint
Large footprint
(airlines/hotels) implies
more choices for
consumer; more choice
implies more consumers
Partnerships
Travel agents,
complementary service
providers, global access
Market share
Higher the market share,
better the ability to sign up
new merchants and
negotiate favorable terms
Ratings
Higher the number of
ratings, more comfortable
customer feels to book
Easy navigation and
smooth transacting
capability are vital
22
May 4, 2015
23
May 4, 2015
Ecosystem #1: Telecom infrastructure developing at a rapid pace

This section includes
the view of our India
telecom team of
Aditya Soman and
Manish Adukia
Exhibit 22: Indian telecom infrastructure ecosystem is evolving fast, creating a launch pad
for higher internet penetration in India
Network of forces coming together
Post spectrum auction in Mar,

2015, India now has spectrum
to enable pan-India 3G
coverage
Cheapest 3G/4G handsets are

available for US$40/150
4G ecosystem in China will
provide enough supply of 4G
handsets in India
Government expects National

optical fiber network will cover
250k villages by Dec 2016
Spectrum
Devices
Fiber/
Towers
Tariffs
9% Fiber coverage and 25%30% 3G/4G coverage currently
Data tariffs have reduced by

c.20% in the past 2 years
Capex ramp up by telcos/R-Jio

and govt.s Digital India will
help ramp up capacity and
coverage
Introduction of 4G by RJio/telcos could reduce data

tariff further in the next 3 years
Source: Company data, DoT, Goldman Sachs Global Investment Research.
#1 Data tariffs: New entrants could accelerate the declining trend

Data tariffs already low: Indias data tariffs as of Dec 2014, measured as charge per unit
4T
MB of usage, is already among the lowest globally at 0.5 cents (US$) per MB, similar to the
trend in voice ARPU which is at US$2/month. Data rates in India are 2X cheaper than in
China and nearly 3X cheaper than in the US. Despite the low tariffs, data consumption,
measured as per capita consumption across all mobile phone subscribers in India, has
been significantly lower than in China/US (Exhibit 10) due to slow adoption and lack of
proper ecosystem in the past 5 years.
Exhibit 23: Data tariffs in India are declining over the past
four quarters (yoy)
0.35
Datatariff(Rs/MB)
Exhibit 24: and are already among the lowest in the

world (2014)
Datapersubpermonth(MB)
1,600
0.33
CostperMB(UScents)[RHS]
1.2
1.1
1,400
1.0
1.0
1,200
0.31
0.8
1,000
0.29
800
1,450
600
0.27
0.4
0.6
0.4
400
0.2
200
Source: Company data from Bharti Airtel and Idea Cellular.
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
0.25
158
India
256
China
US
Source: Company data (Bharti Airtel, Idea Cellular, RCom, China Mobile, China
Unicom and China Telecom, Verizon, AT&T and T-Mobile used as proxy for
respective markets), Cisco, Goldman Sachs Global Investment Research.
24
May 4, 2015
Telcos focusing on data revenues: As data adoption picks up, it is becoming a key
4T
4T
revenue growth driver for Indian telecom companies. Our telecom research team expects
data revenues to drive 43% of incremental revenues by FY25E for the Indian telecom sector.
Widespread adoption of data plans has resulted in data prices coming down by almost 20%
in the past 2 years. Further, economies of scale are also driving these prices lower. The
team expects data consumption by 3G/4G data subscribers to increase to c.1GB/month by
FY25E from c.395MB/month in FY14 driven by (1) better smartphone penetration, (2)
convergence to IP and (3) more localized content.
New entrants may act as another catalyst: Launches by new entrants such as Reliance
Jio (the only private operator to have a pan India 4G/LTE spectrum) would impact: a) price
of data plans, b) per capita data consumption, and c) coverage area of high speed internet
4T
4T
(4G network/ FTTH). Moreover, R-Jio has already launched its chat app called Jio-Chat
which is offering free audio/video calls and messages.
Free internet for consumers: We note another trend with internet companies tying up
4T
with telecom companies to offer free internet applications or website access and the cost is
borne by the telco/internet firm rather than the consumer, e.g. Internet.org by Reliance
Communications and Facebook, and Airtel Zero by Bharti Airtel, Flipkart and others,
(although Flipkart has recently pulled out of the scheme).
Exhibit 26: boosting data consumption significantly, in

our view
Exhibit 25: New entrants to impact penetration and

tariffs
Different technology platforms to offer data services
250
800
200
600
150
400
MTS India
Tata Docomo
BSNL
MTNL
Aircel
Note: 3 ticks indicate strong focus, 2 ticks indicate moderate focus and 1
indicates limited focus
Source: Company data, Goldman Sachs Global Investment Research.
Dataprice(Rs/GB)[LHS]
100
200
Datause(MBs/month)[RHS]
50
FY25E
Reliance Jio
1,000
FY24E
RCOM
300
FY23E
FY22E
FY21E
Idea Cellular
FY20E
1,200
FY19E
350
FY18E
FTTH
FY17E
Bharti Airtel
Vodafone India
Wired
Internet
FY16E
3G/4G
4G data
(dongle) on phone
FY15E
3G data
(phone)
FY14
Operator
#2 Devices: Smartphone penetration rising exponentially

Availability of cheaper smartphones is key: Another key cog in the wheel to boost data
usage is the availability of affordable devices/ handsets that are suitable to 3G/4G bands.
Over the past 2 years, India has seen a significant jump in smartphone launches with a
majority of them in the affordable band of Rs5,000 to Rs15,000 (US$80 to US$250).
Moreover, there have been 200+ new smartphone launches in both 2013 and 2014 that cost
below Rs5,000 (or US$80). As affordability improved with these launches, the number of
smartphone shipments also improved significantly with nearly 38mn units shipped in 2014,
which is higher than the total shipments (smartphones + feature phones) in 2013.
4T
4T
25
May 4, 2015
Exhibit 27: Smartphone prices in India are declining and

are already at c.US$40 levels
Price trends for smartphones and feature phones in India
Exhibit 28: Bulk of the new smartphone launches in India

are in the US$80-US$250 range (Rs5,000-Rs15,000)
Smartphone launches in India
6T
Smartphone
3,500
6T
Featurephone
NewSmartphonelaunchesinIndia
Rs
3,022
3,000
2,712
2,611
2,575
2,565
400
350
300
250
200
150
100
50
0
2,500
2,000
1,500
1,000
740
698
687
689
712
Oct14
Nov14
Dec14
Jan15
Feb15
2013
368
299
215
202
46 63
BelowRs
5K
500
Source: Retail websites (such as Flipkart, Amazon, Snapdeal), Goldman Sachs

Global Investment Research.
2014
Rs5K
15K
Rs15K
25K
18 18
18 27
Rs25K AboveRs
35K
35K
Source: 91mobiles.
Shift from feature phone to smartphone underway: Indias current penetration of

smartphones stands at just 16% of mobile phone users compared with 78% for China and
82% for the US. The rapid rise in affordable smartphones combined with replacement
demand from feature phone users (who bought their phones in 2009-2010) will lead to a
significant jump in smartphone penetration, reaching 54% by 2020, according to Ericsson.
Consequently, as is witnessed in other countries such as China, we expect the rising
smartphone penetration to directly correlate with higher 3G/4G subscription. As such, our
telecom team estimates 3G/4G penetration to reach 49% by 2020.
4T
4T
Exhibit 30: Smartphone shipments into India in 2014

more than the total shipments in 2013
Exhibit 29: Indias smartphone penetration currently at

16% vs. China/US at 78%/82%
Smartphone and high speed mobile data penetration
6T
Smartphonepenetration
Smartphone shipments (in mn)

6T
75.1
3G/4Gsubspenetration
82%
78%
80%
Incrementalsmartphone
shipmentsin2014 more
thantotalshipmentsin
2013
46%
38.1
37.0
20.6
16%
16.5
9%
India
China
USA
Source: Company data (Bharti Airtel, Idea Cellular, RCom, China Mobile,
Verizon, AT&T used as proxy for respective markets), Gartner, Goldman Sachs
Global Investment Research.
2012
2013
2014
Source: Gartner.
26
May 4, 2015
Exhibit 31: Smartphone penetration in India expected by

Ericsson to improve to 50%+ by 2020
700
500
50%
40%
400
Smartphoneusers(mn)
300
30%
Smartphonepenetration(RHS)
200
5.1%
5.9%
7.2%
16.0%
10.7%
81
20%
10%
151
2008 2009 2010 2011 2012 2013 2014
3G/4Gsubspenetration
54.2% 60%
650 mnsmartphone
usersby2020according
toEricsson
600
100
Exhibit 32: driving similar penetration levels in data

subscription
90%
R=0.8089
80%
USA
70%
60%
Europe
50%
Russia
40%
India 2020
China
S.Africa
30%
20%
Indonesia
India
10%
0%
0%
0%
2020
50%
Smartphonepenetration
100%
Note: Data as of CY2014

Source: Gartner, Ericsson, Goldman Sachs Global Investment Research.
Source: Company data (Bharti Airtel, Telkomsel, China Mobile, Vodafone, MTN,
Verizon, AT&T, MTS are used as proxy for respective markets), Gartner,
Chinese 4G ecosystem to help India too: China has seen a rapid development in the 3G/4G
ecosystem as 4G subscribers crossed 100mn in 2014 and are rising rapidly. As a result,
availability of 4G handsets has also become greater. 4G-LTE spectrum band auctioned in
India is same as that of China 2300 TD LTE and potentially 2600 TD LTE which implies
compatibility of 4G handsets from China (available at a reasonable price). The cheapest
3G/4G handsets in India are now available for US$40/US$150, respectively. The trend is likely
to continue with the entry of multiple Chinese handset makers such as Xiaomi, Oppo, and
OnePlus. Xiaomi has already claimed 4% market share of smartphones in the first 3 months
of its launch in India as of Dec 2014, as per Gartner.
4T
4T
#3 Spectrum auction has improved 3G/4G coverage across India

Data from TRAI suggests that various telecom circles in India have 40%-45% of the
spectrum available in Western Europe on a per population basis. However, current data
usage per subscriber is 20%-25% of those in Western Europe. Further, we note that if the
Indian government were to vacate more spectrum in the 700 MHz band in future, it could
potentially cover all the needs for 100% coverage in all forms, i.e., 2G/3G/4G technologies.
Recent auction of spectrum has ensured Bharti, BSNL, and Jio will have entire 100% of
3G/4G coverage, whereas Vodafone and Idea would have c.75% of coverage in India. Some
of the spectrum licenses of the top four mobile operators in India are coming up for
renewal in the next two years. At present, only Airtel and Aircel offer 4G services in India,
albeit on a very small scale. But with R-Jio launching its 4G services shortly, we believe
other operators will start investing and promoting data usage a lot more going forward.
27
May 4, 2015
Exhibit 33: We believe the recent spectrum purchases

would provide pan-India 3G coverage
Spectrumband
Comments
Exhibit 34: India currently has spectrum to enable panIndia 3G coverage
2G
Enough 2G spectrum to cover 100% of the population.

India already has c.80% voice penetration
3G
Recently concluded spectrum auction will ensure Indian

telecom companies have enough spectrum to cover
100% of the population if other infrastructure exists
1,400
1,160
1,200
992
1,000
800
Current available spectrum can ensure 4G coverage for

30%-40% of India. If Indian Defence department
vacates 700MHz spectrum in future, that will ensure
100% coverage as well
4G
SpectrumInventoryinIndia(MHz)
520
600
421
400
306
200
0
900
1800
2100
2300
800
Source: Department of Telecom, Goldman Sachs Global Investment Research.
Source: Department of Telecom.
Exhibit 35: Government has been active in auctioning

spectrum in the past 4 years
Exhibit 36: Both spectrum and non-spectrum capex to

rise, as per our India telecom research team
Spectrum auctions in India including re-auctions (MHz)
GS India telecom coverage capex (Rs bn)
6T
6T
Nonspectrumcapex
SpectrumAuctionsinIndia(MHz)
1000
Spectrumcapex
Capexas%ofsales(RHS)
880
800
600
400
19%
350
17%
300
15%
250
400
385
355
295
95
11%
150
178
200
13%
200
46
104
99
85
100
9%
50
7%
5%
2100 2300 800 1800 900 1800 800 900 1800 2100
2010
2012
2014
Source: Department of Telecom.
2015
#4 Towers: 3G/4G uptake to drive BTS growth of 6X in 10 years

3G/4G BTS penetration at 25%-30%, much lower than US/China: Over the past several
years, we note that telecom companies in India have held back on investing in building
mobile networks as they have been burdened with relatively high spectrum prices and low
average revenue per user (ARPU) in India. As a result, India has had only 25%-30% of the
area covered by 3G/4G enabled towers. However, we believe that: a) the impending pan
India launch of TD-LTE based 4G services across 800 cities by R-Jio, and b) the rising data
demand on the back of improving smartphone penetration are likely to drive incumbents to
step up investments to remain competitive. Our telecom research team forecasts over 6X
increase in 3G/4G enabled towers by 2025E.
4T
4T
4T
4T
4T
4T
28
May 4, 2015
Exhibit 37: Telcos ramping up their tower coverage in

anticipation of 3G ramp up
Exhibit 38: India still lags China in 3G/4G tower coverage

BTS of China Mobile (4G only), Indonesia and India (Idea +
Bharti) (000)
6T
Base transceiver stations (000)

6T
TotalBTS('000)
500
450
400
350
300
250
200
150
100
50
0
1,200
3G/4GBTS('000)
1,000
431
387
268
200
21
2025E
India4G
400
126
2014
India3G
600
170
31
India2G
Indonesiatotal
800
283
ChinaMobile4G
2014
Bharti
2025E
2013
Idea
2014E
2015E
Note: 2013 corresponds to FY14 for Indian and CY13 for China/Indonesia
Non-spectrum capex way behind China: China Mobile has spent US$34.4bn of non4T
4T
spectrum capex in 2014 as it ramps up its 4G footprint in China. For the past five years, its
average has been US$25bn vs. Indian companies spending US$4-5bn. However, we expect
industry capex to rise 55% over the next 3 years to US$8.3bn from US$5.3bn in FY12-FY14.
The incremental spend is likely to be on towers, better in-building solutions, and new
network equipment.
Exhibit 40: Non-spectrum capex of Indian telcos in the

past 5 years is less than 20% of China Mobiles
Exhibit 39: Per capita BTS penetration too low at present

in India, in our view
BTS per thousand subscribers
Capex (US$ bn)
6T
2.50
6T
40
2.29
34.4
35
2.00
BTSperthousandsubs
30
3G/4GBTSperthousandsubs
25
1.50
30.2
20.3
21.0
20.8
20
1.15
15
0.90
1.00
0.93
0.83
0.83
10
0.68
5
0.50
0.25
0.17
0.16
0.00
China
(ChinaMobile)
US
(average)
Indonesia
(Telkomsel)
Bharti
Idea
6.7
6.1
6.0
3.7
3.6
0
FY11
FY12
FY13
FY14
Bharti
Idea
Vodafone
RJio
Towerco's
ChinaMobile
FY15
RCOM
29
May 4, 2015
#5 Fiber: R-Jio launch and NOFN to act as catalysts for fiberization

NOFN to ensure pan India fiber network: The national optical fiber network rollout plan
(NOFN) by the Government of India plans to connect 250,000 village councils and deliver
bandwidth of 100Mbps by Dec 2016. While the progress was slow until FY14, the
government has now put this plan on priority and advanced the rollout targets. It could
accelerate internet penetration and significantly boost data consumption especially in the
sub-urban and rural demographics, in our view.
4T
4T
R-Jio to reportedly launch coverage in 800 cities: Recent media articles (such as
Business Standard, Dec 17, 2014) have stated that R-Jio is set to launch its TD-LTE based
4G services across 800 cities over the next 12 months and that it may augment its 4G
launch with FTTH (Fiber to the home) broadband and Wi-fi based devices. We think this
coupled with the national rollout of fiber optic network by the Indian government could be
a game changer. Coverage of fiber to carry data in India is currently at 9% penetration but a
combination of Jio and NOFN may expand it at least to a 40%+ over the long term.
4T
4T
Exhibit 42: Indian governments National Optical Fiber

Network (NOFN) likely to be a key enabler
Exhibit 41: R-Jio has tied up with various tower

operators for c.300k towers sufficient to provide
network in 800 cities, in our view
120
Roadmap of National Optical Fibre Network (NOFN)
113
Towersharingagreementof
RJiowithdifferentoperators
('000)
100
80
60
45
40
42
36
Connectivity
Connect 250,000 Gram Panchayats (Village

Councils) by Dec 2016
Bandwidth
Deliver 100 Mbps bandwidth at every Gram

Panchayat
Non-discriminatory access to all service
providers
Open access
28
20
11
Additional capacity
8
In addition 400,000 - 500,000 Km of existing

fibre to be leased
500,000 Km of incremental fibre to be laid
Source: Dept. of Electronics and Information Technology
Exhibit 43: Roadmap to Fiberization

CurrentStatus
The government plans to connect 250k gram
panchayats with broadband by Dec 2016. Speed of
laying fiber at 500km per month against target of 30km
per month
Internet penetration of c.25% of which broadband
penetration only at 6%. More than 90% of the 260mn
internet users access it from wireless devices
Challenges
Complicated Right of way procedures and high ROW
charges. Different rules in different states for getting
clearances
Lack of investments in infrastructure by private telecom
operators. Copper wire network mostly owned by
PSUs
Low smartphone and PC penetration

For 3G, only about one third of the available spectrum in
the 2100 MHz band assigned to telcos. Spectrum in the Lack of digital literacy and consumer awareness in
rural areas about advantages of internet
highly efficient 700 MHz is unused
Average broadband speeds of around 1 Mbps in India
vs. 3 Mbps in China and 10 Mbps in the US
Lack of data spectrum. Paucity of spectrum leading to

low speeds
Poor network coverage. BTS: population ratio in India
much lower than in China
30
May 4, 2015
Ecosystem #2: Capital infusion accelerating as global firms enter

