SBICaps IndianApparelRetailSector Overview June2007

Indian Apparel Retail Sector An Overview
Prepared By
the worlds leading M&A alliance
June 2007
Strictly Confidential
Indian Apparel Retail Industry

Indian Apparel Industry - Overview
The Indian Apparel Industry is segmented into two sectors: Domestic & Export segments
RMG* Market Size : 2005-06

Industry size (Rs. Million) - Domestic Market size (A) - Export Market size (B) Total Market size (A +B)
Value
( EUR Billion)
Per cent
68.8 31.2 100
13.64 6.10 19.75
Note: Per cent indicates the domestic and export market with respect to the total market size. * RMG Ready-Made Garment Industry
India is very strong in niche segment and short-run fashion garments
Source: CRISIL Research, Readymade Garment (Annual Review) February 2007
Ready-Made Garment Industry

The Domestic RMG industry is highly fragmented with a few players in organized sector This degree of fragmentation can be attributed to the erstwhile government policies Small and unorganized local players largely dominate the domestic RMG Market The domestic market worth Euro 13.64 billion can further be segmented into: Mens wear segment Womens wear segment Kids wear segment Value (EUR Billion)
- Mens Wear segment - Womens Wear segment - Kids Wear segment
Per cent
41.4 34.4 24.2
5.65 4.69 3.30
Note: The values and percentage in the table corresponds to the domestic market only.

Of these three segments, Mens Wear segment is estimated at 5.65 Euro billion in 2005-06 accounting for about 41.4% of the total domestic RMG market Segment has grown at a CAGR of around 8% from 2001-02 to 2005-06 Mens Wear segment has further been categorized as depicted by the diagram
COATS CASUAL T-SHIRTS

MENS SEGMENT
COATS FORMAL
JEANS WEAR SHIRTS
TROUSER
DRESSES
T-SHIRTS
WOMENS SEGMENT
SAREES
The Womens Wear segment is estimated at 4.69 Euro billion in 2005-06 accounting for about 34.4% of the total domestic RMG market Segment has grown at a CAGR of 8 % from 2001-02 to 2005-06 Womens Wear segment has further been categorized as depicted by the diagram
JEANS WEAR
SHIRTS /TROUSERS
TOPS
The Kids Wear segment is worth 3.30 Euro billion and accounts for about 24.2% of the total domestic RMG market segment has grown at a CAGR of 14% from 200102 to 2005-06 Kids Wear segment has further been categorized as depicted by the diagram
UNIFORM
T-SHIRTS
KIDS SEGMENT
REGULAR DRESSES
JEANS WEARS SHIRTS
TROUSER
The export market for readymade garment is estimated at 6.19 Euro billion of the total market size.
The United States (US) and the European Union (EU) being the key destinations.
Value (EUR Billion)

- US - EU (25 countries) - Others countries TOTAL 2.42 3.12 0.66 6.10
Per cent
39.0 50.4 10.6 100
Note: These values and percentage is corresponding to the export market only.
The RMG industry is the second largest employment generator & employs nearly 4.5 million people.
SWOT Analysis of Indian Apparel Industry
STRENGTHS Increasing disposable incomes of the people Brand conscious customers Availability of cheap finance Growing domestic market, increase in number of malls
OPPORTUNITIES Increasing demand for luxury brands from the middle class Research and new product development can help the companies to move across the value chain
WEAKNESSES Predominance of unorganized sector Technological obsolescence in the supply chain
THREATS Increased competition in the domestic markets Cheaper imports Changing Governments policy on FDI
Foreign Direct Investment (FDI)

The Department of Industrial Policy & Promotion issues the guidelines for Foreign Direct Investment in India FDI upto 51% has been allowed in retail trade of single brand products with prior government approval and under certain condition: Products to be sold should be of a single brand only Products should be sold under the same brand internationally Single Brand product retailing would cover only products that are branded during manufacturing
For example: an umbrella brand like Christian Dior would not be allowed to stock
different brands like jadore, Pure Passion and Dior Addict in one store
Source: www.dipp.gov.in
Foreign Direct Investment

CURRENTLY PERMITTED ROUTES
FRANCHISING
CASH & CARRY ( wholesale trade)
JOINT VENTURE
DISTRIBUTION
MANUFACTURING
Franchising
Rights are granted by one party to another for some stipulated amount of money Franchisee is allowed to conduct business using Franchisers know how and brand name
Joint Venture
International brands provides equity and support to a local Indian entity Share of the foreign player is restricted to 49%
Distribution
International Player sets up a distribution office in India and supplies products for sale to local retailers Can also set up franchised outlets for brands
Cash & Carry (Wholesale Trade)

Allowed 100% FDI under the automatic route by FIPB, model is designed in a way that the wholesaler deals with small retailers
Manufacturing
International Player sets up an Indian company to manufacture its product and also gets the right to retail in India Source: www.dipp.gov.in
Key Business Models for Manufacturing of Apparel
Business models can be categorized as following:

