After speaking to Mr.Garg I got to know that the product approvals take time and generally range from 2 to 3 years(without accounting for the time taken in product development). The capital required for product development is just 6 cr. So capital is not an issue for a new entrant or an existing business..however, would an existing business with lots of capital want to spend so much time on approvals? Wouldnt they rather acquire a small company like Cupid? Secondly, the market is too small for these big players to even concentrate on right now..by the time they, Cupid may well have established its position in the market.
Secondly you have mentioned cost advantage as a moat..How does Cupid have this advantage..what is the source of this advantage? I recall reading cheap labor as a source..I doubt that since its hard to believe that it is such a labor intensive industry..I saw the annual reports of FCH and compared the gross and operating margins..The gross for Cupid is in early 60s while for FCH its 58..shouldnt rubber be cheaper in Malaysia? FCH didnt give break up of its operating costs so couldn’t figure out the expenses on labor..I am struggling to understand the reason for low cost
Still believe, they need to be consumer facing but the management lacks the marketing DNA so licensing it could be an alternative..
Disc:invested
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