Global venture capital (VC) and private equity (PE) firms have been active in India over the
past few years. In 2013, nearly US$700mn of capital has come into e-commerce companies
in India, and the trend continued in the first half of CY2014. However, we note that a pick
up in global internet companies valuations in 2013-2014 led by China provided the first
trigger for increasing capital inflows in India. Big ticket investment announcements like
those into Flipkart (US$1bn investment in July 2014 by investors including Tiger Global,
GIC and Naspers) and Amazon India (US$2bn commitment by Amazon Inc. CEO Jeff Bezos
in the medium term) kickstarted the first major leg of capital inflows into the e-commerce
industry. These were followed by some major announcements with large amounts of
capital commitment from Softbank ($10bn) and Alibaba (through Ant financials), besides
other global companies such as Google Capital deciding to set up shop in India.
Exhibit 45: Large capital inflows accelerated in the past 69 months
Exhibit 44: Venture capital (VC) firms continue to invest

in India
Top 10 VC investors in India (as of April 2015)
6T
S.No
Investor
1
2
3
4
5
6
7
8
9
10
SequoiaCapital
IDGVenturesIndia
TigerGlobalManagement
HelionVenturePartners
AccelPartners
NexusVenturePartners
BlumeVentures
KalaariCapital
IntelCapital
NorwestVenturePartners
#VCInvestments
madeinIndia
74
58
43
41
40
38
37
32
32
30
Capital flows (US$ mn) into e-commerce industry

6T
$2,000
$1,800
mn
$1,757
$3.4bn
$1,600
$1,457
$1,400
$1,200
$1,000
$800
$503
$600
$400
$200
$94
$181
$322 $304
$115
$0
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2013 2013 2013 2013 2014 2014 2014 2014 2015
Source: Crunchbase.
Source: News articles (including The Economic Times dated Apr 16, 2015,
Business Standard dated Jan 16, 2015), Crunchbase
Exhibit 46: Global majors have begun committing capital

to Indian start-ups
Exhibit 47: E-tail attracted the most capital followed by

classifieds
GoogleCapital
Google's firstinvestmentin
India Freshdesk infuses
$31mnalongwithexisting
investors
US$10bn
SoftBankannounces
planstoinvest
US$10bninIndiain
comingyears
Oct, 2014
Jun, 2014
Alibaba
Alibababacked
AntFinancial
Twitter
TwitterbuysIndian takes25%stake
inPaytm
marketingservices
providerZipDialfor
$30$40mn
Feb, 2015
Jan, 2015
Jul,2014
US$2bn
Amazon announcesan
additionalUS$2bn
investmentinIndia
GoogleCapital
Google provides
freshfundingto
CommonFloor
India'sonlinereal
estatecompany
CapitalraisedbyinternetfirmsinIndia(US$bn)
Financialservices/Others
$0.15
$0.22
Social/Entertainmentetc.
$0.24
$0.33
Latestround(US$bn)
Restaurants&Food
$0.18
$0.36
Totalraised(US$bn)
Travel&logistics
Classifieds
$0.58
$0.96
$0.63
$1.20
$4.24
ecommerce
$0.0
$2.0
$4.0
$6.71
$6.0
$8.0
Note: This is not an exhaustive compilation of capital raising activity in India

Source: News articles (including Business Standard dated Jul 31, 2014, The
Economic Times dated Oct 28, 2014)
Source: News articles (including The Economic Times, Business Standard),

Crunchbase
31
May 4, 2015
In 2014, the capital commitment towards e-commerce companies in India has been about
US$6bn, with about 85% of it coming in the second half of CY14. Within e-commerce, e-tail
has captured a major share of capital flows followed by classifieds and travel/logistics. We
expect the capital infusion to continue into 2015 as internet penetration picks up pace
backed by economic reforms on the horizon such as potential rollout of GST reforms. We
believe that investment opportunities in the e-commerce derivate sectors such as
warehousing, distribution and logistics, education, financial and other business services
are likely to take center-stage.
Exhibit 48: E-tail dominated capital raising in the past 2 years

Key investments made in India over the past two years
6T
Company
Industry
Latestroundofinvestment
Investors
e-commerce
Flipkart
Amazon India
Snapdeal
Paytm
Shopclues
Urban Ladder
CaratLane
Others
Marketplace/Retail
Marketplace
Marketplace
Mobile Marketplace
Marketplace
Lifestyle Shopping (Furniture)
Lifestyle Shopping (Jewellery)
Lifestyle Shopping (Furniture,
Qatar Invesment, T Rowe, Steadview Capital

Amazon
SoftBank
Ant Financials (Alibaba Group)
Tiger Global Management
Sequoia Capital, TR Capital, Steadview Capital
Tiger Global Management
SAIF Partners, Temasek, IDG Ventures, Norwest, Kalaari
Fashion, baby products etc)
Capital, Steadview Capital, Intel Capital, Smile Group, Sequoia
Amount
(US$mn)
Totalraised
US$mn
$4,241
$700
$2,000
$627
$525
$100
$50
$31
$208
$6,712
$2,500
$2,000
$1,100
$525
$116
$77
$52
$342
$628
$200
$150
$100
$50
$30
$98
$1,198
$216
$346
$140
$50
$97
$350
$585
$400
$35
$23
$30
$25
$72
$960
$677
$43
$45
$44
$26
$126
Capital, Nokia etc

Classifieds
InMobi
Quikr
Housing.com
CarDekho
Komli Media
Others
Travel & logistics
OLA
Delhivery
Yatra
TaxiForSure
OYO Rooms
Others
Mobile ads
Community (C2C)
Real estate
Automobile aggregator
Advertising
Automobile, Community, Real
SoftBank
Tiger Global Management, Matrix, Nokia, Omidyar Network
SoftBank
Hillhouse Capital, Tybourne Capital, Sequoia Capital
Nexus, Helion, Peepul Capital, Norwest
Tiger Global Management, Canaan Partners, Nexus, DN
estate, deals
Capital, Bessemer Venture Partners, Info Edge
Transport
Logistics
Transport
Transport
Travel/Accommodation
Transport, logistics
DST Global, Tiger Global, Steadview Capital, Accel Partners

Multiples Alternate Asset Management, Nexus, Times Internet
Norwest Venture Partners
Helion, Bessemer, Accel
Greenoaks Capital, Lightspeed Ventures, Sequoia Capital
Intel Capital, Inventus Capital Partners, Peepul Capital,
Blumberg, Helion, Sudeep Bhandari (Datavision)
Note: This is not an exhaustive compilation of capital raising activity in India

Source: News articles (including VC circle, Crunchbase, The Economic Times).
32
May 4, 2015
Exhibit 49: Global pioneers in the internet sector are now eyeing investments in India. Nearly all global majors have
established a presence in India in recent months
Key investments in Indian internet companies by leading private equity/venture capital firms in the past 3 years
6T
SoftBank
Sequoia
Capital
Tiger Global
Management
Accel
Partners
Naspers
Other
Investors
Intel Capital
Twitter
Google
Capital
Tencent
Holdings
Newshunt
Investee
Companies
Capital raising = Discounting, advertising, consolidation

As capital flowed into e-commerce companies, most of them used it to acquire customers
through heavy discounting including incentives such as cash backs, discounts, bonus
reward points, free shipping. As is typical in e-commerce industries across the globe, the
winner takes all phenomenon is taking hold in India as well. This has led to large e-tailers
like Flipkart, Snapdeal and Amazon India offering heavy discounts to gain market share.
With this discounting strategy, we note that these 3 e-tailers now account for nearly 80%
market share in the e-tail space, led by Flipkart at 45%.
In addition to utilizing cash to offer discounts and acquire customers, companies have also
spent money on consolidation, e.g., Flipkart acquiring Myntra (fashion/apparel e-tailer) for
approx US$300mn in May 2014. We expect the trend to continue going forward with a high
possibility of horizontal e-tailers acquiring niche vertical e-tailers.
Impact of capital across spectrum of industries

We believe the rise of e-commerce in India is likely to have a significant derivative impact
on complementary industries like online and print media and advertising, warehousing and
distribution, recruiting etc. Further, it could adversely affect traditional vendors besides the
IT services industry (higher attrition) as both the industries recruit from a similar talent pool.
33
May 4, 2015
Advertising: Heavy advertising spends to attract new customers is becoming a trend

4T
4T
which could not only impact print media companies but will also be quite important for
online advertisers.
Logistics: Logistics and distribution are the key enablers of e-commerce in India, more
so due to the bottlenecks in Indian infrastructure. Increasing capital inflows are
ensuring investments in logistics and last mile delivery infrastructure. Further, logistics
firms as well as real estate firms providing warehousing facilities are likely to be
impacted, in our view.
Recruitment: A surge in the internet sector and significant capital inflows has resulted
in significant demand in workforce across technology, management, finance and
administration levels which would impact recruitment consultants and classified
companies such as Info Edge (Naukri.com), in our view.
4T
4T
4T
4T
Consolidation: In order to gain scale, combat competition and acquire niche offerings
4T
4T
such as personalized deals, companies may look to acquisitions with the help of capital
raised. We are already in the middle of the first phase of consolidation where
companies with better funding are acquiring peers in the space. Start ups and
companies which have gained a reasonable scale are being impacted by this trend.
Consumption: The side-effects of heavy discounting and investments are impacting

4T
offline channels of economies such as offline retail stores, traditional vendors and
capital providers.
Exhibit 50: Key sectors and companies impacted by capital flows into e-commerce
Advertising
Most Internet
companies
business models
are either B2C or
C2C. Consequently,
there is a need to
advertise
Winner takes all
phenomenon
accelerating
advertising spends
Companies
Media companies
Search providers
Social media
advertisers
E.g.: Times Group,
Just Dial, Google,
Facebook, InMobi
etc.
Logistics
Current logistics
infrastructure
covers less than
10% of the
countrys postal
codes
Multiple tax
structure leading to
decentralized
warehouse
networks
Consolidation
Consumers
Rapid growth
leading to talent
hunt
Recruitment
As industry grows,
consolidation bound
to happen
IT/ITES industry
suffering high
attrition rates
leading to higher
retention/ recruiting
costs
Several acquisitions
happened in last
few months.
Internet companies
incentivizing
consumers through
heavy discounts
Companies
Companies
Warehousing and
distribution solution
providers
Talent search firms
Real estate firms

E.g.: Blue dart,
India Post,
Aramex, GATI,
Delhivery, DLF etc.
Colleges/
Universities
Students/Job
seekers
E.g.: Naukri,
LinkedIn, Times
Jobs, Randstad,
Team Lease etc.
E.g.: Flipkart
acquired Myntra,
Goibibo acquired
Redbus
Companies
Niche/vertical
companies
E.g.: Zovi,
Pepperfry, Urban
Ladder, Zomato,
Hike, Policybazaar
etc.
Higher competition
leading to better
customer service
quality
Sectors
Consumers
Traditional vendors
Capital providers
34
May 4, 2015
Ecosystem #3: Payment landscape evolving across channels

the views of our India
financials team of
Tabassum Inamdar
and Shyam Srinivasan
Low card penetration makes case for evolving payment landscape: Credit card
4T
penetration in India is quite low, with only 20mn cardholders as of Sep 2014, implying 1.7%
penetration. Further, while there are 431mn debit cards as of Sep 2014, a lot of these may
be used only for cash withdrawals and not for commercial transactions at all, in our view.
Hence, we believe the online payment landscape in India needs to evolve to propel the
growth of e-commerce. We believe the rise of the internet economy in India would not be
possible without a commensurate improvement in the ease of payments for consumers.
Hence, multiple niche companies, besides banks, have emerged across the payment
landscape offering several inexpensive and innovative transacting solutions.
Cash on Delivery (COD) is the most preferred mode: Our interactions with multiple e4T
commerce firms suggest the most preferred way for Indian consumer to transact still
remains cash as about 60% transactions in e-commerce as of 2014 are being done on cash
on delivery (COD) mode, vs. 2%/30% in the US/China. It is so successful in India because it
is convenient and enhances customer trust initially, in addition to enabling consumers who
do not have access to credit card/debit cards/net banking etc. to buy goods/services online.
This has helped push online commerce to the Indian consumers and propelled it to attain
critical mass. However, cash on delivery is an expensive option owing to a variety of
reasons:
Higher return rates for goods (customer refusal to take deliveries due to lack of cash,
non-serious buyers etc.)
Higher costs of handling cash (theft, loss of cash due to mishandling etc.)
Elongated working capital cycles (time for cash to reach the merchant from consumer
increases)
Higher delivery costs as third party logistic providers charge extra for such deliveries
Exhibit 52: Credit card penetration barely changed since

2006, but debit cards rose as banks offer them for free
Exhibit 51: Cash on delivery is most preferred mode for

Indian online shoppers, unlike in China or the US
Mix of online transactions by mode of payment (2014)
Credit and debit cards outstanding and growth
6T
EMI/3rdpartywallets
1%
NetBanking
China
18%
12%
mn
DCyoy(%)[RHS]
60%
431
37%
300
40%
25%
100
60%
50
80%
331
22%
278 19% 19%
75
50
23
17
102
28
17%
11%
182
137
2%
7%
2%
2%
18
30%
20%
10%
0%
10%
10%
25
50%
40%
228
200
60%
394
32%
19%
150
40%
34%
33%
350
26%
30%
30%
20%
Debitcards(DC)
CCyoy(%)[RHS]
450
250
2%
Creditcards(CC)
51%
400
16%
0%
India
34%
0%
Cashondelivery
US
500
12%
DebitCards
CreditCards
9%
10%
6T
18
26%
18
20
19
20
20%
30%
Note: China wallet mix assumes Alipays wallet users as the total wallet users
in China
Source: Central Banks, Goldman Sachs Global Investment Research.
Source: RBI.
35
May 4, 2015
Expensive COD acting as a catalyst for innovative payment mechanisms: As the

merchants have to typically bear most of the overhead expenses arising out of COD, it is
increasingly denting profitability. Hence, merchants/service providers are opening up for
tie-ups with mobile wallet providers, banks and credit/debit card providers. Sometimes, it
was also due to regulatory requirements such as in the case of Uber/Paytm where the RBI
regulations resulted in Uber using a mobile wallet. Indian banks and start-ups space are
looking to present consumers and merchants with numerous transacting choices including
mobile/electronic wallets, payment gateways, mobile POS (point of sale), cash cards,
credit/debit cards, net banking, electronic fund transfers etc.
Exhibit 53: Mobile based payments fast evolving; could eventually help reduce high
cost/high risk cash on delivery (COD) transactions
Paymentapproach
Providers
Coststructure
Comments
Cashondelivery(COD)
Aramex,FedEx,BlueDart,JAVAS,
Delhiveryetc.
Visa,MasterCard,American
express,Dinersclub,RuPayetc.
CCAvenue,Billdesk,PayU,Citrus,
SBIePay,zaakpayetc.
IMPSlivememberbanks(~59
bankscurrently)
Rs2580per0.5kgpacketor
2%4%ofinvoicevalue
0.75%to3%
Only4bankscharge.Rest
offerforfree
Expensivesolutionforsellers
Improvescustomerreach
Lowpenetration
Lessconvenient
Limitedcustomerbase
Merchanttieupsnecessary
Lowmerchantadoption
Longdrawnsignupprocess
0.7%to3%+convenience
feetousers
Scaleisanissue
Customerskepticism
Credit/debitcard/net
banking
Paymentgatewayscard
linked
IMPS(Immediatepayment
system)
Mobileonlybasedpayments
Mobileprepaidwallets
Airtelmoney,mpesa,Citrus,
Paytm,Itzcash,Oxigenetc.
0.75%to5%
Directoperatorbilling/
Directtobill
Airtel,Vodafone
ashighas60%
Highcoststructure
openuppaidappdownloadmarket
Indirectoperatorbilling
(chargetomobilebill)
Boku,Zong(ownedbyPayPal)
ashighas30%
Highcost/feestructure
Lowmerchantadoptionindigital
Exhibit 54: Digital payment landscape evolving rapidly in India with banks, telecom companies and specialized firms
focusing on disrupting the payments landscape
Payment system landscape and key companies
6T
Telcos
Consumers
Visa
Mastercard
RuPay
American Express
Point of Sale
Terminals
Mswipe
Ezetap
Ingenico
SBI MAB
Acquirers
ICICI Merchant
Services
Merchant Solutions
(Axis Bank)
ACH based
systems
Banks/ Card
issuers
Telco wallets
Wallets
Airtel Money
Vodafone M-Pesa
ITZ cash
Paytm cash
Citrus cash
NACH
remit2India
State Bank of India

Axis Bank
ICICI Bank
HDFC Bank
Payment
aggregators
Gift cards
Bank e-wallets
CCAvenue
BillDesk
SBIePay
direcpay
PayU
Zaakpay
Citrus
HDFC Bank Chillr

ICICI Bank Pockets
Shoppers Stop
Lifestyle
Merchants
Networks
Retail
Banks
Technology
Payment Banks
Paytm
Vodafone
Mobikwik
eWallets
ngpay
PayUMoney
Google wallet
Government/Regulator
Note: Payment banks are not set up yet. Companies listed have applied for Payment bank licenses with the RBI; NACH = National Automated Clearing House
Source: Company data, RBI, Goldman Sachs Global Investment Research.
36
May 4, 2015
Exhibit 55: Mobile banking transactions have picked up in

recent months
Mobile banking transactions
Exhibit 56: Wallets are as yet a new phenomenon in

