Adit Patnaik

Kunal Jaitely

OPPORTUNITY EVALUATION - QuickHeal

AN ASSIGNMENT SUBMITTED AS A PART OF THE REQUIREMENTS

FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

SUBMITED BY

Adit Varun Patnaik D 3

Kunal Jaitely D 22

Batch- 2015-17

Under the Guidance of

Dr. Amit Agrawal

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES (SIMS)

JANUARY 2017
Adit Patnaik
Kunal Jaitely

Kailash Katkar
Born on the 1st of November 1966; Kailash Katkar, a lesser known name is the Founder of
the Rs. 200-crore+ Quick Heal Technologies.

A 22-year-old Quick Heal Technologies Ltd, in the simplest terms is an Anti-Virus Company
that is born and based in India. The company masters the art of cloud-based security and
advanced machine learning enabled solutions to stop threats, attacks and malicious traffic
before it strikes with the help of its services including Quick Heal Total Security, Quick
Heal Internet Security, Quick Heal PCTuner 3.0, etc. for the Home Users, along with Quick
Heal Total Security for Android, Quick Heal Mobile Security, Quick Heal Gadget Securance,
Fonetastic Free, Fonetastic Pro, etc. for the Mobile users.

It is the first company in India to begin and offer Research and Development of IT security
solutions, and today has transformed into an IT security solutions empire which is spread
across 60 countries worldwide including 31 branch offices across the India along with offices
in countries like Japan, USA, Kenya and Dubai.

It is also known to be one of those very few companies who has managed to not only out beat
its competitors like MacAfee and Symantec in its homeland, but has also succeeded in giving
them a run for their money in their own neighbourhoods a.k.a. the US and other countries
across the world.

To add to that, Kailash is also the initiator of the Rotary Cyber Safety Initiative, a series of
awareness workshops which brings together cyber security experts, law enforcement
authorities and academicians on a single platform.

It is also known to be one of those very few companies who has managed to not only out beat
its competitors like MacAfee and Symantec in its homeland, but has also succeeded in giving
them a run for their money in their own neighbourhoods a.k.a. the US and other countries
across the world.
Adit Patnaik
Kunal Jaitely

To add to that, Kailash is also the initiator of the Rotary Cyber Safety Initiative, a series of
awareness workshops which brings together cyber security experts, law enforcement
authorities and academicians on a single platform.

The Journey Of Quick Heal!

After about a year-or-something while continuing the calculator repair shop; he again
transformed into a new venture called CAT Computer Services in 1993 with an office based
in a small one-room electrical device repair station.

The Inception

Now even though he did begin the new venture, the problem was that because he did not have
the relevant experience or for that matter the qualification, generating business had become
far more difficult that he imagined.

However, without losing the hope and will, he kept his efforts at his maximum and pitched
customers aggressively. And these efforts turned fruitful when he got his first break a few
months later and two families signed up for the maintenance of their personal computers for
an annual fee of Rs.2, 000 each. And banking on these new found clients he began getting
more clients as well.

A few months later in September, he also managed to break-in to the corporate world by
winning the annual maintenance contract for New India Insurance, which was soon followed
by another group a month later.

And by the end of the first year, the company had made a more-than-decent turnover of Rs. 1
lakh.
Adit Patnaik
Kunal Jaitely

The Transition

Now goes without saying that, the growth was smooth and towards and upward scale, but
Kailash could clearly see that the wave was slowly turning in the favour of computers. And to
capitalize on this foreseeable future, he acquired the skill to fix computers and was soon seen
signing Annual Maintenance Contracts (AMCs) to maintain these machines.

While at it, the world had also entered the phase of viruses, and these were the times when
virus used to travel from a floppy disc to a computer, and not for stealing the data and using it
for financial gains or any other motive, but just screwing the system.

So to help their clients, he brought in a standard solution wherein although there was no
particular tool or concept of removing the virus, but they reformatted the computer.

He had also managed to see a future pain-point which would only evolve and become grave
for the masses. Since the internet was becoming popular, it only meant that the computers
would be at great risk and would create multiple channels for viruses to reach the machines.

So he then began working on a definite solution for the same.

How?

Well, during that time, Kailashs younger brother Sanjay Katkar, had begun writing
software programs, was studying Computer Engineering in Pune.

So on his insistence, Sanjay started developing a basic model of antivirus software for CAT
Computer Services.

They called this antivirus Quick Heal!

The extended plan that lied behind the scenes was that, back in those days, almost all the
other businesses involved in computer maintenance used to face this problem. So this
software would not only help him and his customers and would help other competitors at
large as well, and there would be plenty of takers for cheap and simple computer security
solutions.

Moving on; in 1994, finally, the first Quick Heal anti-virus for DOS was released and no
prizes for guessing, it broke open the new market. This version was then followed by Win 3.1
in 1995 and Windows 95 in 1996 as well.
Adit Patnaik
Kunal Jaitely

The beauty of their antivirus was that, at a time when 10 other competitors were vying for
market share, Quick Heal was offering their product to other vendors for a fee of Rs. 700,
making it one of the cheapest yet with the best quality options. But the problem was that, for
various reasons nobody was willing to pay for it.

So the duo decided to distribute the antivirus for free along with the computer AMC, and also
circulated it among their network within the industry.

And then came the turning point, the deadly viruses One Half and Natash! Quick Heal was
the only antivirus that could decrypt the files they encrypted, and even global big names in
the antivirus business were not able to match up to the task. This is when they began
capitalising on the situation.

Word has it; the anti-virus software soon became a huge hit making them an overnight
success. And also and gave them a turnover of Rs. 12.19 lakhs in that year, which was three
times more than that of the previous financial year.

