Forecast for the development of the cleaning services market in India
The relevance of research
Cleaning is a professional activity of specialized companies in the field of cleaning premises, maintaining cleanliness, caring for real estate and surrounding areas. Now not only organizations resort to the services of cleaning companies - large shopping centers, office buildings and educational institutions, but also private houses and apartments, as well as cleaning companies act as contractors and perform work on the maintenance and cleaning of residential buildings and adjacent territories.
Purpose of the study
Analysis of the state of the cleaning services market in India, assessment of the market size, analysis of competitors, as well as identification of factors affecting the cleaning services market
Content
Chapter 1. Key components of the cleaning services market
1.1. Market size
1.2. Growth rates of the cleaning services market
1.3. Cleaning market trends
1.4. The main problems of the industry
1.5. Stage of the life cycle of the cleaning services market
1.6. Estimation of the number of buyers and their financial capabilities
1.7. Estimated consumption per capita
1.8. Analysis of sectoral indicators of financial and economic activity
1.9. Price analysis
Chapter 2
2.1. Economic components
2.2. Social Components
2.3. Technological components
2.4. Political Components
2.5. STEP-analysis of the cleaning services market
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
3.2. Number of competitors and relative market shares of the largest competitors
3.3. Compact location of industry companies in certain regions
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
4.2. Analysis of the impact on the state aid industry at the current date
4.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the market of cleaning services
4.4. Prospects and growth drivers for the cleaning services market
4.5. Forecast for the development of the cleaning services market in the context of the current economic crisis due to covid-19
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
5.2. Sources of information for forecasting
5.3. Timing of forecasting
Research excerpt
Chapter 1. Key components of the cleaning services market
1.1. Market size
Cleaning (from the English clean - cleanliness) is a professional activity of specialized companies in the field of cleaning premises, maintaining cleanliness, caring for real estate and surrounding areas. Among the huge range of services offered, the following areas can be distinguished: keeping buildings clean, cleaning rooms, adjacent corridors, stairs and elevator cabins; cleaning equipment; elimination of odors and harmful microorganisms; garbage disposal, garden and vegetable garden cleaning; washing vehicles, stations and airports; chemical treatment, disinfection and pest control measures and much more. Some narrow-profile firms are engaged in cleaning professional equipment in production, cleaning vehicles and cleaning city streets and courtyards.
Initially, consumers in the cleaning services market were organizations and enterprises for the purpose of cleaning office and other premises and territories, services for the maintenance of residential buildings and cleaning adjacent areas were the responsibility of municipal organizations for the repair and operation of housing stock. Cleaning services for apartments and private houses were completely a “gray” segment of the market, which has not yet become fully official. Now, not only organizations resort to the services of cleaning companies - large shopping centers, office buildings and educational institutions, but also private houses and apartments, as well as cleaning companies act as contractors and perform maintenance and cleaning of residential buildings and adjacent territories.
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The Indian cleaning services market can be divided into three segments according to the types of work carried out by the market operators:
general cleaning activities of buildings;
other cleaning and cleaning activities of residential buildings and non-residential premises;
other cleaning and tidying activities.
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The segment of general cleaning of buildings during the entire study period occupied the minimum market share - less than 1%, it includes general (non-specialized) cleaning of all types of buildings: office premises, houses or apartments, factories; shops, institutions; general (non-specialized) cleaning of other business and professional premises and apartment buildings. This activity mainly includes the cleaning of the interior of buildings, although it may include the cleaning of adjacent outdoor objects such as windows and walkways, as well as the cleaning of apartments and private houses. Consumers of services for this segment can be considered to a greater extent small organizations or individuals.
1.2. Growth rates of the cleaning services market
Growth rates of the cleaning services market in 2016-2020 allow us to state that the market is in a growth stage with the prospect and potential for continuing such growth ...
Diagram 2. Dynamics of the volume of the cleaning services market, 2016–2020
The cleaning services market in India during the study period shows ...
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1.3. Cleaning market trends
Environmental friendliness and naturalness are the main trends. An increasing number of people prefer natural products. The same approach is valued in professional cleaning.
Eco-cleaning is cleaning the premises using safe, environmentally friendly materials, which uses a minimum of chemicals. This is especially important for allergy sufferers and families with children. The cleaning agents used do a good job of removing dirt without damaging the surface, they do not have a strong odor and are safe for health and the environment. With this treatment, the risk of allergies is minimized.