India, we expect it to rapidly scale up
Electronic (mobile) wallet users (2014)
6T
Volumeoftransactions(mn)
Walletusers(mn)
169 25
350
160
100
250
200
15
84
77
80
10
40
20
1 2
4447
3940
3433
2626
23
162020
101012111314
50
50
10
Mar11
Mar12
Mar13
Apr13
May13
Jun13
Jul13
Aug13
Sep13
Oct13
Nov13
Dec13
Jan14
Feb14
Mar14
Apr14
May14
Jun14
Jul14
Aug14
Sep14
Oct14
Nov14
Dec14
Jan15
Feb15
Mar15
152
100
Alipay
60
162
150
Paypal
Australia
113
102
120
300
Citrus
140
300
20
Source: RBI
Paytm
141
129
Kakaotalk
180
Paypal
Value(Rsbn)
6T
Source: Company data, respective Central banks.
Reserve Bank of India the facilitator and regulator moving in the right direction:
4T
Over the years, the Indian banking regulator has also been taking incremental steps to
increase cashless transactions not only in the internet space but also offline. More recently
it has released guidelines for a universal bill payment system called Bharat Bill Payment
System (BBPS). It has also released guidelines and invited applications for payment bank
licenses, following which a large number of companies have applied.
We believe that payment bank licenses, once issued, could act as a catalyst in pushing the
Indian consumer towards a cashless economy for the following reasons:
1)
Enhanced customer trust -- will let more people sign up for electronic wallets,
2)
Allows for withdrawal of cash from wallets,
3)
Allows wallet companies to pay interest to customers on money stored in the wallet,
4)
Lower cash balance, regulatory control and ease of payments for small ticket items.
Exhibit 57: Reserve Bank of India actively taking steps to

increase cashless transactions
Timeline of regulations on cashless payments
6T
Date
1986
1994
1998
Jun01
Nov05
Dec07
Jun08
Apr09
Mar12
Oct14
Nov14
Nov14
Dec14
Paymentrelatedmilestone
IntroductionofMICRbasedchequeclearing
ElectronicFundstransfersystem(EFT)launched
Introductionofdebitcard
RBIallowedbankstoofferinternetbankingfacilities
Nationalelectronicfundstransfer(NEFT)launched
ParliamentclearsthePaymentandsettlementsystemsact
OperatingguidelinesformobilepaymentsreleasedbytheRBI
OperatingguidelinesforprepaidinstrumentsputoutbyRBI
LaunchofRupaydomesticcardpaymentnetwork
2factorauthenticationmandatedforallcreditcard
transactions
RBIreleasesfinalguidelinesforlicensingofPaymentbanks
Guidelinesforbharatbillpaymentsystem
EMVChipandPinmandateddomestically
Source: RBI
Exhibit 58: We think the grant of payment bank licenses

to wallet companies would improve trust, penetration
Key payment bank applicants
6T
No
Applicant
JVPartner
1
2
3
AdityaBirlaNuvo
BhartiAirtel
Cholamandalam
InvestmentandFinance
FinoPaytech
Futuregroup
GITechnology
Oxigen
Paytm
RelianceIndustries
VakrangeeLtd
Vodafone
IdeaCellular
KotakMahindraBank
NA
4
5
6
7
8
9
10
11
NA
IDFC
NA
RBLBank
NA
StateBankofIndia
NA
YesBank
Source: Reserve Bank of India.
37
May 4, 2015
Ecosystem #4: Logistics Within the bottleneck lies the opportunity

infrastructure team of
Pulkit Patni and Mohit
Soni
Lack of infrastructure is a blessing in disguise: Lack of retail outlet infrastructure, high

4T
4T
rentals and poor connectivity have limited the presence of organized retail (less than 10%
according to EY in 2013) in India. We believe the same reasons could act as a catalyst for
heightened adoption of e-commerce in India a counter trend to that in developed
countries. However, we believe logistics and last mile delivery are key bottlenecks that
need to be addressed for faster adoption of e-commerce in India.
Traditional vendors evolving, so are new entrants: While incumbent logistic providers
4T
4T
like India Post, Aramex, Blue dart, DTDC, Fedex have specially added ecommerce solutions
to their offerings, the e-commerce industry still faced challenges in terms of handling cash
on delivery orders, return orders and customer service. This led to the emergence of
specialized e-commerce logistics companies like Delhivery, E-Com express, e-kart etc. As
most of these specialized providers suffered from limited reach across India (Exhibit 48), it
saw the emergence of logistics aggregators such as Kart Rocket and Zepo. These
aggregators do not have their own distribution network, but instead rely on the
incumbents network. They assist merchants in choosing cost/time effective way of
shipping merchandize to their customers.
Exhibit 60: Lack of retail outlet infrastructure in India
(hypermarkets) is a big catalyst for faster adoption of
online commerce, in our view
Exhibit 59: E-comm. related logistics market grew at a

105% CAGR in 3 years, while organized air/ground
express industry grew 14%/19%
Market size and growth
Data as of 2014
6T
6T
Marketsize(US$mn)
FY11FY14CAGR
750
700
105%
650
600
550
500
690
#peopleperHypermarket('000)
120%
3,500
100%
3,000
80%
2,500
60%
2,000
680
40%
450
400
500
350
19%
14%
20%
0%
300
ecomm.logistics
OrganizedAir
Express
OrganizedGround
Express
Source: Holisol Logistics, Avenues Capital, Blue Dart.
2,974
1,500
1,000
500
43
74
UK
USA
233
425
0
China
Brazil
India
Source: Euromonitor.
4T
Clarity on tax and regulations needed; GST may be a potential trigger: Even with the
emergence of multiple competitors, key issues such as lack of enough warehousing and
distribution space and sub optimal (or lack of) last mile connectivity still hinders the ecommerce industry. Moreover, uncertainty around tax regulations for marketplace
providers (such as Amazon, WS retail) who handle warehousing and distribution for SMEs
that sell merchandize on their platforms is causing further roadblocks. With our forecast for
e-tailing market to grow to US$220bn in size by 2030, we estimate that a significant
opportunity awaits the logistics industry.
4T
We believe the passage and potential implementation of GST starting April 2016 (goods
and services tax) could result in seamless working of the hub and spoke model in the
Indian logistics industry. This could lead to third party logistics companies (3PL) emerging
in the market place resulting in much lower logistics cost and lesser bottlenecks. Also,
modes of transportation like the railways which are currently underutilized for logistics,
would assume significance for long distance travel.
38
May 4, 2015
Exhibit 61: COD is more than twice as expensive as regular delivery, but remains the
preferred option for consumers
140
Cashondelivery(COD)
Rs
120
100
68
80
130
60
40
62
58
20
0
NonCODtotal CODshipment
charge
charge
CODcash
collection
charge
CODtotal
charge
Note: Delivery of 500g

Source: Zepo, Kart Rocket, Goldman Sachs Global Investment Research.
Exhibit 62: Most logistics companies do not have enough Pan-India reach, except India Post
Key logistic solutions providers in India and their current reach
6T
Company
eCommerce solution
Type
Description
CoD offered
(Pincodes)
Pre-paid
reach
(Pincodes)
Blue Dart
E-business solutions
B2B and B2C
Provides shipping tools that businesses can incorporate in their e-tail stores
3,300
4,100
Delhivery
Delhivery
B2B
Fulfilment and logistics network for non-contact retail. Own and operate fulfilment centers
2,600
2,600
DTDC
Dotzot
B2B and B2C
Third party logistics service provider focused exclusively on e-retail delivery fulfillment
7,100
8,000
FedEx
FedEx
B2B and B2C
Provides shipping tools that businesses can incorporate in their e-tail stores
2,650
5,550
India Post
Express Parcel
B2B and B2C
50 cities
50 cities
India Post
Business Parcel
B2B and B2C
Door-to-door service available to both retail as well as business (corporate) customers in

major cities using air mail service
Offers total mailing solutions to businesses from mail preparation to mail delivery using
surface transport system
25,000
25,000
9,000
16,000
6,100
8,220
Shipping solutions
Logistic aggregators
KartRocket
ShipRocket
B2B
Zepo
ZePost
B2B
Enables e-tailers to dispatch a shipment, pick a courier company, assign an airway bill
number, and print a shipping label, among other facilities
Offers complete logistic assistance to small businesses looking to sell online
Exhibit 63: Potential GST implementation could ease logistics bottlenecks for companies
with large scale warehousing facilities and multi-modal logistics firms
How GST will change things
Central taxes
Excise
Customs duty
CST
VAT
Octroi
State Cess
Current tax structure

State taxes
Manufacturers do stock transfer between inventory stocking points
To avoid duplication
of taxes
Hence, they have multiple small warehouses in each state
Target - saving taxes rather than operational efficiency
Proposed GST
Large scale / 3rd party warehousing will get a big boost
Source: Goldman Sachs Global Investment Research
39
May 4, 2015
Ecosystem #5: Government initiatives likely to pick up

economics team of
Tushar Poddar and
Vishal Vaibhaw
Lack of clarity around the regulatory environment

The regulatory environment in India has not been very clear around e-commerce till now.
In the past few years, there have been concerns around lack of clarity on various regulatory
/legal issues such as taxation, logistics, foreign investment, payments landscape and
vertical specific concerns. Although India does not have a separate regulator for the ecommerce industry yet, the government has identified nine different agencies which would
monitor the development of this sector going forward. We believe that while regulation is
necessary, businesses should be able to focus more on expanding their business.
Exhibit 64: No separate regulator in place for e-commerce yet, still governed by existing rules/laws
Regulatory landscape for e-commerce and related businesses in 2014
6T
Category
ReserveBankof
India
Dept. ofIndustrial
Policyand
Promotion,Dept.
ofCommerce
Regulation
2factorauthenticationismandatoryforcard/online
payments
PaymentsLandscape Allowingpaymentbankslicenseswhichwillallow
acceptanceofdepositsuptoRs100k,issuanceofdebitcards,
offeringfinancialproductslikeMFs,Insurance.
ForeignDirect
Investment(FDI)
100%inB2Becommerce
100%insinglebrandretail(offline)
51%inmultibrandretail(offline)
ValueAddedTax
Dept.ofRevenue
M&A
Dept.of
Information
Technology
Alletailingcompanies
Completerestrictiononforeignonlineretailerstosell
Foreignecommerce
productssourcedbythemselvesshouldrelyonmarketplace
companies
modelwhichis100%allowed
Distributableprofitsinatleast3outofpast5yearsand
positivenetworthinthepast3years
Listing/IPO
AffectedCompanies
AllB2Cecommerce
companies
Mobilewallets,payment
gateways,ecommerce
companies,telcos
Ministryof
Corporate affairs
Lossmakingecommerce
companies
ForgoodssoldbyonlineretailerslikeAmazonundertheir
ownrisk(fulfilment),theyshouldbepayingVATratherthan Alletailingcompanies
themerchant
CurrenttaxregimeandunclearM&Aregulationsforonline
Allecommercecompanies
companiesmaketheM&Aprocesscomplicated
Dept.ofConsumer
affairs
LackofGSTleadstoinefficienttaxationofsalestaxandVAT
ineachstateandresultinginmultiplewarehousesindifferent Alletailingcompanies
locationsandlackofeconomiesofscale
Logistics
Dep.Of
Information&
Broadcasting
Ministryof
Statisticsand
Programme
Implementation
Ministry ofHome
&Finance
Source: News Articles (The Economic Times, Business Standard etc.), Goldman Sachs Global Investment Research.
Digital India a key cog in the wheel to increasing penetration

By pursuing its Digital India initiative which entails a capital expenditure of c.US$19bn, we
believe the Indian government could accelerate the spread of internet connectivity in India
by improving infrastructure (broadband connectivity to 250k village councils, 400k internet
access points, Wi-Fi in 250k schools and all universities) and easing bottlenecks as enabling
private investments in technology. While the NOFN and Digital India rollout has been
gradual to date, the central government seems to be focusing on the same and have
advanced the timeline to execute the Digital India initiative by almost a year.
40
May 4, 2015
Exhibit 65: Digital India initiative proposes to connect 250k village councils to broadband via National optical fiber
network
Digital India highlights
6T
Impact of Digital India by 2019

Broadband in 250,000 villages
Universal mobile phone connectivity
Costs
Net zero electronics imports by 2020
New Schemes
Ongoing Schemes
Rs130 bn
(US$ 2bn)
Rs1 tn
(US$ 17bn)
400,000 public internet access points

Wi-Fi in 250,000 schools, all universities
Public Wi-Fi hotspots for citizens
17mn trained for IT, Telecom & Electronic jobs
17mn direct employment; 85mn indirect employment
e-governance & e-services across government
Leader in IT use across health, education, banking
Source: Dept. of Electronics and Information Technology.
Government channels may contribute in a big way

Besides helping build network connectivity across the country, we believe the Indian
government has several other channels through which it can accelerate the penetration of
internet and e-commerce. We list below a few of those avenues, in some of which the
government already has a major head-start.
Indian Railways IRCTC portal is the largest online portal in India

4T
The Indian government runs one of the largest e-commerce portal in the country IRCTC
(Indian Railway Catering and Tourism Corporation) measured in terms of number of
transactions (463,000 per day in FY14). It is the online railway ticketing platform used by
the Indian Railways. It provides the first touch point of e-commerce for the vast rural and
suburban population, which is otherwise untouched by the current e-commerce industry in
India. The government could leverage this reach and look to provide e-governance and eservices across various departments, in our view.
Exhibit 66: Indian govt. owned IRCTC runs one of the

largest online ticketing agencies in the world
Exhibit 67: India Post is looking to launch an e-commerce

portal in marketplace model in 2015. Its infrastructure
reach could help deepen the e-comm. market, in our view
IRCTC
India Post
# of Post Offices (PO)
# in rural areas
% in rural areas
People served per PO
Avg. area served by each PO
Employees
COD orders (Rs bn - FY14)
FY12
FY13
FY14
# of tickets (mn)
116.1
140.6
169.0
# of
Avg.
Avg.
Passengers tickets per passengers
(mn)
day ('000) per day
('000)
209.9
318.1
575.1
254.4
385.2
697.0
345.7
463.0
947.0
155,015
139,144
89.8%
7,175
2
21.2Km
460,000
2.8
Note: Data as per latest available

Source: IRCTC.
Source: India Post.
41
May 4, 2015
India Post The widest distribution reach in the country

4T
The Indian government possesses a massive logistics network through India Post - its
postal service arm. It is the only logistics service provider in India currently that can deliver
parcels and goods to nearly 25,000 postal codes in India (nearly a 4th of total pin codes).
Several large e-tail companies in India, like Amazon and Flipkart among others, have
partnered with India Post to take advantage of its deep reach. As such, India Post is already
aiding as a catalyst in the penetration of e-commerce.
P
Further, India Post plans to launch an e-commerce marketplace of its own that could
significantly aid in improving internet and e-commerce penetration into the hinterlands of
the country. Moreover, we note that if they were to get a payments bank license from the
RBI, it could enable safer and easier way of payments for its customers.
Jan Dhan Yojna The biggest drive for financial inclusion in India
The PMJDY (Pradhan Mantri Jan Dhan Yojna) scheme intends to bring banking to every
doorstep in the country. As part of this initiative, the government has opened nearly 125mn
bank accounts as of Jan 2015 since the program started on Aug 28, 2014. Of 125mn
accounts, 110mn account holders were also issued debit cards potentially arming them
with the necessary tools to be able to transact online. We believe this increases the target
market for online commerce in India as well as helps propel India towards a cashless
economy.
JAM Number trinity: The Indian government envisages the JAM Number trinity Jan
Dhan Yojna (Bank account number), Aadhaar ID card number (UIDAI), and Mobile number
to help effectively target public resources (such as direct cash transfer of subsidies to the
poor) and deliver other governance services. As highlighted in our Indias Digital
Dividend report dated Sep 24, 2014, the delivery of governance services through the use
of technology could eliminate wastage of resources as well as drive productivity growth in
the country. We believe this could potentially bridge the per capita income gap that India
has with China/US at a faster pace fuelling consumerism, a key catalyst for e-commerce
growth, in our view.
Exhibit 68: Unique Identification Authority of India

(UIDAI) issued identification cards to nearly 2/3rd of
Indian population (Feb, 2015)
P
Exhibit 69: Jan Dhan Yojna launched in late August,

2014 has added c.110mn debit card holders in 5 months
JanDhanbankaccounts(Jan31,2015)
India
160.0
mn
140.0
120.0
Restof
population
463mn
37%
100.0
80.0
Aadhaarcards
issued
773mn
63%
Total
125.5
Rupaydebitcard
110.8
60.0
40.0
20.0
Aadhaarseeded
45.0
Source: UIDAI.
Source: UIDAI, Ministry of Finance
4T
42
May 4, 2015
Ecosystem #6: Talent driven start-up ecosystem fast emerging

Indian IT services sector has a pool of tech talent: Over the past couple of decades, the
Indian IT-BPM sector has been the key driver of employment in India. This has led to an
increasing number of graduates looking to equip themselves for recruitment by this
industry. As a result, talent supply to the industry has grown significantly, more or less
matching demand. Apart from more than 1mn engineers that graduate in India every year,
there are more than 150,000 digitally skilled high end employees that can cater to the
supply side dynamics for the industry.
4T
4T
Exhibit 70: 5.8mn are estimated to graduate in FY15 (vs.