Manufacturing the apparel on their own Purchasing the apparel from the contract suppliers / outsourcing Giving the designs to the contract supplier and get the apparel manufactured Manufacturing Stage Distribution Stage Branding Stage
Brand owner may provide designs and/or raw materials
Outsource Manufacturing Brand Name Own Manufacturing Sell to a brand owner or Purchase brand
Distribute through own stores
Distribute through MultiBrand Outlets
Key Business Model

Companies may follow a Single Strategy from among the list of business models mentioned before. Very often a company can combine one or more of the mentioned business models to form a
Multiple Strategy
For eg. partly manufacturing and partly outsourcing, owning a few brand names and purchasing some from others, selling partly through the own stores and through Traders and Commission Agents. There is also a dominant role played by the players in the unorganized sector
Some of the participants from this sector are:
Traders purchasing branded or un-branded garments and selling them through own retail shops or to other retailers Commission Agents - acting as a middle agencies between manufacturer, purchaser and distributor.
Distribution Channels in Indian RMG Industry

DISTRIBUTION CHANNELS
OWNED STORES / EXCLUSIVE BRAND OUTLET DISCOUNT STORES
RETAILERS
DISTRIBUTORS
EXPORTS
MULTI-BRAND OUTLETS or SHOPPING MALLS
Various Distribution Channels
Owned Stores / Exclusive Brand Outlets

Advantages
direct medium of selling apparel high realization for the garment sold end-user feedback and knowledge of their preferences Disadvantages requires greater advertising expenditure greater fixed costs Some of the Players following this channel Provogue Raymonds Manufacturer-cum-Distributor Madura Garments Arvind Brands Zodiac Clothing Century Textiles

Multi-Brands Outlets or Shopping Malls
Organization sells apparels to multi-brand outlets, which in turn sell them through large retail space MBOs are located in prime locations of the various cities and towns ensuring maximum reach MBOs are chain of shopping malls having a presence in more than one location Realization from this channel is lower than those earned by selling to the retailers; as MBOs keep
higher margins because their costs are higher Some of the major players in this channel of distribution: Shoppers Stop Pantaloon Retail Westside (Trent) Manufacturer-cum-Distributor Globus Pyramid Retail Reliance Retail

Distributors
This channel involves two middle agencies between the seller and the end-user Organization sells it to the distributor, who in turn sells to the Retailers or MBOs Realization from this channel are low
Discount Stores
For selling apparels at lower prices to attract larger volumes Used for selling apparels with minor defects or for selling slow moving stocks Low realization from this channel as garments are old-fashioned or sold at low prices for gaining big
volumes
Retailers

Company sells garment to Traders or Commission Agents Greater reach of the distribution channel Creation of a middle agency between the organization and the end-user Lower realizations from this channel
Comparison Between Different Distribution Channels
Higher realizations than selling through distributors Low realizations, but lower advertising and fixed costs
HIGH
RETURNS
MEDIUM
LOW
Advertising and fixed costs are lower RETAILERS & MBOs
High realizations, but advertising and fixed costs are high

OWN STORES
DISTRIBUTORS
DISTRIBUTION CHANNELS the worlds leading M&A alliance
Industry Snapshot
AT Kearney report suggests that the Indian retail market has the largest growth potential in comparison to the international retail market and is expected to grow to 4 to 5 per cent a year in volume and 13 per cent in value. Some important upcoming potential players of this market are: The $600 million Dubai-based The Landmark Group which entered the Indian market in 1999, with its chain of premium 'Lifestyle Store the group aims to provide a stiff competition to the retail majors like Pantaloon, Westside, Shoppers Stop The Group has its presence in 5 cities - Chennai, Hyderabad, Bangalore, Mumbai and Gurgaon through 10 lifestyle stores Also planning to bring concept stores to India including Max Retail, Home centres, Max hypermarket Landmark group currently in discussions with French hypermarket operator Carrefour to roll out the brand in India The leading UK fashion retailer - New Look, has signed a new Middle East regional franchise agreement with the Landmark Group Also the Group intends to invest heavily in the fast growing Retail Market by opening outlets in Delhi, Pune, Kolkata and Ahmedabad.
Industry Snapshot

ITCs Lifestyle retailing business division established a chain of exclusive specialty stores, in July 2000 Offering to the premium consumer with Wills Classic range of Formal Wear Launched in 2002, provides the consumers a distinct product offering Wills Clublife range of Evening Wear & designer accessories Launched in 2003, Wills Sport range of Relaxed Wear ITC launched its brand John Player in December 2002 With this brand the company offers a complete wardrobe of Casuals, Party, Work wear and Denims The brand is available across the country through a nation-wide network of exclusive stores and multi-brand outlets Website: www.willslifestyle.com
Industry Snapshot
Some of the premium international brands like the Gucci Group, Fendi, are in talks with major retailers like the Pantaloon, Lifestyle, Shoppers Stop etc to set up their brands in India The Murjani Group with its Joint Venture with Marvin Traub focuses on bringing international brands to the Indian retail market The Murjani Group launched Tommy Hilfiger in India in 2004 Future strategy of the group for the Indian markets would be to create multibrand retail platform The Group has already formed exclusive distribution agreements with the brands like Gucci, Jimmy Choo, Calvin Klein, FCUK, TUMI and Build-A-Bear Website: www.murjanigroup.com
Profile of Major Players
The Major players in the Indian RMG Industry are profiled as following in the next few slides:
1. Pantaloon Retail (India) Limited 2. Shoppers Stop 3. TATA Trent 4. Globus Stores Pvt Ltd 5. Piramyd Retail Ltd 6. Arvind Brands Ltd 7. Provogue ( India) Ltd 8. The Raymond Group 9. Madura Garment 10. Reliance retail Ltd 11. Wills Lifestyle (Lifestyle Retailing Business Division, ITC) 12. Murjani Group 13. Landmark Group
1. Pantaloon Retail (India) Limited The Future Group
Pantaloon Retail (India) Limited The Future Group