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The development of harvesting equipment supports the trend towards automation and mechanization of manual labor, affecting many industries. Wipers with brooms and cleaners with mops are a thing of the past: today their work is performed by high-performance machines with ""smart"" control, each of which specializes in a certain type of dirt. As a result, cleanliness becomes cheaper, and its provision is increasingly outsourced to professionals. But even for companies that actively use equipment in cleaning, the cleaning process is not completely mechanized: rags and mops are still in use. Although it has been proven that the machine will cope with any task better.
1.4. The main problems of the industry
The main issues in the industry include:
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1.5. Stage of the life cycle of the cleaning services market
The cleaning market in India is in a growth stage, characterized by high production and revenue growth rates. Sales growth is due to an increase in purchases by existing consumers who have a positive experience of using the product, the growth of individual segments. In some cases, revenue growth is not only due to an increase in sales, but also depends on an increase in the cost of services, the use of additional or new services (for example, disinfection). The main task of a company in the growth stage is to use all points of growth to extend this stage.
There are all prerequisites for increasing competition, the number of players may increase - in this case, the market is attractive for enterprises already operating in related industries. At the same time, competitors can enter the market with new technologies and equipment, improved methods of cleaning and personnel control, and services for new niches.
At the growth stage, you need to use the expansion of the product line, new product variations, improving quality characteristics to maximize the extension of the growth stage. New assortment solutions, such as special offers differentiated for different customer segments, can prolong the growth stage.
During the growth stage, services are in high demand, which makes it easier to negotiate, plan production volumes in more detail and be sure of sales volume.
At the stage of growth, close to maturity, a base of regular consumers has already been formed. It is necessary to maintain contact and promptly respond to the requests of each of them, as well as monitor the markets of consumer enterprises - the entry of new players, changes in composition, market trends. When working with a potential target audience, the emphasis should be on:
achieving awareness of the company's services among the potential target audience;
search for new consumers - it is necessary to use all opportunities to expand the target audience;
increasing the frequency of use of the product / service by existing consumers;
active formation of loyalty and commitment to the company and its services through attention to the needs of consumers.
The growth stage promotion strategy is formed with the goal of being present in the minds of consumers as a market leader. Here, it is most important to confirm your status not only by the conditions for the provision of services under the contract and attention to consumers, but also by being present in industry communities and participating in industry events where consumer enterprises are present.
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1.6. Estimation of the number of buyers and their financial capabilities
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1.7. Estimated consumption per capita
Consider the dynamics of the volume of consumption of cleaning services per capita in India in 2016-2020.
Diagram 5. Consumption of cleaning services per capita, 2016–2020, Rs./person
The volume of consumption of cleaning services per capita in India as a whole correlates with the dynamics of the market volume, since the dynamics of the population over the study period, although it has a negative trend, is declining slightly.
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1.8. Analysis of sectoral indicators of financial and economic activity
Gross margin is an economic indicator that characterizes the ratio of gross profit to revenue and allows you to evaluate the efficiency of an industry or enterprise.
Table 1. Gross margin of the cleaning services industry in comparison with all sectors of the Indian economy, 2016-2020, %
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Profitability before tax is an economic indicator that characterizes the ratio of gross profit to revenue, in other words, how much profit is in each ruble from services sold.
Profitability before tax in the cleaning services industry is low, throughout the entire study period, this indicator is lower than the same indicator for all sectors of the Indian economy, which indicates a relatively low profitability of this industry.
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Diagram 7. Current liquidity (total coverage) in the field of cleaning services for 2016–2020, ra
The current (total) liquidity ratio is a financial ratio equal to the ratio of current (current) assets to short-term liabilities (current liabilities). This is the most common and commonly used measure of liquidity. The ratio reflects the company's ability to repay current (short-term) liabilities at the expense of current assets only. The higher the indicator, the better the solvency of the enterprise.
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The absolute liquidity ratio is a financial ratio equal to the ratio of cash and short-term financial investments to short-term liabilities (current liabilities). The source of data is the company's balance sheet in the same way as for current liquidity, but only cash and funds close to them in essence are taken into account as assets. It shows what part of the current liabilities of the companies in the industry are able to repay at their own expense and in the shortest possible time and is used to assess the financial position of the industry.
The financial position of the industry is recognized as good when the absolute liquidity ratio is 0,15 or more.
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Accounts receivable is accompanied by indirect losses in the income of the enterprise. This is explained by the fact that real money in the industry from the services rendered has not yet appeared and cannot be directed into circulation.
The turnover period of receivables reflects the number of days required for the transformation of receivables into the money supply. The economic meaning of this indicator is to determine the average number of days during which money from counterparties in the industry arrives at the settlement accounts of industry participants.