3.7mn in FY10)
Graduate output in India
Exhibit 71: 150K+ digitally skilled employees are readily

available (FY15)
Digitally skilled professionals
6T
6T
50,000
analytics
professionals
75000+ Post
graduates
30,000
mobility
specialists
1.5mn
industry
ready
professionals
> 50,000 cloud,

social media, and
collaboration
skilled talent
0.8mn
science
graduates
1mn
engineers
Source: NASSCOM, McKinsey.
Source: NASSCOM, McKinsey.
Tougher immigration norms in the US, bridging parity help: Availability of talent is
4T
4T
improving driven by: (1) increasingly tougher immigration norms in the US, (2) reducing
purchasing power parity in India as salaries for good talent are at global levels, and (3)
potential upside in compensation from stock options in Indian start ups after they get listed
or acquired.
Start-ups boom as funds become freely available: Of late, the abundance of talent has
driven a start-up boom, catapulting India to be among the top start-up nations across the
globe. Since 2010, industry participants such as NASSCOM estimate that nearly 3,100 startups focused on technology have emerged in India. Of these, it is estimated that nearly
2,200 are digitally focused, while c.500 in the e-commerce space. As capital from around
the globe begins to flow into Indian entrepreneurial ventures, we see a virtuous cycle of
entrepreneurship and employment generation taking shape in India. Within e-commerce,
most of the interest has been in the e-tail category probably a reflection of the vast
opportunity in the space. Travel/ticketing and classifieds have closely followed while
financial services start-ups have been relatively fewer.
4T
4T
43
May 4, 2015
Exhibit 72: Abundance of talent driving start-up boom in

India
Exhibit 73: India is now the 4th biggest start-up hub in the
world (as of 2014)
Technologyproduct/startupsby
inceptionyear
Techproduct/digitalstartupsbykey
countries
900
800
700
600
500
400
300
200
100
0
8,000
805
6,000
590
525
41,500
7,000
680
480
5,000
4,000
3,500
3,300
3,100
3,000
2,700
2,000
1,000
0
2010
2011
2012
2013
2014
US
UK
Israel
India
Canada
Source: NASSCOM, Zinnov.
Exhibit 74: 2/3rd of start-ups focused on digital, of which

nearly 500 are in the e-commerce space
Exhibit 75: E-tail and ticketing dominate e-commerce

start-ups in India
Indian Start-ups breakdown as of 2014
Start-ups by category as of 2014

6T
etail
~3,100 Startups
200+
Travel/ticketing
70+
~2,200 Digital
focused
Classifieds
60+
Financialservices
~500
e-comm.
20+
Otheronlineservices
50+
0
50
100
150
200
250
Exhibit 76: Most start-up businesses in India are

consumer centric as of 2014
Exhibit 77: Indian IT industry investing significantly in

augmenting workforce (data below as of 2014)
B2C
1,820
59%
B2C/B2B
120
4%
B2B
1,140
37%
$2.2bn spent annually on training and re-skilling
50% of the spend is on new employees
~5% of man hours spent on average in training
$4K spent on training a new recruit
Training focused on emerging technologies like cloud,

analytics, social, mobility, robotics, artificial intelligence etc.
Global firms increasingly shifting product/engineering

development to India
Source: NASSCOM, McKinsey
44
May 4, 2015
Risks to our view: Execution is key

We believe the India internet opportunity is predicated on the successful execution of some
of the key ecosystem enablers. We note that growth rates of some of the listed internet
companies such as MMYT, Just Dial, and Info Edge have not been very high, despite being
first movers in their space, due to slow pace of online adoption, relatively mature segments
(such as OTA) and smaller addressable markets in some cases (such as online recruitment
classifieds). This may not necessarily hold true for the larger verticals such as e-tailing
where growth rates have been high. However, we highlight some of the risks/challenges
that the sector may face going forward:
Lower investment in telecom infrastructure: In addition to the high spectrum capex

incurred recently, telecom companies would need to spend significant capex for laying out
backhaul/fiber network. Non-spectrum capex in India is significantly lower than that being
spent in China for 4G rollouts (e.g., China Mobile (Exhibit 40)). In the absence of adequate
capex investment, there is a risk of demand outstripping capacity.
Delayed execution of 4G services and Digital India: Some of the key risks that can delay
the successful execution of 4G services and Digital India initiative are clarifying right of way
for laying fibre, providing more backhaul spectrum, incentivizing operators to share
infrastructure, promoting capital expenditure and incentivizing local manufacturing of
network equipment.
Lack of logistics infrastructure: Lack of retail outlet infrastructure, high rentals and poor
4T
connectivity have limited the presence of organized retail (less than 10% according to EY in
2013) in India. Further, we believe logistics and last mile delivery are key bottlenecks that
need to be addressed for faster adoption of e-commerce.
Language is an entry barrier SMS adoption is a case in point: SMS adoption could not
take off in a big way in India during 2001-2010 (despite rising wireless penetration rates)
due to the low percentage of English speaking population (only 10% in 2001). If the ecommerce firms are unable to adapt to the language diversity in India, we believe the pace
of growth may not be as strong. However, we think the English speaking population may
have increased over the past decade.
Clarity around regulatory environment: The regulatory environment in India has not
been very clear around e-commerce till now. In the past few years, there have been
concerns around lack of clarity on various regulatory/legal issues such as taxation, logistics,
foreign investment, payments landscape and vertical specific concerns. Any adverse
regulatory change could be a risk for the sector.
Oversupply of start-ups funded by private equity: The recent rise in private equity fund
flow has resulted in a significant increase in startups/new entrepreneurs. Hence, there is a
risk of oversupply of ideas in the medium term which may make the market extremely
competitive and potentially alter the profitable trajectory for some of the better business
models.
45
May 4, 2015
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46
May 4, 2015
47
May 4, 2015
TAM# 1: Indian e-tail market to reach US$220bn by FY30E

US$220bn e-tailing market by FY30E: We estimate the Indian e-tail market to be US$7bn
of GMV (gross merchandise value) in FY15E, more than double the US$3bn market in FY14.
With the necessary ecosystem rapidly evolving as outlined earlier and internet penetration
achieving critical mass, we expect the e-tail market to continue its robust growth path. We
estimate the Indian e-tail market to reach c. US$47bn/US$220bn by FY20E/FY30E, at 47%/
26% CAGR, driven by online shopping penetration rising to 12%/25%, respectively, from
4% currently.
E-tail companies creating the ecosystem: Paucity of infrastructure, high rental expenses,
fragmented supply chain are some of the primary reasons for the low penetration of
organized retail. E-tail companies are looking to address these issues by organizing the
supply chain (aggregating merchants via marketplace model) and debottlenecking
infrastructure (such as establishing logistics solutions, warehousing and distribution centers)
to enhance the internet shopping experience, a key driver of the market, in our view.
Key assumptions for our long-term estimates for e-tailing market are:
1)
Data penetration and online shopper penetration: We forecast the overall data
penetration to reach 71% by FY30E (13% in FY14) vs. wireless penetration at 78%,
assuming the developing ecosystem will help converge data and wireless penetration
over time. Further, we estimate online shopper penetration to reach 25% levels, from
4% currently.
2)
Average transaction value and transactions per shopper: We forecast every

shopper to increase the frequency of purchases from just about 4 transactions per year
to about 8 transactions per year as the ecosystem evolves and more merchants come
online. Further, we forecast average transaction value to grow from Rs1,800 currently
to almost Rs4,300 by FY30E, growing largely in line with inflation at about 6%.
Comparison to US and China: At US$220bn, the Indian e-tail market in FY30E would be
smaller than the current US$240bn e-tail market in the US, but larger than the current
US$134bn market in China. The significant differential in per capita income between India
and US/China partly explains the relatively small size of the Indian market. Nevertheless,
the e-tail market is likely to become nearly 1.8% of Indias GDP or 11% of the Indian retail
market by FY30E, according to our estimates.
Exhibit 78: We estimate e-tail GMV to reach c.US$220bn
by FY30E, growing at a 26% CAGR
GMV= gross merchandize value
Penetration online shoppers as % of population
150
110%
300
90%
250
70%
200
25%
18%
$19
$27
$37
2015E
2016E
2017E
2018E
2019E
19%
13%
100
10%
50
2030E
2025E
10%

12%
4%
2%
24
49
72
98
20%
380
122
147
15%
10%
258
6%
168
5%
0%
2017E
$12
$112
30%
9%
11%
8%
2016E
$7
29%
$47
150
2015E
$3
2014
36%
2020E
44%
50%
2014
57%
50
0
350
30%
25%
$220
71%
100
130%
Penetration(%)[RHS]
2030E
CAGR
20152020:47%
20152025:32%
20152030: 26%
200
Onlineshoppers(mn)
400
2025E
144%
150%
2020E
Growth(%)[RHS]
2019E
GMV(US$bn)
6T
2018E
6T
250
Exhibit 79: driven by online shopping penetration

increasing to 25% (from 4% in FY15E)

48
May 4, 2015
Exhibit 80: We estimate the Indian e-tail market in FY30E

to be larger than the size of the China market today but
smaller than the US
Population (mn)
Wireless subscribers (mn)
Penetration (%)
Data subscribers (mn)
Penetration (%)
Online shoppers (mn)
As % of online users
Penetration (%)
Average transaction value (Rs)
GMV per transaction (Rs mn)
No of transactions per annum
Annual GMV (Rs bn)
India
FY15
India
2030E
China
2014
US
2014
1,268
932
73%
244
19%
49
20%
4%
1,812
230
4.7
416
1,527
1,196
78%
1,086
71%
380
35%
25%
4,341
3,047
8.0
13,228
1,350
1,227
91%
604
45%
302
50%
22%
320
328
103%
254
79%
191
75%
60%
$7
$220
$135
$240
Annual GMV (US$ bn)
Exhibit 81: We estimate the Indian e-tail market to grow

to 1.8% of GDP by FY30E
IndianRetailandetailin2030
GDP
$11,950
Offlineretail
etail
$1,813
$220
15%
2%
Retail
$2,033
17%
Note: GDP forecasts are from our Global Macro Research team
Source: CNNIN, Euromonitor, Goldman Sachs Global Investment Research.
Indian retail market at US$415bn in FY14: The Indian retail industry which is estimated
at c.US$415bn in size (FY14), is likely to grow at 12% CAGR till FY18, as per Euromonitor.
However, the retail industry is highly fragmented in India with organized retail accounting
for less than 10% of the market as of 2014. Lack of adequate infrastructure, high rental
expenses, fragmented supply chain are some of the primary reasons for the low
penetration of organized retail, as per the India consumer and retail team.
Exhibit 82: Indian retail market is likely to grow at 12%

CAGR to c. US$640bn by FY18, as per Euromonitor
2013Retailmarketsplit
IndiaRetailsales(US$bn)
700
642
650
600
12%CAGR
550
Pharmacy
2%
578
463
450
Furnitureand
Others
furnishing Footware 6%
2%
1%
Consumer
durablesandIT
6%
519
500
400
Exhibit 83: Indian retail market is dominated by food &

groceries, followed by apparel
Jewellery
6%
415
370
Apparel
8%
350
300
Food&grocery
69%
250
2013
2014
2015
2016
Source: Euromonitor.
2017
2018
Source: ASSOCHAM, India Brand Equity Foundation (IBEF).
49
May 4, 2015
Exhibit 84: Organized retail market in India is less than

10% of the total
Exhibit 85: Organized retail is more focused and is evenly

spread across categories
2013OrganizedRetailmarketsplit
2013Retailmarketsplit
Food&grocery
3%
Organized
8%
Others
9%
Apparel
19%
Footwear
27%
Unorganized
92%
Consumer
durablesandIT
20%
Furnitureand
furnishing
8%
Source: ASSOCHAM, IBEF.
Jewellery
10%
Pharmacy
4%
Source: ASSOCHAM, IBEF.
E-tail industry needs US$20bn of incremental capital in next 5 years

At present, the Indian e-tailer on average incurs 1.35X of the GMV sold as expenses
suggesting gross losses of 35%. This is due to the heavy discounting, marketing, free
shipping and handling, cash incentives and various other incentives that e-tailers give to
attract consumers. We believe this is likely to continue till the online shopping penetration
reaches a steady state in about 5 years from now. As such, we estimate that e-tailers are
likely to continue their cash burn to keep their growth intact while slowly working towards
lowering and eventually eliminating aggressive consumer incentives. Based on our etailing market forecasts and assumptions of the e-tailing transactions becoming profitable
only after the next five years (FY20E onwards) vs. a loss of 35% currently, we estimate that
the e-tail industry will need at least US$20bn of incremental cash infusion to deliver
sustainable growth before it reaches steady state in FY20E.
Exhibit 86: Currently, companies are incurring almost 1.35X of their GMV as expenses,
driven by high discounting and promotions
Currentetailerrevenuesplit
160%
140%
120%
30.0%
100%
80%
12.0%
8.0%
7.0%
5.0%
3.0%
2.0%
3.0%
Payment
Gateways
Others
35.0%
65%
60%
40%
20%
0%
Vendors
Discounts
Marketing& Technology
Promotions
Logistics
Warehousing Packaging
Loss
50
May 4, 2015
Exhibit 87: We estimate that US$20bn of incremental cash burn is needed to sustain GMV
growth to US$47bn by FY20E
Etailing:Incrementalannualfundingneeded(US$bn)
$25
$20
$2.4
$1.5
$20
2019E
2020E
FY15EFY20E
$4.3
$15
$4.7
$10
$4.0
$5
$2.9
$0
2015E
2016E
2017E
2018E
Source: Company data (Flipkart, Snapdeal, Amazon), Goldman Sachs Global Investment Research.
Exhibit 88: E-tailers steady state margins will be reached in 5-6 years time provided
execution is reasonable
Steadystateetailerrevenuesplit
100%
3.0%
90%
2.0%
2.0%
2.0%
Packaging
Others
3.0%
6.0%
7.0%
80%
10.0%
70%
65%
60%
50%
40%
Vendors
Marketing&
Promotions
Technology
Logistics
Warehousing
Payment
Gateways
Margin
51
May 4, 2015
TAM# 2: Online travel market to reach US$40bn by FY30E

Online travel market to reach US$40bn by 2030E: We estimate the online travel agency
4T
4T
(OTA) market to grow nearly 5X to US$40bn by FY30 from US$8bn in FY14 implying 11%
CAGR. The growth is likely to be driven by: 1) the shift of travel ticketing from offline to
online with online travel penetration growing from 41% in FY15 to 50% by FY30E, and 2)
9% CAGR in the travel market from US$22.8bn in FY15 to US$80bn by FY30E, largely linked
to GDP growth in India.
Exhibit 89: We estimate OTA penetration to reach c.50%
by FY30E
Totalonlinetravelmarket(US$bn)
Exhibit 90: Indias OTA penetration in FY30E to be higher

than where China/US are today
US$ bn
Totaltravelmarket(US$bn)
Airline market
79.5
50%
80.0
49%
70.0
60.0
50.0
41%
42%
43%
40%
30.0
20.4
22.8
20.0
10.0
India
China
US
FY30E
2014
2014
10.1
29.1
56.9
132.2
5.1
16.0
16.0
71.1
51%
55%
28%
54%
4.5
13.0
34.3
132.1
45.2
55%
90.0
40.0
India
FY15E
8.1
9.4
25.5
10.7
28.5
12.3
44%
31.9
14.1
45%
46%
50%
62.5
Online penetration (%)

45%
35.8
40.0
40.0
18.4
35%
30%
OTA market
0.9
4.6
6.7
20%
35%
20%
34%
22.8
79.5
116.2
318.5
9.4
40.0
23.2
136.7
41%
50%
20%
43%
FY30E
FY25E
FY20E
FY19E
FY18E
FY17E
FY16E
FY15E

Total travel market
0.0
FY14
Hotel market
OTA hotel market
40%
30.5
16.2
OTA airline market
4T
Online air ticketing business to reach US$16bn by 2030E: At present, the Indian OTA
4T
market is dominated by airlines which contribute 55% of the total revenues. This is despite
relatively low airline passenger traffic growth in India and can be attributed to: 1) higher
average ticket size, 2) higher online penetration among the target passenger segment, and
3) relatively low fragmentation of the airline industry in India. However, as online
penetration improves in other travel categories, we expect the airline contribution to OTA
market to decline to 40% by FY30E. As such, we estimate the online air travel market to
increase from US$5.1bn in FY15 to US$16bn by FY30E, a CAGR of 8% over 15 years.
Online railway bookings to reach US$18.6bn by 2030E: Although railways is under state
control and is the dominant source of transportation for the masses in India, the online
market is not as big due to the low level of internet penetration compounded by the limited
access to online payment options for the average Indian traveler. However, we believe that
the Indian governments Digital India initiative to provide broadband access to 250,000
village councils by 2016 combined with the permeation of digital wallets to the masses in
India is likely to drive growth in online rail travel penetration, in our view. As such, we
estimate the online rail market to increase from US$3.2bn in FY15 to US$18.6bn by FY30E,
a CAGR of 12% over 15 years.
4T
Online hotel market to reach US$4.6bn by 2030E: The other big piece of the travel
4T
4T
market pie, the hotel market, is highly fragmented in India. Further, most hotel operators in
India do not have the necessary systems in place to take an online reservation. As a result,
it is one of the least online penetrated markets among the travel categories with 17%
penetration in FY14. With Indian OTAs like Makemytrip, Yatra etc. beginning to aggregate
hotels and roll out real-time online hotel reservation systems, we believe online
penetration for the hotel market is likely to pick up in the medium term. By FY30E, we
52
May 4, 2015
estimate the online penetration in hotels to reach 35% with online hotel market reaching
US$4.6bn.
Online car rental market to reach US$1.4bn by 2030E: The car rental market is highly
4T
fragmented in India. Further, most car operators in India do not have the necessary
systems in place to take an online reservation or payment. However, multiple car rentals or
taxi hailing companies have emerged such as Olacabs, Uber, Carzonrent, Orix, Meru which
are rolling out real-time online car hailing or reservation systems. Hence, by FY30E, we
estimate the online car rental market to reach US$1.4bn growing at a CAGR of 18%.
Comparison to US and China: At US$40bn, the Indian OTA market in FY30E would still be
much smaller than the current US$137bn OTA market in the US but higher than the current
US$23bn market in China. The significant differential in per capita income between India
and US/China partly explains the relatively small size of the Indian market.
Exhibit 91: Online air travel penetration is already at 50%

in India. We expect this to improve to 55% by FY30E
OnlineHotels(US$bn)
Airtravelmarket(US$bn)
4.6
10.1
5.1
10.0
8.0
11.1
5.8
12.2
13.5
6.5
16.0
50%
6.0
13.1
2.0
5.0
24%
6.6
6.0
30%
25%
7.3
25%
20%
4.6
3.2
0.7
0.9
1.0
1.2
1.4
40%
35%
15%
10%
1.8
1.6
5%
0.0
FY30E
FY25E
FY20E
FY19E
FY18E
FY17E
FY16E
5.5
45%
40%
FY15E
4.5
23%
22%
4.0
0.0
FY14
20%
17%
4.1
8.9
8.1
7.3
16.3
14.8
21%
35%
45%
0%
FY30E
5.0
9.2
55%
23.9
10.7
30%
FY14
10.0
12.0
FY20E
15.0
54%
29.1
55%
FY19E
51%
53%
55%
FY18E
50%
52%
55%
FY17E
25.0
55%
13.0
FY16E
30.0
20.0
14.0
60%
FY25E
35.0
Hotelmarket(US$bn)
FY15E
Onlineairtravel(US$bn)
Exhibit 92: We expect 25% hotel market penetration by

FY20E and 35% by FY30E
Exhibit 94: Rail is likely to overtake airlines as the largest

market in OTA
Exhibit 93: Airlines currently dominate the OTA market in

India primarily due to the higher ticket size
OTA market mix
OTA market mix in FY30E
6T
6T
FY15E
FY30E
Hotels
11%
Rail
34%
Carrental
3%
Rail
46%
Airline
55%
Hotels
10%
Airline
40%
Carrental
1%
53
May 4, 2015
TAM# 3: Digital ad market to reach US$15bn by FY30E