The Growth

Since then there has been no looking back for the company. Some of the major developments
made by the company till date, are mentioned below

In 1998 the company launched their corporate website called www.quickheal.com.

Kailash also faced a huge crunch of funds. Since he was bad at marketing his business,
Banks never really understood his work or concept, enough to take the risk of lending him
money. Hence, he hired a distributor, who although raised the sales volumes, but was also
stealing a cut from the sales. That is when Kailash built his own team and covered his
financial crunch.

This effort of his paid off and the year of 2002, saw an immense growth in business which
led to buying an office space of 2,000 sq. ft. in Pune for Rs. 25 lakhs.

Soon, the company also expanded into another city and opened their first branch in Nasik,
which was followed by opening of several other branches across India.
Adit Patnaik
Kunal Jaitely

Next year, the company expanded their area of focus and moved beyond from being just anti-
virus solutions, to getting into the area of computer speed, mobile security and gateway level
protection.

This was followed by another technological leap with the introduction of DNA Scan
technology. This technology enabled the company to detect unknown viruses in real time
without depending on variable factors.

The phase between the years 2006 and 2010 were years of big jumps and news.

They began by the signing of the deal with Microsoft for bundling of Quick Heal anti-virus
with Genuine Windows XP.

And were followed by the renaming of the company to Quick Heal Technologies.

Later in the year 2010; after approaching several banks for loans for software and market
development, the company received their first round of investment from Sequoia Capital of
Rs.60 crores.

And with the help of these funds, the company expanded their reach internationally. They
first began with opening sales offices in Japan and the US and then subsequently moved
ahead and opened many more.

The uniqueness of this company is that, for the major part of their journey, they have
managed to survive, grow and succeed without marketing and advertising of their products,
unlike most of larger competitors. They have used that money to deepen their relationships
with their 12,000-15,000 channel partners, distributors and retailers around India.

During this journey of theirs, they have also faced several setbacks and roadblocks, which
have only helped them to evolve and grow further.

Around the same time, they had noticed that a huge chunk of their employees had begun to
leave the company, because they felt that their company was small and wasnt growing or
well-known.

That is when Kailash decided to use this as an opportunity and move to a more realistic idea
and lose the Maintenance Company tag. Yes, they did lose a few customers because they
were short staffed, and suffered losses at a time when they were cash crunch and no banks
were ready to support them as well, but the transition and the faith kept them going.
Adit Patnaik
Kunal Jaitely

And today the company has expanded to reach to point where they have launched their
version 16.00. This series helps its users with safe banking, secure Internet Surfing, and a
better PC experience and has been designed to easily combat the dangers of online financial
transactions such as paying bills, banking and shopping.

Additionally, the company also holds an Enterprise Security Brand called Seqrite.

Seqrite aims at IT security solutions for business enterprises, which with its portfolio of
security products aims to help the organizations to counter evolving threats, support new
computing platforms and simplify security management.

The company has been receiving a 46% growth YOY, over the last three years since 2012,
and has also announced its entrance in the North American IT security market, with an aim to
target the small to midsize enterprises (SME).

Today the 1200+ employees company with more than 17 million customers across 112+
countries has transformed into a globally-known brand and the venture is also looking at the
possibility of an IPO at a valuation somewhere around Rs. 2500 crore and 3000 crores.

Five Forces Model Applied to Industry

Applying the Porter five forces model to the AntiVirus computer industry, the threats to
entry, bargaining power of suppliers, bargaining powers of buyers, pressure from substitutes,
and industry competition can be evaluated.

Threat of entry

The cost of entering the Antivirus market is relatively low. Looking at the McAfee model, the
company entered with a BBS, a telephone line, and a few key staff personnel. Additionally,
threats come from other lesser known competitors which poses competitive advantage in
others areas, such as access to international markets. One example is company called ALWIL
Software, which is a Czechoslovakian company which has over 60,000 legal installations of
their Antivirus product (called AVAST) and is looking to enter the US and West European
markets. This company has established competitive advantage in the Eastern bloc
International markets, a market hardly looked at by US and other western countries. AVAST
Adit Patnaik
Kunal Jaitely

won third and second place in DOS-based Virus Scanner Review published by the Virus
Bulletin (Oxfordshire, England) in January and July of 1995 (Newsbyte, 1995). ALWIL has
been in negotiations with several US software companies and expects to enter into a licensing
agreement with one soon. ALWIL possesses competitive advantage over other industry
players because it has access to strategic international markets, has brand name recognition,
and has the distribution channels to move AntiVirus products.

Bargaining Power of Suppliers

The bargaining power of suppliers is not a major factor because most AntiVirus organizations
develop their own products and provide their own set of services.

Bargaining Power of Buyers

The buyers of the AntiVirus industry, thus AntiVirus software, are large corporations, small
businesses, state and federal governments, local governments, educational institutions, and
individuals. Some buyers have a larger impact than others. For instance, the federal
government is a much larger buyer than most business, so their choice of AntiVirus software
vendor has a greater impact on the industry and the strength of its players.

Pressure from substitutes

There are not many substitutes for AntiVirus software on the market currently. IBMs work
in developing new technologies to use more expert system technology in solving the
problems may be viewed as a substitute, however, this work is more likely an advancement
of the current technologies and thereby is more likely a trend in future software development
tools.

Major Industry Trends

Four major industry trends which will have the greatest impact on the AntiVirus Industry are
(1) the growth of the Internet, (2) the continued proliferation of viruses, and (3) the move
towards heuristic-based products, and (4) international expansions of the AntiVirus markets.
Adit Patnaik
Kunal Jaitely

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