Also, the period of turnover of receivables characterizes the average duration of deferred payments provided to buyers.
A decrease in the maturity of receivables is positively assessed, and vice versa. However, too tight control of the repayment of receivables can lead to the loss of customers, too soft - to the emergence of a shortage of working capital and weakening the payment discipline of debtors, many of whom, according to the old Indian tradition, are delaying payment ""to the last"".
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1.9. Price analysis
Prices for cleaning services in the Indian market are presented in a wide range. Prices for the same services may differ several times within the same region. The cost depends on many factors: the size and patency of the object, the composition of the area, the frequency of cleaning, the type of coating, the special requirements of the customer, the time of year, etc.
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Table 4. Average prices in the market of cleaning services in the Union Territories
Chapter 2
2.1. Economic components
Gross domestic product (GDP) is one of the most important macroeconomic indicators.
It reflects the market value of all final goods and services intended for direct consumption, which were produced for a certain period (quarter, year) in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used.
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The depreciation of the national currency against the US dollar has a negative impact on the market.
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2.2. Social Components
Population. During 2019-2020 India's population shows a slight negative trend. The decrease in the population has an insignificant impact at the moment on the decrease in demand for this type of service.
Real disposable money income of the population is money income minus obligatory payments (taxes and fees, interest on loans, etc.), adjusted for inflation.
Changing consumer behavior - people are increasingly choosing to order goods at home on websites and through applications, the impetus for the development of e-commerce was given by restrictions during the coronavirus pandemic in 2020 and further restrictions in 2021. At the moment, shops, shopping, entertainment and office centers continue to work, after the restoration of traffic at the end of 2020 and the first half of 2021, traffic is decreasing again, due to the restriction of access to public places for unvaccinated citizens. Accordingly, large consumers of cleaning services are again losing revenue, and, as a result, they will reduce all possible costs for maintaining premises for some time.
The growing popularity of cleaning services in households - in large cities, the pace of life is increasing, respectively, the time for working citizens to do housework is critically lacking, hence the need to use third-party services at an affordable price.
2.3. Technological components
Robotization and automation of the cleaning process - automated machines for floor care are gradually replacing manual labor in objects ranging from showrooms to local grocery stores. Where automated floor scrubbers were once a necessary but too expensive solution, they are fast becoming the norm. This allows you to reduce harvesting time while improving its quality - an obvious competitive advantage today.
Experts and market operators note innovations with a significant return on investment as one of the market trends:
Programmable cleaning equipment - machines that allow you to set the intensity of cleaning. They also support setting the amount of water and detergent used. This helps improve cleaning efficiency and results.
Fleet management systems are intelligent devices that collect comprehensive information about the machine. This helps managers improve productivity and ensure consistency in results.
Autonomous cleaning equipment - machines that can perform repetitive cleaning tasks. This improves productivity and reduces labor costs.
IT technologies for management accounting - the introduction of management accounting software that allows you to analyze activities and make timely decisions to improve the performance and reduce costs of cleaning service providers allows companies to enter the ""white"" market with minimal losses and remain efficient and profitable. Market leaders recognize the importance of analyzing the data generated within their companies and understand how to use it to achieve maximum efficiency and manageability of all processes.
The development of online trading is a definite plus, as it reduces the time for finding a supplier and placing an order, makes the process of paying for goods more convenient, and provides opportunities to expand the geography of sales.
Improvement of preparations and reagents for the provision of cleaning services - in recent years, professional cleaning products have been improved, which allow you to cope with the tasks of cleaning, disinfection much faster and more efficiently, which positively affects the speed and quality of cleaning, while improving the company's image.
2.4. Political Components
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To regulate the industry at the state level, OPORA RUSSIA, together with the Association, has prepared an industry cleaning development program for 2021-2024. Key positions of the authors of the program:
Preparation of a draft federal law ""On cleaning activities"";
Preparation, together with the Ministry of Finance of India and the Federal Tax Service of India, of a package of amendments to the federal legislation on public procurement (FZ-No. 44) and procurement from state-owned companies (FZ-No. the maximum price of the contract, the transition from an auction to a tender when purchasing cleaning services and an open-ended contract;
Preparation, together with the Ministry of Finance of India and the Indian Federal Tax Service, of amendments to the Tax Code of India, in terms of determining the essential conditions of a tax clause, introducing a tax prejudice when initiating criminal cases for tax crimes, a tax amnesty for companies that have gone through the whitewashing process and are included in the official register of the Indian Federal Tax Service, and also reduce the tax burden for bona fide companies;
Digitization of the industry, raising the level of skills of people employed in the industry, preferential lending to bona fide market players and the priority of the health and well-being of people, and the safety of the environment in the development of regulatory regulation in terms of establishing requirements for the design, construction, operation of facilities that provide measures to protect against infections.