Social networks are likely to drive online ad-revenues in India
According to comScore, social networking activity accounts for the greatest share of time
(25% of total time) spent online by Indians, with messaging platforms among the most
popular means of communication. Indian consumer companies (including banks) are
increasingly looking to take advantage of this phenomenon and beginning to engage
consumers by building communities and platforms on social media to highlight their
brands.
Currently, social media engagement by Indian firms is not too focused on generating leads
for sales as much as it is used for highlighting brands and/or building communities, as per
EY Social Media Marketing: India Trends study 2014. However, we believe this is likely to
change as online consumerism evolves and digital payments become seamless. Hence, we
believe social media advertising is likely to emerge as a strong growth engine for digital
advertising in India.
Exhibit 96: Messaging services are among the most
popular services in India (2014)
Exhibit 95: Social networking dominates share of

minutes spent online in India (2013)
PenetrationinIndia
Shareofminutesspentonline
Services
23%
Other
35%
Viber
4%
Pinterest
4%
LinkedIn
5%
WeChat
5%
Twitter
6%
Google+
News
3%
Retail
3% Entertainment
Social
networking
25%
7%
Skype
8%
FB
8%
FBmessenger
9%
Whatsapp
11%
0%
11%
2%
4%
6%
8%
10%
Source: comScore.
Source: Statista.
Exhibit 97: Indian companies are currently looking to

build brands than generate leads (2014)
Exhibit 98: Even social media-savvy firms are not

spending much on social advertising yet (2014)
SocialmediaengagementbyIndiancompanies
Buildcommunity/advocates
Socialmediabudgetsofsocialmediasavvy
organizations
20%+marketingonsocial
media
76.2%
0%
Generateleads
42.9%
16%20%marketingon
socialmedia
5%
Customerservices
42.9%
11%15%marketingon
socialmedia
5%
Platformtohighlightbrand
Research
0.0%
95.2%
Source: EY Social Media Marketing India trends study 2014
6%10%marketingon
socialmedia
48%
1%5%marketingonsocial
media
38.1%
50.0%
12%
100.0%
43%
0%
10%
20%
30%
40%
50%
Source: EY Social Media Marketing India trends study 2014
54
May 4, 2015
Exhibit 99: Social network in India dominated by US based companies like Facebook, LinkedIn, Twitter. Hike is the only
Indian social network with decent scale
Competitive landscape for social networking sites, as of 2014
6T
US
Facebook
LinkedIn
Twitter
Tumblr
2001
1,189
2003
347
2004
284
2007
420
2010
300
$12,467
$2,219
$1,403
Usage
Founded
Registeredusers(mn)
Monthlyactiveusers(mn)
Monetization
2014Revenue($mn)
Usecases
Public
Privatemessage
Photo
Video
News
Predominant
Instagram Pinterest
RenRen
Weibo
Kakao*
2010
70
2006
219
44
2009
600
2010
150
$83
$334
$203
Available
Asia
Pengyou
WeChat
Hike
2010
260
2011
438
2012
35
Europe/Russia
VK
WhatsApp*
2006
280
2009
700
$10
Notavailable
*denotes2013revenue($mn)
Source: The Wall Street Journal, GigaOm, EY, TechCrunch, Company data, Goldman Sachs Global Investment Research.
Significant shift to online advertising to drive US$15bn spend

Although social networking dominates the Indian online activity landscape, there are very
few Indian origin social networks of scale. Currently, the Indian social scene is dominated
by the likes of Facebook, Twitter etc. We believe these companies are likely to benefit as
more Indians gain access to internet and adopt internet commerce.
As in markets across the globe, India is also witnessing the trend of internet battling with
print and television media for eyeball share. However, the trend in India is not as profound
as in other markets with digital ads accounting for only 7%-8% of total advertising spend vs.
26% in the US (as per Magna Global) in 2014. However, with rising internet penetration and
changing patterns of content consumption (news, movies, plays, music etc.) internet is fast
turning into the medium of choice for consumers. As such, the demand for advertising in
the digital channel keeps rising at a solid pace resulting in 25% CAGR in digital ad spend to
Rs28bn in FY14 from Rs17bn in FY12.
Exhibit 100: Digital ad market in India is currently at

c.US$450mn, led by search (30%) and display (23%)
Exhibit 101: Digital ad market to grow at 26% CAGR till

FY30E driven by offline to online shift
FY14
Email
$14
3%
Totalonlineadspend
US$mn
Video
$54
12%
Onlineadas%oftotal[RHS]
US$mn
13%CAGR
14,000
Search
$136
30%
SocialMedia
$81
18%
Mobile
$63
14%
16,000
12,000
30%
24%CAGR
10,000
25%
19%
4,000
20%
15%
7%
8%
452
596
2,767
FY14
FY15E
FY20E
2,000
0
15,043
36%CAGR
6,000
Source: IMRB International, IAMAI.
40%
35%
31%
8,000
Display
$104
23%
37%
10%
8,093
5%
0%
FY25E
FY30E

Research.
55
May 4, 2015
Within the digital ad market, search currently dominates with 30% of revenue followed by
display at 23% in FY14. However, the growing relevance of mobile internet, social media
and improvement in internet speeds are resulting in ad spend shift towards these media.
We forecast digital ad spend market to grow to US$15bn by FY30E from c.US$0.5bn now.
We believe this will be driven by mobile advertising (US$4.6bn by FY30E) and social media
advertising (US$4.5bn) and the shift from offline to online advertising.
Key assumptions for our long-term estimates for ad-tech market are:
(1) Overall and online ad spend market in India: We forecast the overall ad-spend market
in India to reach US$40bn by FY30E assuming a CAGR of 12%, in line with the nominal
GDP growth as per our Global Macro Research team. Further, by FY30E, we estimate 37%
of advertising spend to be directed towards digital channels from 7% currently.
(2) Mobile and social media to garner highest share: We forecast mobile and social
media to garner almost 61% of the overall online ad-spend in India as of FY30E as we
believe that these media are going to be a lot more relevant and effective against the
backdrop of increasing data penetration in India.
Comparison to global ad-spend penetration: As per our US team, the global online ad
spend stands at 23% currently and is expected to go up to 36% over the next five years. We
also assume a similar online ad-spend penetration in India by FY30E.
Exhibit 102: Indian digital ad market to reach US$20bn or

50% of total market by FY30E
India digital advertisement market (US$ mn)
Split of digital ad market by revenue
6T
US$mn
Search
Display
Mobile
Social Media
Email
Video
Total online ad spend
Growth rate (%)
Totaladspend
Onlineadas%oftotal
FY14
$136
$104
$63
$81
$14
$54
452
9%
6,317
2%
7%
FY15E
$161
$110
$107
$125
$15
$77
596
32%
7,350
16%
8%
FY20E
$415
$208
$858
$830
$42
$415
2,767
36%
14,753
14%
19%
6T
FY25E
$1,214
$607
$2,509
$2,428
$121
$1,214
8,093
24%
26,468
11%
31%
FY30E
$2,256
$1,128
$4,663
$4,513
$226
$2,256
15,043
13%
40,177
8%
37%

Research.
Exhibit 103: Mobile to be the largest segment in digital

ad world by FY30E
FY30E
US$mn
Email
$226
1%
Video
$2,256
15%
SocialMedia
$4,513
30%
Search
$2,256
15%
Display
$1,128
8%
Mobile
$4,663
31%
56
May 4, 2015
TAM# 4: Electronic payments market to reach US$5bn by FY30E

financials team of
Tabassum Inamdar
and Shyam Srinivasan
Confluence of banking and technology evolving payments

landscape
With multiple companies emerging in the payments landscape bringing in disruptive
changes, the electronic payments market is set for rapid expansion in India, in our view.
Further, Indian governments initiative to extend banking facilities to its previously
unbanked citizens through the Jan Dhan Yojna scheme has added significant number of
debit cards (over 110mn) thereby providing these customers access to electronic payments.
Also, the launch of electronic wallets (such as Paytm, Mobiqwik, Freecharge, HDFC), mobile
POS (point of sales) machines (such as ezetap, mswipe), social network banking (such as
ICICI Bank, Kotak Mahindra Bank) and peer to peer money transfers (such as ICICI Pockets,
HDFC Chillr) are all aiding in enhancing electronic access to funds.
US$5bn market from payments processing by 2030E

We estimate the overall payments market in India to grow from just US$80mn in FY15E to
US$5bn by FY30E at a CAGR of 23% largely driven by migration of offline retail to: (1) ecommerce as data penetration improves in India and (2) electronic modes of payments
such as credit/debit cards, mobile wallets and net banking. As per RBI, as of Dec 2014, only
US$50bn of annualized transactions go through the point of sale mode (credit/debit cards)
but it has been growing rapidly at 28% CAGR in the past five years, suggesting increasing
adoption of electronic mode of payments in India.
Key assumptions for our long-term estimates for payments market are:
(1) Overall point of sales: We forecast the overall point of sales to grow from US$51bn in
FY15E to US$153bn by FY20E (25% CAGR) and US$510bn by FY30E (16% CAGR) largely
driven by increased adoption of electronic payment mechanisms and increasing
penetration of e-commerce transactions.
(2) Online point of sales: We forecast e-commerce transaction through online POS to
become 12%/17% of overall POS transactions in FY20E/FY30E vs. 1.5% in FY15E as the ecommerce market in India grows at 23% CAGR over FY15E-FY30E to US$282bn. We believe
this will be driven by: 1) shift of offline commerce to online, 2) shift of online transactions
from cash-on-delivery to an electronic payment system (wallets), and 3) increased velocity
of transactions due to ease of payments via electronic channels.
(3) Share of modes of payments: We assume share of CoD in e-commerce transactions

will go down from 60% in FY15E to 45%/35% by FY20E/FY30E and will be taken up by
credit/debit cards and emergence of mobile wallets and/or payment banks which will
garner 25% of e-commerce transactions by FY30E vs. just 8% in FY15E.
(4) Blended commissions on e-payments: We believe that the overall commissions in the
e-payments will continue to shrink from a blended 1.5% currently to 0.82% by FY30E, in
line with global trends.
57
May 4, 2015
Exhibit 104: India has disproportionately large number of

e-commerce transactions settled in cash
Exhibit 105: High incidence of cash usage in India is a

possible reason for higher proportion of cash on delivery
e-commerce transactions payment distribution (2013)
Cash as % of GDP (2013)
6T
20.0%
1%
EMI/3rdpartywallets
1%
12%
DebitCards
66%
Cashas%ofGDP
17.8%
13.8%
14.0%
11.4% 11.2% 11.0%
12.0%
26%
30%
10.0%
8.7%
7.7%
8.0%
7.4%
6.4%
6.0%
0%
40%
16%
2%
18.0%
India
18%
12%
Cashondelivery
US
16.0%
NetBanking
CreditCards
China
10%
3.7%
3.7%
2.0%
8%
0.0%
60%
0%
3.8%
4.0%
20%
40%
60%
80%
Source: Respective Central Banks.
Source: Respective Central Banks.
Exhibit 106: Interchange fee in India relatively higher than

in China
Exhibit 107: Electronic payments set to pick up, revenue

for payments industry to reach US$3.4bn by FY30E
Interchange fees on card transactions (2014)
Break up of offline vs. online payments revenues
Interchangefees(%)
3.5%
Creditcard
OfflineelectronicPaymentsrevenue(US$bn)
Debitcard
6.0
5.07
5.0
RevenueCAGR(20152030)
2.5% 2.5%
1.9%
2.0%
1.5%
1.5%
Totalpayment:13%
Onlinepayment:23%
Offline electronicpayment:11%
4.0
2.0%
1.5%
1.06
0.25
2.02
1.90
1.24
1.39
1.52
0.33
0.42
0.50
2020E
0.18
0.86
1.80
2019E
0.0
0.70
0.12
1.57
2018E
0.66
0.58
0.08
1.30
2017E
0.0%
1.0
2016E
0.7%
0.2%
1.04
0.83
2015E
0.7%
0.3%0.3%
2.0
0.9%
2014
1.0%
0.9%0.9%
1.0%
3.45
2.81
3.0
1.5%
1.62
0.92
2030E
2.3%2.3%
2025E
2.5%
0.5%
OnlinePaymentsrevenue(US$bn)
3.0%3.0%
3.0%
Source: Respective Central Banks, Goldman Sachs Global Investment

Research.

Investment Research.
Exhibit 108: E-commerce driven payment revenue to

grow at 23% CAGR till FY30E to US$1.6bn
Exhibit 109: driven primarily by shift of e-commerce

payments from COD to wallets
Online payment revenues in US$bn
e-commerce transactions payment distribution
6T
OnlinePaymentsrevenue(US$bn)
6T
Growth(%)[RHS]
2015E
1.8
1.62
1.6
50%
1.4
80%
1.2
40%
62%
1.0
0.92
43%
0.8
26%
0.42
0.33
0.12
0.18
40%
0.50
0.25
13%
12%
20%
25%
17% 17%
13%13%15%
11%
10% 10%10%
20%
10%
15%
8%
1%1%1%
Source: RBI, Goldman Sachs Global Investment Research.
2030E
2025E
2020E
2019E
2018E
2017E
2016E
0%
2015E
35%
19%
0.0
2014
45%
30%
0.6
0.08
2030E
40%
33%
0.4
2020E
57%
60%
49%
0.2
100%
60%
0%
COD
Credit
Cards
DebitCards
Net
Banking
EMI/
Others
Wallets
58
May 4, 2015
59
May 4, 2015
Evolution of unique business models and internet giants in China

The rapid and substantial internet infrastructure build out in China led by telecom giants
such as China Mobile led to a significant rise in internet penetration, a key driver of the
internet market seen in recent years. Further, lack of a significant presence of global
internet giants in China, such as Google, has led to the rise of local internet giants which
look to fill this gap.
This section is sourced

from GS Fortnightly
thoughts Issue 87
dated April 6, 2015
Rise and rise of Alibaba: Alibaba, which originally began as a search engine in the ecommerce space, grew to displace eBay in China by starting a free C2C proposition that
appealed to small merchants. Alibaba then realized that the only way to get more
customers to transact on its platform was to have escrow accounts for payments until the
customer was happy with the products. And thats the genesis of Alipay, which has now
become an extremely prominent and critical part of Alibabas ecosystem. To monetize the
vast SME customer base, Alibaba has resorted to advertising, creating a differentiated
model vs US e-commerce companies such as Amazon which has not tried to monetize
search. Alibaba now has a widespread presence today: e-commerce, internet finance,
social network, mobile browser, maps and logistics.
Birth of the Freemium model: China has been extremely innovative in the gaming
industry aided in part by the Chinese government due to its ban on gaming consoles. The
ban on consoles pushed gaming online and the need to monetize online gaming led to
what is now called the freemium model. This is the model adopted by King.com and
Candy Crush wherein players pay for virtual items to improve their standing in a game.
This idea originated and evolved in China for a long time and then spread to the rest of the
world. Virtual identity or status is very important for the Chinese consumer and Chinese
online gaming companies capitalized on this trait, a pattern now being adopted around the
world.
Tencent - Messaging its way to success: Tencent started as a communications company
with a messaging service for PCs. Its free QQ messaging platform was quite early to move
from the consumer market to the enterprise space, and came at a time when younger
internet users preferred the less formal messaging tool to the relatively more formal email.
When the QQ customer base assumed significant mass, Tencent leveraged the platform to
enter the online games segment and has eventually become the pre-eminent gaming
platform in the world. Further, Tencent messaging dominance went mobile leading to
social and messaging products years before the likes of Facebook added messaging to
their platforms. Being the single most prominent messaging app in China allows Tencent
to always stay in touch with its users. We think this sticky user base and the ability to
control the user experience is what made Tencent so dominant on the mobile platform in
China.
Deeper monetization through vertical focus: Many Chinese internet companies have
been innovative in adapting their business models and coming up with alternative
monetization techniques by moving into more verticals rather than focusing on horizontal
expansion making them quite different from US internet companies. This has resulted in
Chinese internet companies developing much deeper monetization models and far richer
content. As a result, the competitive advantage of the Chinese companies has evolved such
that in the event that they have to compete with US firms, they would be able to maintain
their dominance on their customer base.
60
May 4, 2015
India coming to the fore for global majors

the views of our
global analysts
Heather Bellini, Heath
Terry, Bill Shope,
Marcus Shin, and Ikuo
Matsuhashi
The impending rise of internet penetration in India and the rapid strides made by the ecommerce industry has caught the attention of most of the major global internet
companies including Google, Facebook, Amazon, Twitter, and Alibaba, along with handset
makers such as Samsung, Apple and Xiaomi. With higher entry barriers in China for
foreign companies and several domestic internet firms emerging in the past decade such
as Alibaba, Tencent, India is set to become the target for these global majors with its
potentially large internet population, dominated by users under the age of 35 years. While
US giants such as Google, Facebook, Apple, and Amazon are already making inroads and
count India as their second largest market by user base, the Asian companies such as
Samsung, Xiaomi, Alibaba, and Softbank are finding ways to grab a slice of the pie.
While Google, Facebook and Twitter may want to tap the ad revenue market as well as
online payments market, handset makers such as Samsung, Apple, Xiaomi and other
Chinese companies would be looking for the bigger pie of smartphone market in India.
Exhibit 110: India emerging as a key market for global companies

Global companies website positioning (latest rank) in India in the past 3 months
T
Note: Size of bubble represents unique visitors from India for global websites
* For Samsung, Xiaomi and Apple: X-Axis = market positioning in India based on smartphone shipments in 4Q2014, Y-Axis =
Market share of smartphones in India in 4Q2014. Size of bubble represents smartphones shipments in India in 4Q2014.
Source: Alexa, comScore, Gartner, Goldman Sachs Global Investment Research.
61
May 4, 2015
Google: Multi-pronged opportunities across verticals in India

Digital ad revenue opportunity to rise in coming years
Google, the global market leader in the US$142bn digital advertising market (2014) gets
over 10% of visitors from India, second only to the US (source: Alexa). At present, Google
charges for ad words in India are a fraction of those charged in the US (Exhibit 68). In most
of the popular keywords, Google cost per click (CPC) rates in India are on average 75%
lesser than that in US. As Indias online penetration and e-commerce rise significantly in
the next few years, the need for digital advertising is going to rise as well, in our view.
Hence, online traffic and CPC rates for ad words may rise in India as currently about 35%40% of traffic for some of the large internet portals in India is driven by Google.
Exhibit 112: Prices for adwords in India are a fraction of

those in the US (2014)
Exhibit 111: About 10% of Googles global visitors are

from India
Size of bubble represents internet users in the country (2014)
6T
45%
Restaurants
55%
USA
35%
%ofGlobalVisitors
DiscountonCPCratesforkeywordsinIndiavs.US
GoogleVisitors
40%
Movies
90%
35.9%
Mobile
98%
30%
Insurance
95%
25%
Hotels
65%
20%
Games
68%
15%
India
10%
9.6%
5%
Furniture
71%
Japan
Brazil
3.0%
Iran
2.9%
2.8%
Cars
77%
0%
5%
3
4
RankintheCountry
Apartments
18%
Airlinetickets
78%
6
120%
100%
80%
60%
40%
20%
0%
20%
40%
Source: Alexa.
Exhibit 113: Googles market share gains in global online

advertising are likely to be affected with competition and
advertising shift towards mobile and social
Exhibit 114: Paid clicks growth decelerated in 2014, while