2.5. STEP-analysis of the cleaning services market
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Based on the results of the analysis of the factors affecting the cleaning services market in India, there is a balance of the influence of positive and negative factors on the market, and, accordingly, on demand.
Restraining factors are the negative dynamics of population growth, the decline in GDP, the unstable exchange rate of the national currency, the increase in the cost of consumables and equipment, changes in consumer behavior, and the decline in real incomes of the population.
The following political and technological factors have a stimulating effect on the analyzed market: state regulation of the industry, the presence of an industry association that is ready to take part in changing the regulatory framework of the industry in dialogue with government agencies, robotization, mechanization and automation of the cleaning process, as well as automation of management accounting in the industry, development of online trading and platforms for choosing cleaners, improvement of preparations and reagents for cleaning. A positive impact on the market of cleaning services is provided by such a social factor as the popularization of the services of cleaning market operators in households.
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
Cleaning services are in demand and the market has good potential for development. The attractiveness of the business is ensured by the high demand for services - cleaning is required not only for enterprises, shopping centers and offices, but also for individuals.
Of particular interest are the regional markets, where good rates of commissioning of commercial real estate are maintained, respectively, there are prospects for companies. In small towns, the level of competition is not so high, and the low threshold for entering the market is ensured by the rather moderate cost of equipment and the absence of compulsory licensing and certification (mandatory only for work in medical institutions), as well as the use of unskilled labor. The payback period of a business can be up to three years and this attracts investments.
In addition, the most important feature of the cleaning business is the ability to enter into contractual relations in the corporate segment, and this allows you to plan its development. It is important that it is the corporate segment that dominates the structure of the clients of most cleaning companies: experts say that maintenance of commercial real estate is 80% of all contracts.
Competition in the cleaning market is fierce with many small companies competing for both residential and commercial cleaning contracts. Barriers to entry are low as very little expensive equipment is required and little to no staff training is required, for this reason new players often emerge. Many market operators today continue to work not quite officially, while not paying taxes and fees, they can reduce prices more than those companies that have completely legalized their business. This factor also toughens and complicates the competition, since the price in a crisis is a decisive factor for making a decision on choosing a counterparty. But in the end, those operators who are ready to provide high-quality services in the middle and high price segments remain on the market and strengthen their positions, since savings do not always mean high-quality services.
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3.2. Number of competitors and relative market shares of the largest competitors
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There are currently over 12 companies in the cleaning services industry in India. In every state of the Indian Federation, there are companies providing cleaning services in various formats, from municipal street cleaning companies to private cleaning companies providing cleaning and cleaning services to businesses and organizations, as well as individuals.
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Diagram 13. Dynamics of the total revenue of the largest operators of the cleaning services market (TOP-5) in India, 2016–2020
Diagram 13 shows the dynamics of the total revenue of the largest market players for all types of activities of these organizations. For all enterprises from the TOP-5, cleaning services is the main activity.
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3.3. Compact location of industry companies in certain regions
To determine the compactness of the placement of companies in the industry, let's consider the amount of revenue from the cleaning services provided in the states of India, which will indicate a high demand and a large volume of services provided (recall, the cost of the contract depends on the cleaning area), and, accordingly, the concentration of industry companies in this region .
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Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
In 2020, many markets felt the impact of the pandemic and the onset of the economic crisis, the cleaning services market in India was no exception, but the crisis in 2020 affected it to a lesser extent than the tourism, entertainment, catering, and transport industries.
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During the crises of 2008-2010. and 2014-2016 The market of cleaning services in India significantly lost its volume only in 2014, in 2008-2010. the market has passed the crises due to the annual increase in prices for cleaning services and their demand. At the same time, it should be noted that the impact of the crises was not significant in the long term, since shopping and entertainment centers were developing in the country - the main consumers of the services of the cleaning industry, and the demand for outsourcing cleaning (involving cleaning agencies in cleaning premises) also increased, since in many industries the unprofitable maintenance of cleaners in the state became obvious - the need to pay taxes and fees for employees who use an inefficient approach to cleaning premises was an additional burden for large companies. Hiring cleaning companies to maintain cleanliness has proven to be more beneficial for many, both in terms of cleaning efficiency and cleaning costs.