CPC continues its decline from 2013
Globaladvertisingrevenuesmarketshare
45%
Google
Facebook
40%
42.4% 43.0% 42.0% 42.1%
35%
34.3%
30%
15%
18%
23%
Paidclicks
26%
31%
12%
Costperclick[RHS]
26%
25%
8%
17%
14%
20%
4%
13%
0%
12%
18.6%
8.1%
11.8%
30%
24%
24.9%
20%
5%
41.7% 41.1%
38.1%
36.3% 37.0%
29.5%
25%
10%
Google(yoygrowth)
36%
Twitter
10.1%
11.9%
5.8%
3.7% 4.2%
2.5%
2.0%
0.3% 0.5% 0.9% 1.3%
0.3% 0.5% 1.2%
0%
Source: Company data, MAGNA Global, Goldman Sachs Global Investment

Research.
6%
4%
2%
0%
6%
12%
6%
6%
8%
4%
3%
7%
9%
11%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15
8%
12%
62
May 4, 2015
Google Play and Android One are other opportunities

With digital advertising shifting away from desktop towards mobile, our US technology
research team expects Googles market share gains of the past decade to marginally
reverse as competition from the likes of Facebook and Twitter intensifies. To counter this
trend, Google may look to improve monetization from the mobile ecosystem. We believe
that Google is well positioned in the Indian context given that: 1) majority of Indian
smartphones run Googles Android operating system, and 2) India is already the 3rd largest
market for apps download via Google Play (source: AppAnnie). Further, Googles Android
One project has started well in the country in the past one year and may pose a challenge
to the cheap and crowded smartphone market in India due to its value proposition of low
price, android OS, local content and tie up with local handset distributors such as Spice
and Karbonn.
P
Exhibit 115: India is the 3rd largest in terms of app

downloads via Google Play, but revenue lags
P
Exhibit 116: Android One phones launched in India with

some of the top Indian smartphone distributors
Company
GooglePlaytop10countriesin2014
Rank
Downloads
Revenue
1
US
Japan
2
Brazil
US
3
India
S.Korea
4
Russia
Germany
5
S.Korea
Taiwan
6
Mexico
UK
7
Turkey
France
8
Indonesia
HongKong
9
Germany
Australia
10
Thailand
Russia
Micromax
Karbonn
Spice
Company
smartphone
marketshare
13%
11%
5%
Model
Price(Rs)
CanvasA1
SparkleV
DreamUNO
7,999
6,990
7,499
Note: Market share of companies based on smartphone shipments into India in

4Q2014
Source: AppAnnie.
Source: Company data, Gartner, Android One.
Exhibit 117: Revenue from mobile apps is likely to grow

8.7X by 2017 from 2013
Exhibit 118: Google Indias revenue crosses US$0.5bn in

FY14
Google India revenues
6T
Indexedmobileapprevenue
400
350
3.5x
GoogleIndia
Mobileapprevenuebycountry
35
300
Rsbn
Revenue(Rsbn)
30
250
25
200
70%
60%
21
47%
150
100
15
3.2x
50
3.5x
1.5x
3x
2.2x
8.7x
10
2.7x
Brazil
Russia
India
Canada
France
S.Korea
Germany
UK
Japan
US
50%
40%
12 36%
30%
20%
3.2x
Source: IDC, AppAnnie.
80%
CAGR:41%
20
1.8x
90%
YoY(%)[RHS]31
79%
10%
9%
0%
0
FY10
FY11
FY12
FY13
FY14
Source: Registrar of Companies, Ministry of Corporate Affairs.
63
May 4, 2015
Facebook: India set to become the largest subscriber base globally

Largest subscriber base offers a big revenue opportunity
Facebook (along with its subsidiary WhatsApp) has been the social network of choice in
India as evidenced by the number of users and web traffic ranking by Alexa. According to
eMarketer, India is set to overtake US as the largest mobile user base for Facebook by 2017
suggesting robust penetration of the FB platform into the Indian internet user community.
Further, the trend of digital advertising shift towards mobile is only likely to gain traction.
All these factors put together suggest that India is likely to become a sizable market for
Facebook in the medium to long term.
Exhibit 119: Facebook is the 3rd ranked website in India,
which contributes 9% of its user traffic (2014)
P
Exhibit 120: India set to overtake US as the largest

mobile user base for Facebook by 2017, according to
eMarketer
Size of bubble represents internet users in the country

6T
Facebook (FB) users

6T
35%
Facebookvisitors
IndiaFBmobileusers(mn)
225
30%
USA
%ofGlobalVisitors
25%
211
13.0%
Indiansas%ofmobileFBusers[RHS]
13%
185
12% 168
162
11%
11.0%
146
10%
136
9%
124
9.0%
109
102
8%
IndiaFBusers(mn)
200
24.7%
175
20%
150
15%
India
10%
125
8.5%
Germany
3.6%
5%
3.5%
0%
0
5%
100
Brazil
UK
78
4.3%
75
3
81
7.0%
58
50
5.0%
2013
RankintheCountry
2014
2015
2016
2017
2018
Source: Alexa, Goldman Sachs Global Investment Research.
Source: eMarketer.
Exhibit 121: Global online advertising shift towards

mobile is favorable to FB, as per our US tech research
team
Exhibit 122: FB demonstrated that its open to

acquisitions in India with its purchase of Little Eye Labs
in 2014
Facebook'sIndiaacquisition
Globaladvertisingmarket(US$bn)
$250
US$bn
Desktop
Mobile
$200
$150
$100
$50
$2
$60
$3
$72
$4
$82
$9
$17
$30
$46
$65
$85
$105
Who?
When?
What?
Acquisition#
Howmuch?
LittleEyeLabs
Feb,2014
Tooltomeasure,analyzeand
optimizeanapp'sperformance
43rdbyFacebook;1stinIndia
approx.$15mn
$132
$112 $117 $123 $128
$93 $104
$0
2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E
Source: MAGNA Global, Goldman Sachs Global Investment Research.
Source: Company data, News articles (including The Economic Times dated
Jan 8, 2014).
64
May 4, 2015
India is a key geography in the underpenetrated Asian market

Asia Pacific region contributed only 15% of Facebooks 2014 global revenues even though
its user base is as big as 28% of global users as of 4Q2014. Keeping that metric in mind,
Indias contribution to the revenues may be disproportionately lower despite the large
number of users in the country as the ad rates in India are much lower than developed
markets. As Indias online penetration and e-commerce rise significantly in the next few
years, the need for digital advertising is going to rise as well, in our view. As such,
Facebook may benefit form this trend in line with our US teams views on increasing
market share of FB in global digital advertising market.
Exhibit 123: More than 1/3rd of FB users in Asia-Pac

region are from India
P
mn
180
Exhibit 124: Asia-Pac showed the most growth in

revenue for Facebook in 2014
TotalRevenue
FacebookusersinAsiaPacificregion(2014)
Users(mn)
35.3%
40.0%
%oftotal
160
2013
7,000
35.0%
29.1%
140
30.0%
120
25.0%
19.5%
100
80
60
8.6%
40
4.0%
3.5%
20
0
India
Indonesia Japan
YoY(%)[RHS]
80%
US$mn
5,865
6,000
72%
4,000
15.0%
3,000
10.0%
2,000
5.0%
1,000
0.0%
1,374
921
59%
3,695
55%
3,396
49%
1,831
50%
40%
30%
2,193
20%
1,063
10%
0%
ROW
AsiaPac
Europe
US&Canada
Source: Company data, eMarketer.
Exhibit 125: Revenue growth was driven primarily by ads
Exhibit 126: However, Asia-Pac ARPU still among the

lowest worldwide
ARPU(2014)
Adrevenue
2013
6,000
US$mn
2014
8.0
YoY(%)[RHS]
79%
5,285
5,000
67%
60%
4,000
52%
3,131
3,173
3,000
2,000
1,000
1,741
1,335
881
1,958
80%
70%
Europe
US&Canada
7.2
6.0
5.0
50%
4.0
20%
US$
7.0
60%
30%
974
AsiaPac
90%
40%
0
ROW
70%
60%
5,000
20.0%
S.Korea Australia Others
2014
2.9
3.0
2.4
2.0
10%
1.0
0%
0.0
0.8
ROW
1.1
AsiaPac
Europe
US&Canada Worldwide
65
May 4, 2015
Twitter: Picking up pace in India

Twitter, although not at the scale of Facebook, is the other popular social networking
platform in India, with eMarketer expecting Twitter users to grow to 19% of social network
users in India by 2018 from 16% now. Twitter is fast becoming a key news disseminating
network in India with the government also actively using Twitter to disseminate
information.
Twitter began to actively monetize its healthy user base in India with its recent purchase of
ZipDial. ZipDial is an innovative pull-based marketing tool that sends marketing
information to users who give a missed call to a pre-disclosed number through SMS.
Twitter has also set up a system Twitter Samvad (meaning Twitter dialogue) for Indian
politicians and government agencies to send tweets to followers using SMS. By sending
tweets through SMS, Twitter expects to expand its reach to consumers who do not even
have a data plan.
Exhibit 127: India is the 3rd largest source of traffic for
Twitter globally
P
Exhibit 128: Twitter expected to reach 19% penetration of

social network users in India by 2018
Twitter users in India
6T
40%
6T
Twittervisitors
IndiaTwitterusers(mn)
35%
%ofGlobalVisitors
45
USA
30%
30.1%
40
25%
35
20%
30
15%
25
Japan
10.9%
10%
8.0%
UK
3.4%
5%
15
19%
19%
17%
16%
40
28
14%
17
12
34
15%
14%
22
13%
12%
2013
RankintheCountry
20%
18%
16%
10
10
19%
17%
15
4.2%
0%
0
18%
20
India
Spain
5%
as%ofsocialnetworkusers
2014
2015
2016
2017
2018
Source: Alexa, Goldman Sachs Global investment Research.
Source: eMarkerter.
Exhibit 129: Our US tech research team estimates Twitter

to capture 2% of ad market share globally by 2016E
Exhibit 130: Twitter made its first acquisition in India in

Jan 2015
Global advertising revenue market share
Twitter acquired ZipDial of India in Jan 2015
6T
6T
Twitter'sIndiaacquisition
Twitteradvertisingmarketshare(%)
2.5%
2.0%
2.0%
Who?
When?
What?
ZipDial
Jan,2015
'Missedcall'marketingCustomer
callsandhangsupbeforeheis
charged.Companysendsinfotothe
'caller'.
Clients
Unilever,Disney,Gillette,Amazon,
Facebook,Twitteretc.
approx.$30mn
1.5%
1.3%
1.0%
0.9%
0.5%
0.5%
0.3%
Howmuch?
0.0%
2012
2013
2014E
2015E
2016E
Source: MAGNA global, Goldman Sachs Global Investment Research.
Source: Company data, News articles (including LiveMint dated Jan 20, 2015).
66
May 4, 2015
Amazon: A giant with global expertise and balance sheet

Amazon Seller Services Private Limited, a 100% subsidiary of Amazon, launched its
operations in India in June 2013 through the marketplace model. Indian regulations
prohibit foreign companies to sell multi-brand products directly to consumers in India.
However, under the marketplace model, Amazon also does fulfillment for merchants
selling on its platform, if needed. Within a year of operations, Amazon in India has grown
to be among the top 3 e-tail companies (in terms of GMV) along with Flipkart and Snapdeal.
The rapid rise for Amazon could be attributed to its investments in establishing a merchant
ecosystem, setting up warehouses, building out distribution and fulfillment network
(through partnerships with India Post etc.). Further, Amazon CEO Jeff Bezos
announcement in July 2014 that Amazon is looking to invest US$2bn in its India operations
is an indication of the opportunity for growth that it sees in India.
Exhibit 132: Nearly 25mn unique users visit Amazons

online store in India in a month
Exhibit 131: Amazon is ranked among the Top 20

websites in India
Size of bubble represents internet users in the country(2014)
Unique visitors
6T
70%
6T
Amazonvisitors
60%
UniquevisitorsinIndia(Oct14)inmn
USA
Bookmyshow
4.9
56.3%
%ofGlobalVisitors
50%
Homeshop18
6.0
Zovi
6.0
40%
Shopclues
30%
7.3
Myntra
20%
11.1
eBay
10%
India
S.Korea Canada
5.2%
China
3.6%
1.7%
5.3%
10
10%
20
21.0
Flipkart
0%
0
12.7
Snapdeal
30
40
22.4
Amazon
RankintheCountry
24.2
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Source: comScore.
Exhibit 133: Amazon is the 2nd largest e-tailer in India by

net revenues
Exhibit 134: However, its customer acquisition costs are

the highest in India
Net revenue and loss (Rs bn)
Loss to net revenue ratio (FY14)
6T
6T
Losstorevenueratio(FY14)
LargeetailersinIndia(FY14)
Revenue(Rsbn)
3.5
2.00x
Loss(Rsbn)
1.72x
1.60x
3.0
2.6
1.40x
2.5
2.0
1.76x
1.80x
3.2
3.2
1.90x
1.20x
1.8
1.7
1.00x
1.5
1.5
0.60x
1.1
0.8
1.0
0.77x
0.80x
0.40x
0.20x
0.5
0.00x
0.0
Flipkart
Amazon
Snapdeal
eBayIndia
Amazon
Flipkart
Snapdeal
eBayIndia
67
May 4, 2015
eBay: Early entrant building a diversified portfolio

eBay India, a 100% subsidiary of eBay Inc., was one of the first global majors to start
operations in India with the acquisition of Bazee.com in 2004 for about US$55mn (source:
Business Standard). As is the case with Amazon, eBay also operates a marketplace only
platform in India due to regulatory reasons.
eBay India currently lags market leaders Flipkart, Snapdeal and Amazon in terms of gross
merchandize value (GMV) sold on its marketplace platform as well as revenue. This
appears to be due to its less aggressive discounting stance as evidenced from its low loss
ratio (loss/net revenue - See Exhibit 105). Further, eBays exposure to the Indian ecommerce opportunity extends beyond its own marketplace through its investments in
Snapdeal (2nd largest e-tailing company in India) and Quikr (one of the biggest online
classifieds company in India). eBays participation in multiple rounds of fund raising by the
companies suggests that it is looking to play a significant role in the rapidly evolving ecommerce landscape in India.
Exhibit 136: eBay diversifying its portfolio in India
through investments in Snapdeal and Quikr
Exhibit 135: eBay is ranked among the Top 100 websites

in India
Size of bubble represents internet users in the country(2014)
eBay investments in India
6T
70%
6T
InvesteeCompany
eBayvisitors
Bazee
USA
60%
2004
May,2011
54.8%
50%
%ofGlobalVisitors
InvestmentDate
May,2012
40%
QuikrIndia
30%
Mar,2014
20%
5.1%
0%
0
Russia
India
3.3%
2.6%
20
40
60
80
China
2.6%
100
120
Snapdeal
InvestedinUS$60mnSeriesGfunding
round
Apr,2013
InvestedinUS$75mnSeriesDfunding
round
ReportedlyinvestedUS$50mnin
US$134mnSeriesFfundinground
Feb,2014
140
AcquiredforUS$55mn
InvestedinUS$8mnSeriesDfunding
round
InvestedinUS$32mnSeriesEfunding
round
InvestedinUS$90mnSeriesFfunding
round
Sep,2014
S.Korea
10%
Comments
10%
RankintheCountry
Source: Crunchbase, News articles (including Business Standard, The

Economic Times).
Exhibit 137: eBay Indias revenue growth healthy but on

a declining trajectory as competition is rising
Exhibit 138: However, its loss ratio is lowest among large

e-tailing companies in India
Net revenue (Rs bn)
Loss to net revenue ratio (FY14)
6T
6T
Losstorevenueratio(FY14)
eBayIndia
1.2
1.0
Revenue(Rsbn)
YoY(%)
69%
0.8
0.6
33%
0.2
1.1
0.8
70%
1.80x
1.20x
1.00x
FY14
0.80x
0.77x
0.60x
0.0
FY13
1.76x
1.40x
40%
30%
1.90x
1.72x
1.60x
50%
20%
0.5
FY12
2.00x
60%
59%
0.4
80%
0.40x
10%
0.20x
0%
0.00x
eBayIndia
Snapdeal
Amazon
Flipkart
68
May 4, 2015
Samsung: Market leader facing stiff competition

Samsung India Electronics, a subsidiary of the global electronics major Samsung, has been
a leading competitor in the Indian mobile phone space with a dominant presence in
smartphone shipments for the past several years. Samsungs ability to offer mobile phones
to Indian consumers at multiple price points has been a key contributor to its success in
India. Although Samsung has a range of products that it sells in India across various
consumer appliance categories, its growth in recent years has been driven by the mobile
devices segment with revenues growing at 60% CAGR between FY10-FY14 vs. 39% CAGR
for its whole India business. However, the entry of domestic companies like Spice, Karbonn
etc. and global firms such as Apple and Xiaomi, has resulted in Samsung yielding market
share in the mobile devices segment. Nevertheless, Samsungs focus on the Indian market
continues as is evidenced by the launch of its Tizen powered mobile device Samsung Z1
first in India.
Exhibit 139: Samsung shipments strong, but dipping
Exhibit 140: as new entrants impact market share
Samsung
000's
6,000 276%
SmartphoneShipments('000)
YoY(%)[RHS]
238%
5,000
203%
4,000
300%
60.0%
250%
50.0%
200%
40.0%
150%
3,000
89%
84%
59% 57%
58%
2,000
61%
100%
42%
23%
54.4%
50.8%49.2%
48.2%49.8%
39.2%
35.7%35.9%35.6%
28.1%
30.0%
21.9%
17.5%
20.0%
50%
3%
1,000
SamsungSmartphonemarketsharein
India
10.0%
0%
50%
0.0%
2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Source: Gartner.
Source: Gartner.
Exhibit 141: Revenue growth in India for Samsung driven

primarily by mobile
Exhibit 142: Overall market share in phone shipments is

slipping in India, not just on smartphone shipments
Rsbn
450
SamsungIndia
Mobilephonerev.(Rsbn)
Revenue(Rsbn) 404
400
350
300
250
198
279
42
11,500
17.0%
14%
13%
14.0%
11%
11.0%
8,500
110
107
Mobilephoneshipments('000s)
Marketshare(%)
23.0%
21% 22%
21%
21%
20%
18% 18%
20.0%
17% 17%
10,000
180
141
150
50
278
Mobilerev.:60%
200
100
13,000
CAGR
Revenue:39%
Samsung
000's
66
7,000
8.0%
5.0%
0
FY10
FY11
FY12
FY13
FY14
Source: Gartner.
69
May 4, 2015
Xiaomi: Unique marketing style, but going full throttle now

Xiaomi, the Chinese smartphone and electronics manufacturer, is targeting India as its next
growth frontier. It followed a distinct strategy of entering India by exclusively selling
through online store Flipkart via flash sales which required users to pre-register. Despite
the online only strategy, Xiaomi managed to capture c.3% market share in smartphone
shipments within six months of its entry into India. It has launched more than 4 models in
the past 4 months. After the initial buzz through its exclusive online flash sales, Xiaomi has
now tied up with other e-tailers Amazon and Snapdeal and also with offline mobile retailer
Mobile Store. Recently, Mr. Ratan Tata announced buying a stake in Xiaomi (source: The
Economic Times, April 27, 2015) as it plans to aggressively expand operations in India with
a first India-specific handset model Mi4i at Rs12,999 launched in India on April 23, 2015.
Exhibit 144: Xiaomi initially sold through online store
Flipkart via flash sales which required users to preregister
Exhibit 143: China based Xiaomi grabbed 3%+

smartphone market share in India with 6 months of its
launch
Model
XiaomiinIndia
000's
900
3.2%
800
700
Redmi1S
RedmiNote4G
Mi3
Mi416GB
Mi464GB
Mi4i16GB
3.5%
3.0%
2.5%
600
2.0%
500
400
779
1.5%
300
100
5,999
9,999
13,999
19,999
23,999
12,999
OnlinesalesviaFlipkart
SoldthroughBhartiAirtelstores
1.0%
0.8%
200
Price(Rs) InitialSalesstrategy
0.5%
164
0.0%
2014Q3
2014Q4
Source: Gartner.
Exhibit 145: Xiaomi phone features comparison with other similarly configured phones
Model
Z1
Redmi Note 4G
Canvas A1
One
Mi 4
Samsung
Xiaomi
Micromax
OnePlus
Xiaomi
Apple
Jan-15
Aug-14
Sep-14
Jun-14
Jul-14
Sep-14
OS
Tizen
Android
Adroid One
Oxygen OS
Android
iOS
Price (Rs)
5,999
9,999
9,999
17,999
19,999
53,500
Dual
Single
Dual
Single
Single
Single
Manufacturer
Launch
SIM
2G N/W
3G N/W
4G N/W
Display - Resolution
Camera
Video
Secondary Camera
Memory (Internal)
NFC
Battery Capacity
Talktime
iPhone 6
GSM 850 / 900 / 1800 / GSM 900 / 1800 / 1900 GSM 850 / 900 / 1800 / GSM 850 / 900 / 1800 / GSM 850 / 900 / 1800 / GSM 850 / 900 / 1800 /
1900
1900
1900
1900
1900
HSDPA 900 / 2100
TD-SCDMA 1900 /
HSDPA 2100
HSDPA 850 / 900 /
HSDPA 850 / 900 /
HSDPA 850 / 900 /
2000
1700 / 1900 / 2100
1900 / 2100
1700 / 1900 / 2100
na
TD-LTE 1900 / 2300 /
na
LTE 700 / 2600 / 2300 /
LTE
LTE
2600
2100 / 1800
480 x 800 pixels
720 x 1280 pixels (267
480 x 854 pixels
1080 x 1920 pixels
1080 x 1920 pixels
720 x 1334 pixels (326
(233 ppi)
ppi)
(218 ppi)
(401 ppi)
(441 ppi)
ppi)
3.15 MP, 2048 x 1536
pixels
Yes
13 MP, 4128 x 3096

pixels
1080p@30fps
5 MP, 2592x1944
pixels
Yes, 1080p
VGA
5 MP
Yes, 2 MP, 720p
4 GB, 768 MB RAM
8 GB, 2 GB RAM
4 GB, 1 GB RAM
13 MP, 4128 x 3096

pixels
Yes, 2160p@30fps,
1080p@60fps
Yes, 5 MP,
1080
16/64
GB,@30f
3 GB RAM
13 MP, 4128 x 3096

pixels
1080p@30fps, HDR
8 MP, 1080p@30fps
8 MP, 3264 x 2448

pixels
1080p@60fps,
720p@240fps
1.2 MP, 720p@30fps
No
No
No
Yes
16 GB, 3 GB RAM
Yes
16 GB, 1 GB RAM
Yes
1500 mAh
3200 mAh
1700 mAh
3100 mAh
3080 mAh
1810 mAh
Up to 8 hours (3G)
Up to 14 h (3G)
Up to 6 hours
na
na
Up to 14 h (3G)
Source: GSM Arena, Company data.
70
May 4, 2015
Apple: Growing shipments, but not significant strides in India yet

While Apple has been selling its iPhones in India for several years, it has not been able to
make inroads in terms of market share even as the shipments have increased in absolute
terms. Apples market share in the Indian smartphone market over the years has remained
within the 1%-2% range which may be attributed to its restricted distribution structure,
besides India not being a huge market for premium phones currently. However, share
improvements were seen whenever it introduced new models. We believe this could be
due to: (1) discounted pricing for the prior models targeting the emerging markets, and (2)
offering several financing models in emerging markets including India. Both these factors
have likely captured new iPhone users, and while its relatively small as a market for Apple,
new users far outnumber replacements in India at this early stage.
However, media reports (including The Times of India dated Jan 27, 2015) suggest that
Apple is looking to grow its market share in India by partnering with global retail major
Brightstar to sell its devices in India. Besides, it has also begun to tie up with network
operators such as Vodafone and Bharti and offer EMI payment option to grow sales.
Exhibit 147: Share improvements seen around new
model launches
Exhibit 146: Apple shipments into India have seen a

steady rise
Apple
000's
500
YoY(%)[RHS]
459
450
400
295 288
300
225
180
200
205
237
231
136
150
100
600%
500
500%
450
400%
350
250
75
33
400
iPhone 5C,5S
models
launched
350
300%
300
200%
250
100%
200
0%
71
50
AppleIndia
000's
iPhone 6,6
Pluslaunched
150
100
100%
50
200%
2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
iPhone 5
launched
2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Source: Gartner.
Source: Company data, Gartner.
Exhibit 148: However, market share remains at around

the 2% level
Exhibit 149: Apple India revenues grew 10X in a period of

5 years
AppleSmartphonemarketshareinIndia
4.5%
AppleIndia
3.9%
4.0%
3.5%
2.7%
3.0%
2.5%
2.0%
2.2%
2.2%
2.0%
1.7%
1.9%
2.1%
1.9%
1.7%
1.2%
1.5%
0.8%
1.0%
0.5%
0.0%
2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Source: Gartner.
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Revenue(Rsbn)
YoY(%)[RHS]
250%
200%
150%
45.0
100%
30.6
50%
20.0
4.5
6.2
FY10
FY11
0%
FY12
FY13
FY14
71
May 4, 2015
SoftBank/Alibaba: Strategically entering India through investments

SoftBank is one of the largest investors in the Indian e-commerce space with the company
directly or through its subsidiaries investing approximately US$1bn in 2014 alone. Further,
SoftBanks CEO Masayoshi Son has announced that it is looking to invest nearly US$10bn in
India over the next 10 years. We note that Softbanks investments in India and other South-East
Asian countries accelerated over the past 9 months since the appointment of the new Vice
Chairman. Alibaba, in which SoftBank owns 32% stake, has bought a significant share in One97
Communications in India, the company that owns Paytm a mobile only commerce platform
and e-wallet company. In addition to this investment, Alibabas international arm Aliexpress
also has a decent presence in India with c. 7% of its traffic coming from India as of Dec 2014.
Alibaba/Softbank and their major shareholders may increase their presence in India
through strategic investments in various horizontal and vertical plays as per media reports
(The Times of India, Oct 28 and Nov 27, 2014). Jack Ma has already made a few visits to
India with big contingents, meeting the government and companies across the board,
indicating his interest in the countrys internet opportunity.
Exhibit 150: With its investments in 2014, SoftBank has become the largest investor in the Indian internet space
SoftBanks investments in India (direct and indirect)
Source: Crunchbase, News articles (including The Economic Times, Business Standard, VC Circle).
Exhibit 151: India is the 2nd highest source of traffic for Aliexpress (international arm of
Alibaba selling merchandise
P

6T
35%
Aliexpressvisitors
%ofGlobalVisitors
30%
25%
20%
Brazil
15%
13.7%
10%
Russia
6.5%
5%
India
USA
6.9%
6.3%
S.Korea
6.1%
0%
50
50
100
RankintheCountry
150
200
Source: Alexa, Goldman Sachs Global Investment Research.
72
May 4, 2015
Private companies dominant in the Indian market
73
May 4, 2015
Private companies dominant in the Indian market today

We give an overview of a few large private companies dominant in their respective categories in the India
internet space.
Flipkart
Company description: Flipkart started operations in October 2007 selling books via internet. It is now Indias leading
4T
4T
e-commerce marketplace with over 20mn products across 70+ categories including electronics, apparels, baby care
products, home & kitchen appliances, books & media, fitness equipment, auto accessories etc. It also plans to enter
the hyper local grocery business in 2H2015 per media reports (The Economic Times, dated Apr 8 2015). We note that
grocery business constitutes nearly 65% of total retail sales in India, according to IBEF.
Flipkart has the unique distinction of being the first billion dollar Indian e-commerce company and is the first to offer
an annual subscription service called Flipkart First. The company operates exclusively in India.
Founders: Sachin Bansal, Binny Bansal

4T
4T
Key executives: Sachin Bansal (CEO), Binny Bansal (COO), Mukesh Bansal (CMO), Sanjay Baweja (CFO)
4T
4T
Headquarters: Bengaluru, India

4T
4T
Business Model: Hybrid of Inventory-based e-tailing and marketplace model. The company is currently focused on
4T
4T
expanding number of merchants on its marketplace platform, aiming to reach 50,000 sellers by 2HCY15.
Flipkart also does exclusive product launches, and branded stores. For example, when a Chinese smartphone
manufacturer entered India recently, it did so through an exclusive partnership with Flipkart.
Gross merchandize value (GMV): Estimated by management to reach US$3bn in FY15 and US$8bn in FY16. At
4T
present, 45% of units and 20% of the GMV is contributed by the marketplace channel.
Fulfilment: E-kart, owned by WS Retail, currently accounts for about 80% of Flipkart shipments. However, the
company is looking to partner with more 3rd party logistics companies to expand reach and scale.
Key metrics: Flipkart has about 60mn registered users and gets nearly 8mn page visits daily. It has 13 warehouses
4T
4T
and over 25,000 employees including contract employees mostly used for delivery.
Acquisitions: WeRead.com (2010), Mime360.com (2011), Chakpak.com (2011), Letsbuy.com (2012), Myntra.com
4T
4T
(2014)
Key investors: Accel Partners, Baillie Gifford, Dragoneer Investment Group, DST Global, Green oaks Capital
Management, Iconiq Capital, Morgan Stanley, Naspers, Qatar Investment Authority, Singapore GIC, Sofina,
Steadview Capital, Tiger Global Management, Vulcan Inc.
K
4T
Funds raised to date: US$2.5bn in 11 funding rounds

4T
4T
Funds raised in latest round: US$700mn in Dec 2014

4T
4T
Estimated market value: US$12.5bn, as per media reports such as The Economic Times (March 31, 2015)
4T
4T
Note: The above information has been sourced from various media reports and company websites, and may not be exhaustive.
Source: Company data, Crunchbase, Media reports (including The Economic Times, Business Standard)
74
May 4, 2015
Snapdeal
Company description: Snapdeal started operations in February 2010 as a daily deals platform inspired by US-based
4T
4T
Groupon. In September 2011, the company expanded to become an e-commerce company via the marketplace
model. The company has over 5mn unique products listed on its website across various categories like Mobiles &
Tablets, Home & Living, Apparel, Jewelry etc. The company also sells apartments, automobiles and yachts on its site.
Snapdeal has also recently helped over 150 sellers on its platform, raise over Rs500mn in loans through its capital
assist initiative (per company press release dated Mar 26, 2015).
Founders: Kunal Bahl, Rohit Bansal

4T
4T
Key executives: Kunal Bahl (CEO), Rohit Bansal (COO), Abhishek Passi (CSO), Vivek Patnakar (Sr. VP Finance)
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4T
Headquarters: New Delhi, India

4T
4T
Business Model: Snapdeal follows a marketplace only model and the company claims it is the largest online
4T
4T
marketplace in India.
Gross merchandize value (GMV): Estimated to be US$2bn in FY15 (as per Business Standard report dated Feb 18,
4T
4T
2015)
Key metrics: Snapdeal has over 40mn registered users, over 100,000 merchants on its platform selling goods and
4T
4T
products across 500+ categories. According to the company, over 65% of its orders come from outside of the top 10
Indian cities currently. The company has about 15-20 fulfilment centers across the country.
Acquisitions: Grabbon.com (2010), esportsbuy.com (2012), Shopo.in (2013), Doozton.com (2014), Wishpicker.com
4T
4T
(2014), Smartprix (2015), Exclusively.in (2015), Freecharge (2015).

The acquisition of Freecharge for a reported valuation of c.US$400mn (Source: The Hindu dated April 8, 2015) in cash
and stock, is the largest in the Indian e-commerce space to date. Freecharge is a mobile commerce platform that
allows users to recharge their mobile connection and pay utility bills across major operators.
Key investors: Bessemer Venture Partners, Blackrock, eBay, IndoUS Venture Partners, Intel Capital, Kalaari Capital,
4T
4T
Nexus Venture Partners, PremjiInvest, Ratan Tata, Ru-net, Saama Capital, Softbank Capital, Softbank Internet and
Media, Temasek Holdings, Tybourne Capital Management.
Funds raised to date: US$1.1bn in 8 funding rounds

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4T
Funds raised in latest round: US$627mn in Oct 2014

4T
4T
Estimated market value: US$5bn as per media reports (The Economic Times dated Feb 14, 2015)
4T
4T
Source: Company data, Crunchbase, Media reports (including The Economic Times, Business Standard)
75
May 4, 2015
OLA Cabs
Company description: Ola cabs (ANI Technologies Pvt Ltd) started operations in January 2011. It brings taxi/cab
4T
4T
services online by partnering with private taxi owners. It is Indias first aggregator of car rentals and point-to-point
cab services. Ola Cabs does not own or operate its own fleet, but aggregates small fleet operators and single vehicle
owners. Customers can access Ola services through the web, mobile app or through a customer service center. Cab
owners benefit from Ola Cabs network and technology platform which helps them procure customers.
The company recently launched Ola Caf, a mobile-only food delivery service where customers can order food
through their mobile app from restaurants in the near vicinity. However, this service is only available in 4 cities and
limited areas within those cities currently.
Founders: Bhavish Aggarwal, Ankit Bhati

4T
4T
Key executives: Bhavish Aggarwal (CEO), Ankit Bhati (CTO), Mitesh Shah (CFO)
4T
4T
Headquarters: Mumbai, India

4T
4T
Business Model: Ola provides an online marketplace for valid permit holding drivers of rental cars and auto
4T
4T
rickshaws (a three-wheeler vehicle)
Gross Transaction value (GTV): Estimated to be US$350mn in FY15 (VC Circle article dated Nov 19, 2014)
4T
4T
Key metrics: Ola operates in 67 cities across India and has over 60,000 cabs on its platform (as of Feb 2015). It has
4T
4T
about 3,000 employees. In addition it has 30,000 auto rickshaws on its platform.
Acquisitions: TaxiForSure (2015). Ola reportedly acquired TaxiForSure for US$200mn in a cash and stock (Source:
4T
4T
Livemint dated Mar 2, 2015). The deal reportedly adds c.15,000 cabs to its fleet. TaxiForSure is present in 47 cities
across India.
Key investors: DST Global, SoftBank Capital, Accel Partners, Matrix Partners India, Sequoia Capital, Steadview
4T
4T
Capital, Tiger Global Management, Falcon Edge Capital.
Funds raised to date: US$677mn in 6 funding rounds

4T
4T
Funds raised in latest round: US$400mn in Apr, 2015

4T
4T
Estimated market value: US$2.4bn as per media reports (VC Circle dated Apr 16, 2015)
4T
4T
Source: Company data, SoftBank, Crunchbase, Media reports (including The Economic Times, Business Standard, VC Circle, Livemint)
76
May 4, 2015
InMobi
Company description: InMobi began operations in 2007 as an SMS-based search platform and was then known as
4T
4T
mKhoj. Later it changed into a performance based mobile ad-network. It builds mobile-first customer engagement
platforms and operates from 17 offices across the globe with a nearly 1,000 strong employee base. It provides
advertising solutions, mobile app analytics, consumer insights to advertisers and other related services. It ties up
with web publishers to enable brands and app developers to seamlessly integrate their products into mobile content.
Founders: Naveen Tewari, Amit Gupta, Mohit Saxena, Abhay Singhal

4T
4T
Key executives: Naveen Tewari (CEO), Manish Dugar (VP of Finance & Legal), Anne Frisbie (VP, Global Alliances)
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4T
Headquarters: Bengaluru, India

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4T
Business Model: Proprietary cloud based technology enables remote deployment of mobile ads with the click of a
4T
4T
button on sites and apps of the customers choice
Key metrics: Inmobi has grown into the worlds largest independent ad network reaching 1bn unique mobile
4T
4T
devices, 30,000+ publishers across 200 countries and serves c.6bn daily ad impressions (as of Dec 2014). 43% of
unique mobile devices on InMobis network come from advanced markets in North America and Western Europe
while 38% come from Asia-Pac. InMobi employs over 800 people.
Competition: In the global mobile advertising market, InMobi competes directly against Googles AdMob and
Apples iAd.
Acquisitions: Sprout (2011), MMTG Labs (2012), Metaflow Solutions (2012), and Overlay Media (2013)
4T
4T
Key investors: Mumbai Angels, Kleiner Perkins Caufield Byers (KPCB), Sherpalo and Softbank
4T
4T
Funds raised to date: US$220mn in 5 funding rounds