4.2. Analysis of the impact on the state aid industry at the current date
Forecasting the development of the cleaning services market in India is impossible without understanding the economic situation in the country as a whole, as well as assessing the impact of the spread of a new coronavirus infection and the measures taken to support the population, as well as businesses and industries that have been particularly affected by the pandemic. The list of sectors of the Indian economy most affected by the deteriorating situation as a result of the spread of a new coronavirus infection, approved by the Government of India on April 03.04.2020, 434 No. , includes, among other things, transport activities, activities in the field of culture, leisure and entertainment , activities of sanatorium organizations, activities of travel agencies and other organizations providing services in the field of tourism, hotel business, catering. The industry of cleaning services is not one of the most affected industries, however, government support measures concern industries where there are enterprises-consumers of cleaning services.
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In addition, due to the introduction of non-working days in November 2021, some support measures have been extended or resumed:
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4.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the market of cleaning services
The most powerful factor that influenced all the processes of the country's economy was the coronavirus pandemic in 2020.
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4.4. Prospects and growth drivers for the cleaning services market
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It should be noted that one of the most important drivers of growth in the cleaning services market is the growth of the economy, and at the same time the growth of household incomes and their purchasing power. Consider the forecast indicators for the development of the Indian economy for the period 2021-2023. under two scenarios.
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4.5. Forecast for the development of the cleaning services market in the context of the current economic crisis due to covid-19
The market analysis was carried out on the basis of methods based on identifying trends over time, adjusted for expert opinion in the industry. When compiling the forecast, methods of mathematical modeling, mathematical analysis and statistics were used, adjusted for market trends and expert opinions.
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Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and projected general economic situation in connection with the spread of the coved-19 virus.
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
5.2. Sources of information for forecasting
Industry volume over the past 5 years
Industry dynamics in 2008-2009, in 2014-2015, in 2016-2020*
Dynamics of macroeconomic indicators over the past 9-10 years
Current public assistance plans
Databases of the State Statistics Committee of India
Indian Revenue Service databases
Open sources (websites, portals)
Issuer reporting
Company websites
Media Archives
Regional and federal media
Insider sources
Specialized analytical portals
* Until October 2021 financial indicators for the main market operators and industry coefficients for 2020 - GidMarket forecast based on the dynamics for 2016-2019, except for cases when the operator discloses data on the results of financial 2020 publicly.
5.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2021-2025)
Diagrams
Diagram 1. Structure of the cleaning services market by types, %
Diagram 2. Dynamics of the volume of the cleaning services market, 2016–2020
Figure 1. Stage of the life cycle of the cleaning services market
Diagram 3. Population dynamics in India, as of 01 Jan. 2013–2020
Chart 4. Dynamics of real income of the population of India, 2012-2020, available period 2021
Diagram 5. Consumption of cleaning services per capita, 2016–2020, Rs./person
Diagram 6. Profitability of profit before tax (profit of the reporting period) in the field of cleaning services in comparison with all sectors of the Indian economy, 2016–2020, %
Diagram 7. Current liquidity (total coverage) in the field of cleaning services for 2016–2020, times
Diagram 8. Business activity (average receivables turnover period) in the field of cleaning services, for 2016–2020, days.
Diagram 9. Financial stability (security of own working capital) in the field of cleaning services, in comparison with all sectors of the Indian economy, 2016–2020, %
Chart 10. India's GDP evolution, 2012-2020, available period 2021
Chart 11. Monthly dynamics of the US dollar against the rupee, 2016-2021 available period, Rs. for 1 US dollar
Diagram 12. Shares of the largest competitors in the cleaning services market in 2020, %
Diagram 13. Dynamics of the total revenue of the largest operators of the cleaning services market (TOP-5) in India, 2016–2020
Diagram 14. Compactness of location of companies in the industry in certain regions
Diagram 15. Forecast of the volume of the cleaning services market in 2021–2025
Tables
Table 1. Gross margin of the cleaning services industry in comparison with all sectors of the Indian economy, 2016-2020, %
Table 2. Absolute liquidity in the cleaning services industry compared to all sectors of the Indian economy, 2016-2020, times
Table 3. Consumer price indices in the cleaning services market in India in 2016–2021 (available period), %
Table 4. Average prices in the market of cleaning services in the Union Territories
Table 5. STEP analysis of factors influencing the cleaning services market
Table 6. Main companies participating in the cleaning services market in 2020
Table 7. Assessment of the impact of recent crises on the industry
Table 8. Analysis of the impact on the industry of the state aid proposed to date
Table 9. Forecast indicators of the development of the Indian economy
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