4T
4T
Funds raised in latest round: US$5mn in Dec 2014

4T
4T
Estimated market value: US$2bn as per media reports (Economic Times dated Mar 11,2015)
4T
4T
Source: Company data, Softbank, Crunchbase, Media reports (including The Economic Times, Business Standard)
77
May 4, 2015
Paytm
Company description: Paytm started by offering mobile recharge and utility bill payments. It has now transformed
4T
4T
itself into a digital goods and mobile commerce platform. It is run by One97 Communications, a firm that delivers
mobile content and commerce services to mobile consumers through its cloud platforms. Paytm also offers mobile
wallet solutions and has an exclusive tie up with the taxi hailing app Uber in India. It has over 1,200 employees and
has offices in Mumbai, Pune, Chennai, Bangalore and Kolkata with global presence in Africa, Europe, Middle East and
Southeast Asia. Paytm has recently (Apr, 2015) entered the typically hyper local grocery segment and plans to launch
in 10 cities in 2015.
In February, Alibaba Group through its affiliate Ant Financial bought a 25% stake in One97 Communications.
Founders: Vijay Shekhar Sharma

4T
4T
Key executives: Vijay Shekhar Sharma (CEO)

4T
4T
Headquarters: New Delhi, India

4T
4T
Business Model: Paytm offers a mobile marketplace for digital goods and an electronic wallet offering payment
4T
4T
services. In April 2015, Paytm has tied up with Axis Bank and Yes Bank enabling its customers to load their Paytm
wallets by depositing cash. However, customers are limited to depositing a minimum of Rs2,000 and a maximum of
Rs10,000 in cash at a banks cash counter.
Key metrics: Paytm has about 50mn Paytm wallets and about a 1/3rd of them transact on Paytm in a month on
4T
4T
average. Paytm expects to increase the number of wallet users to 100mn by the end of 2015. The company clocks
over 60mn transactions every month with an average user transacting four times in a month on its platform. (Source:
Livemint dated Apr 13, 2015).
Paytm mobile marketplace has about 33,000 merchants on its platform and it reportedly expects to increase it to
100,000 merchants by the end of 2015. Similarly, it expects to increase the number of units sold on its commerce
platform to 100mn a day by the end of 2015 from 8.5mn currently. (Source: Business Insider dated Apr 24, 2015)
Annualized GMV: Estimated by management to cross US$4bn by Dec 2015 (Livemint dated Apr 25, 2015)
4T
4T
Key investors: Alibaba Group, Intel Capital, Reliance Capital, SAIF Partners, Sapphire Ventures, Silicon Valley Bank
4T
4T
Funds raised to date: Unknown

4T
4T
Funds raised in latest round: US$575mn for 25% stake

4T
4T
Estimated market value: US$1.5bn as per media reports (Business Standard dated Jan 16, 2015)
4T
4T
Source: Company data, Softbank, Crunchbase, Media reports (including VC Circle, The Economic Times, Business Standard, Livemint, Business Line)
78
May 4, 2015
Housing.com
Company description: Housing.com is an online real estate platform started in June 2012. It was launched as a
4T
4T
rental service finder in Mumbai. Since then it has expanded presence to 60 major cities in India and offers an online
real estate platform which allows customers to search for housing based on geography, number of rooms and
various other filters.
In November 2014, Housing launched an interactive home booking platform called Slice View and partnered with
Tata Value Homes (TVH) to launch an exclusively online-only inventory across four of TVHs projects. Slice View
enables users to take a virtual walk through houses, by providing 3-D renderings of apartments. Further, it allows
customers to book their homes online.
Founders: Rahul Yadav, Advitiya Sharma, Abhishek Anand, Snehil Buxy, Ravish Naresh, Sanat Ghosh, Abhimanyu
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4T
Dhamija, Jaspreet Saluja, Rishabh Agarwal, Neeraj Bhunwal, Amrit Raj, Vaibhav Tolia
Key executives: Rahul Yadav (CEO), Azeem Adil Zainulbhai (CFO)

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4T
Headquarters: Mumbai, India

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4T
USP: The company states that its site contains 100% verified listings. It is looking to provide respite to home-seekers
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4T
and home-owners from endless site visits to explore properties by providing genuine pictures of properties. It also
provides several additional features such as CFI (Child friendly index) heat maps, demand flux maps.
Acquisition: Indian real estate forum (2015). Housing acquired Indian real estate forum, an online discussion site for
a reported US$1.2mn (Source: VC Circle, March 26, 2015).
Key metrics: Housing.com does nearly 4,000 listings in a day.

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4T
Key investors: Helion Venture Partners, Nexus Venture Partners, Softbank

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4T
Funds raised to date: US$140mn in 4 rounds

4T
4T
Funds raised in latest round: US$100mn from Softbank Capital in Nov 2014
4T
4T
Estimated market value: US$250mn as per media reports (Times of India dated Dec 17, 2014)
4T
4T
Source: Company data, Softbank, Crunchbase, Media reports (including VCCircle, The Economic Times, Business Standard)
79
May 4, 2015
Appendix
Exhibit 152: Transaction map for an airline ticket issuance via an OTA
OnlineTravelAgent(OTA)
SourceofrevenueforOTA
1.ConvenienceorserviceFee
2.FeefromGDSpartner
3.Airlinecommission+volumeincentives
C.Fee+Commissions+
volumeincentive +GDS
Rs98.5
Global distribution
system(GDS)like
Amadeus/Sabre
Listingfee
Rs6
Rs98.5
Rs5
GDSFee(dependsonvolume)
Rs3
SG&A
Rs100+C.Fee
Customer confirmsa
purchase
Rs2
Grossbookingamount
Rs100
+conveniencefee(C.Fee)
Rs2
Rs98.5
Directroute
Airline
Marketing
Rs0.25
Personnel
D&A
Payment
Gateway
Rs1.5
1%commission+volumeincentives
Rs5
*ConvenienceFeeindependentofgrossbookingamount
Note: This is for illustration purpose only assuming a gross booking value of Rs100; all numbers are indicative.
80
May 4, 2015
Exhibit 153: Transaction map for hotel booking via the agency/ merchant model through an OTA
SourceofrevenueforOTA
AgencymodelviaTravelaggregator:Aggregatortakesinventoryfromhotels;
OTAtakescommissionforbookingsmade
AgencymodelviaGDS:HotellistswithGDSandpayslistingfee;Hotelsetsitsownprice;
OTAgetspaidinGDSfee(volumedependent)
Merchantmodel:OTAgetspreferredrateandrooms;OTAsetspriceandmakesthemargin
1)Agencymodel
Rs85
Rs100+C.Fee
Rs100
Customer confirmsa
purchase
OnlineTravelAgent(OTA)
Hotel 1
Inventory
OfflineTravel
agents/
aggregators
Hotel n
Global
distribution
system(GDS)
HotelChains
Listingfee
Rs15
Bookingamount
Rs100
+conveniencefee(C.Fee)
2)GDSFee(volumedependent)
Rs10
Hotel1
Hotel
Payment
Gateway
3)Merchantmodel
Rs80
Hoteln
Rs1.5
*ConvenienceFeeindependentofgrossbookingamount
Exhibit 154: Transaction flow of a standard debit/credit card transaction

Goods and services
Consumer
Merchant
Card payment
Customer pays
Rs100
CC = Credit Card
DC = Debit Card
Merchant Receives
Rs98(CC)/
Rs99(DC)
Merchant
service charge
Interchange fee
Rs1.50 (CC)
Rs0.65 (DC)
Network fee
Rs0.10
Transaction
processing fee
Rs0.15 (CC)
Rs0.10 (DC)
Authorization & Fraud
Issuing banks
HDBK, ICBK,
SBI, BOB
Clearing & Settlement

Transaction amount (minus
interchange fees)
Acquiring fee
Rs0.25 (CC)
Rs0.15 (DC)
Capture & Authorisation
Payment network
Visa, Mastercard,
Rupay
Payment
aggregator
Billdesk,
CCavenue, Citrus
Clearing & Settlement
Acquiring banks
Transaction amount
(minus interchange fees)
HDBK, ICBK, SBI,

BOB
81
May 4, 2015
Exhibit 155: Most Indian e-tailers are running the marketplace model, with some like Flipkart preferring a hybrid model
CustomerordersRs100
Inventorymodel
Onlinestore
Customer
OnlinestoredeliversRs90
CustomerordersRs100
Onlinestore
Customer
Orderconfirmation
toshiptocustomerRs95
Marketplacemodel
Productinformation
Offlinesellerdelivers
tocustomerRs90
Offlineseller1
Offlineseller2
Offlinesellern
CustomerordersRs100
Onlinestore
Customer
1.OnlinestoredeliversRs90
Hybridmodel
Orderconfirmation
toshiptocustomerRs95
Productinformation
2.Offlinesellerdelivers
tocustomerRs90
Offlineseller1
Offlineseller2
Offlinesellern
82
May 4, 2015
Disclosure Appendix
Reg AC
We, Rishi Jhunjhunwala, Piyush Mubayi and Venkat Surapaneni, hereby certify that all of the views expressed in this report accurately reflect our
personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be,
directly or indirectly, related to the specific recommendations or views expressed in this report.
Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs' Global Investment Research division.
Investment Profile
The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and
market. The four key attributes depicted are: growth, returns, multiple and volatility. Growth, returns and multiple are indexed based on composites
of several methodologies to determine the stocks percentile ranking within the region's coverage universe.
The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:
Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate
of various return on capital measures, e.g. CROCI, ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend
yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month volatility adjusted for dividends.
Quantum
Quantum is Goldman Sachs' proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for
in-depth analysis of a single company, or to make comparisons between companies in different sectors and markets.
GS SUSTAIN
GS SUSTAIN is a global investment strategy aimed at long-term, long-only performance with a low turnover of ideas. The GS SUSTAIN focus list
includes leaders our analysis shows to be well positioned to deliver long term outperformance through sustained competitive advantage and
superior returns on capital relative to their global industry peers. Leaders are identified based on quantifiable analysis of three aspects of corporate
performance: cash return on cash invested, industry positioning and management quality (the effectiveness of companies' management of the
environmental, social and governance issues facing their industry).
Disclosures
Coverage group(s) of stocks by primary analyst(s)
Rishi Jhunjhunwala: Asia Pacific Media, Indian IT Services. Piyush Mubayi: Asia Pacific Media, Asia Pacific Telecoms.
Asia Pacific Media: 58.com Inc., Alibaba Group Holding, Astro Malaysia Holdings, Autohome Inc., Baidu.com Inc., Changyou.com, Ctrip.com
International, Info Edge India Ltd., Jumei International Holding, Just Dial Ltd., Makemytrip Ltd., New Oriental Education & Technology, Qihoo 360
Technology Co., Qunar.com, SINA Corp., Sohu.com, SouFun Holdings, TAL Education Group, Tarena International Inc., Television Broadcasts,
Tencent Holdings, Vipshop Holdings, Weibo Corp., Youku Tudou Inc..
Asia Pacific Telecoms: Axiata Group, Bharti Airtel, Bharti Infratel Ltd., Chunghwa Telecom, Digi.com, Dish TV India, Far EasTone, HKT Trust, Hong
Kong Broadband Network Ltd., Hutchison Telecommunications HK, Idea Cellular, Indosat, KT Corp., KT Corp. (ADR), LG UPlus, M1 Ltd., Maxis Bhd,
PCCW Ltd., PT Link Net Tbk, PT XL Axiata, Reliance Communications, Singapore Telecommunications, SK Telecom, SK Telecom (ADR), SmarTone,
StarHub, Taiwan Mobile, Telekom Malaysia, Telekomunikasi Indonesia.
Indian IT Services: HCL Technologies Ltd., Infosys Ltd., Infosys Ltd. (ADR), Mindtree Ltd., Mphasis, Tata Consultancy Services Ltd., Tech Mahindra
Ltd., Wipro Ltd., Wipro Ltd. (ADR).
Company-specific regulatory disclosures

The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies
covered by the Global Investment Research Division of Goldman Sachs and referred to in this research.
Goldman Sachs beneficially owned 1% or more of common equity (excluding positions managed by affiliates and business units not required to be
aggregated under US securities law) as of the second most recent month end: Just Dial Ltd. (Rs1,070.30)
Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Just Dial Ltd. (Rs1,070.30)
Goldman Sachs had an investment banking services client relationship during the past 12 months with: Just Dial Ltd. (Rs1,070.30)
Goldman Sachs had a non-securities services client relationship during the past 12 months with: Info Edge India Ltd. (Rs769.85), Just Dial Ltd.
(Rs1,070.30) and Makemytrip Ltd. ($21.30)
Goldman Sachs makes a market in the securities or derivatives thereof: Makemytrip Ltd. ($21.30)
Distribution of ratings/investment banking relationships

Goldman Sachs Investment Research global coverage universe
Rating Distribution
Buy
Hold
Investment Banking Relationships
Sell
Buy
Hold
Sell
Global
32%
54%
14%
46%
37%
32%
As of April 1, 2015, Goldman Sachs Global Investment Research had investment ratings on 3,356 equity securities. Goldman Sachs assigns stocks as
Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for
the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage groups and views and related definitions' below.
83
May 4, 2015
Price target and rating history chart(s)

Stock Price Currency : Indian Rupee
Info Edge India Ltd. (INED.BO)
Stock Price Currency : Indian Rupee
Just Dial Ltd. (JUST.BO)
Goldman Sachs rating and stock price target history
1,000
1630
27,000
1,700
27,000
25,000
1,500
25,000
600
23,000
1,300
23,000
500
21,000
1,100
21,000
19,000
900
19,000
300
17,000
700
200
15,000
500
785
800
700
835
900
Stock Price
400
Apr 14
B
M J J A S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F M
2012
2013
2014
2015
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2015.
Rating
Covered by Rishi Jhunjhunw ala,
as of Sep 15, 2014
Price target
17,000
May 23
15,000
B
M J J A S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F M
2012
2013
2014
2015
Rating
Apr 14, 2014 N
as of Sep 15, 2014
Price target
Not covered by current analyst
Price target at removal
29,000
Index Price
900
Stock Price
1,900
Index Price
29,000
India BSE30 Sensex
India BSE30 Sensex
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or
may not have included price targets, as w ell as developments relating to the company, its industry and financial markets.
Stock Price Currency : U.S. Dollar
Makem ytrip Ltd. (MMYT)

40
28
35
6,000
5,500
5,000
27
30
4,500
4,000
25
3,500
20
3,000
15
2,500
Apr 14
N
M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M
2012
2013
2014
2015
2,000
Index Price
Stock Price
10
Rating
Price target
as of Sep 15, 2014

NASDAQ Composite
Regulatory disclosures
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or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/comanaged public offerings in prior periods; directorships; for equity securities, market making and/or specialist role. Goldman Sachs usually makes a
market in fixed income securities of issuers discussed in this report and usually deals as a principal in these securities.
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prior periods, above, or, if electronic format or if with respect to multiple companies which are the subject of this report, on the Goldman Sachs
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84
May 4, 2015
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INDIA RISING

India is poised to see more people

Unlocking the potential of a billion digital users

India: Technology: Internet

India internet market: Hyper-local and on-demand

Indian companies that are exposed to India internet themes

Six key ecosystem enablers

Ecosystem #1: Telecom infrastructure developing at a rapid pace

Ecosystem #2: Capital infusion accelerating as global firms enter

Ecosystem #3: Payment landscape evolving across channels

Ecosystem #4: Logistics Within the bottleneck lies the opportunity

Ecosystem #5: Government initiatives likely to pick up

Ecosystem #6: Talent driven start-up ecosystem fast emerging

Risks to our view: Execution is key

Addressable markets: US$300bn opportunity

TAM# 1: Indian e-tail market to reach US$220bn by FY30E

TAM# 2: Online travel market to reach US$40bn by FY30E

TAM# 3: Digital ad market to reach US$15bn by FY30E

TAM# 4: Electronic payments market to reach US$5bn by FY30E

Indias increasing importance for global firms

Google: Multi-pronged opportunities across verticals in India

Facebook: India set to become the largest subscriber base globally

Twitter: Picking up pace in India

Amazon: A giant with global expertise and balance sheet

eBay: Early entrant building a diversified portfolio

Samsung: Market leader facing stiff competition

Xiaomi: Unique marketing style, but going full throttle now

Apple: Growing shipments, but not significant strides in India yet

SoftBank/Alibaba: Strategically entering India through investments

Private companies dominant in the Indian market today

Goldman Sachs Global Investment Research

India: Technology: Internet

PM Summary: Transforming into a hyper-local, on-demand market

(1) E-tailing market: US$220bn by FY30E

Catalyst: We believe lack of adequate infrastructure would potentially catalyze the

Comparison with US/China: We estimate the Indian e-tail market at US$220bn in

(2) Online travel market: US$40bn by FY30E

(3) Digital ad market: US$15bn by FY30E

Opportunity: We forecast digital ad spend market to grow to US$15bn by FY30E from

Goldman Sachs Global Investment Research

India: Technology: Internet

(4) Electronic payments market: US$5bn by FY30E

Catalyst: We believe emergence of innovative payments mechanisms such as e-wallets

Government push: Governments initiative to extend banking facilities to its

Six enablers to provide

Telecom infrastructure: Developing at a rapid pace: Launch of 4G services in India

Payments landscape: Evolving across channels: Reduced entry barriers through

Key risks to the internet

Goldman Sachs Global Investment Research

India: Technology: Internet

1) What is so unique about India?

PIN CODES SERVED BY INDIA POST

68% of the population is under the age of 35

CREDIT CARD HOLDERS < WALLET HOLDERS

243mn internet users/57% via mobile

There are over 150,000 post offices in India with

OF INDIA IS CONNECTED BY FIBER

20mn credit cards outstanding vs.

CASH ON DELIVERY (COD)

60% OF E-COMMERCE SALES

Only 9% of India penetrated by Fiber vs. 40% in

Warehousing & distribution cost