Background
Incorporated in October 1987 under the leadership of Mr. Kishore Biyani Became public limited in 1991 The Pantaloon Shoppe - exclusive menswear store was set up in 1994 Big Bazaar under the concept of Hypermarket started in 2001 Pantaloon Retail India Limited a flagship enterprise of The Future Group Retail sector activities - Departmental Stores, Hypermarkets, Supermarkets, Malls and Specialty Stores website: www.pantaloon.com
The Future Group operates through six verticals : Future Retail covering retail business Future Capital catering to financial products & services Future Brands managing all the brands owned or managed by group companies Future Space managing real estate business Future Logistics managing supply chain and distribution Future Media developing and managing retail media space
Business Area

Business Strategy
Targeting greater market share by entering into formats such as departmental stores,
supermarket, hypermarkets, malls etc. Developed a Dual Strategy Of opening smaller versions in its flagship stores like BIG BAZAAR Opening larger Independent Stores. Currently adopted retail format by the group: Lifestyle Segment Pantaloon Central Value Segment Big Bazaar Food Bazaar

Private Labels
such as:
Pantaloons apparel retail business derives its 75 per cent of sales from its private label
Major Strategic Alliances
John Miller shirts Lombard Bare Leisure Annabelle Akkriti
JM Sports Pantaloon Bare Denim Mix Match
PRIL has entered into 50:50 JV with Ginni & Jonny known brand for kids Sole Franchisee of Mark& Spencer, Guess and Womens Secret in India PRIL holds a 51 per cent stake in JV with Liberty Shoes called FootMart
runs stores under the name of Shoe Factory located in shopping malls and also opened as independent stores
Financial Snapshot
Financial and Operating Performance Total Sales PAT Equity Net Worth Market Capitalization (as on 5th April 07)
2006 (EUR Million) 340.94 11.15 4.67 91.62 956.60
2. Shoppers Stop
Shoppers Stop
Background
Established in 1991 by the K. Raheja Group The group is a well known player in the construction sector It is a Public Limited Company Principal Fascia Shoppers Stop, Crossword, HomeStop, Mother Care, MAC Retail sector activity Departmental Stores, Specialty Stores (books, home products,
cosmetics, F&B, Baby Care) Website: www.shopperstop.com
Business Area
The store offers a wide variety of international and Indian brands Stocks private labels like Stop, Kashish, Vettorio Fratini, Elliza Donatein The store also offer concessionaire space to brands, whereby the counters are arranged by the employees of the concessionaire
Shoppers Stop
Business strategy
Primarily catering to the Lifestyle Retailing segment through Departmental Stores
Offers a gamut of products apparels, accessories, footwear, cosmetics, music, books,
leather products, furnishing etc. Ventured to the Value Retailing segment with inception of HYPERCITY Apart from these stores, the company also has presence in Niche Retailing format
With the brands such as:
Crossword a lifestyle bookstore; these are run in 3 formats Corner Store, Brand Stores and Flagship Stores. MAC its a tie-up with a cosmetic major, Estee Lauder HomeStop its a specialty store, caters exclusively to home furnishings and furniture Mother Care - its a franchise agreement with a UK-based Mothercare marketing baby clothes, toys, baby care products and maternity clothes
Shoppers Stop
Future Expansion Plans

The company plans to form a JV with AGROS of UK to start
Catalogue Retailing Business in India Plans to diversify into airport retailing, for which also signed an MOU with the Nuance Group of Switzerland
Financial Snapshot
2006 (EUR Millions) 117.73 4.714 5.97 46.93 367.86
3. Tata Trent Ltd
Tata Trent Ltd

Background
established in 1998 as a part of Tata Group started operations by acquiring the UK-based Littlewoods departmental stores in Bangalore the company owns a chain of department stores across the country & is also increasing its foothold in the high volume hypermarket sector The company has initiated a new retail venture called Infinity Retail Limited dealing primarily in electronic consumer durables Website: www.mywestside.com

Tata Ltd
Trent Ltd
Infiniti Retail Ltd
Westside
Star India Bazaar
Landmark
Croma
Tata Trent Ltd

Business Strategy
The company has three store formats on which it is current operating
Westside stores
Primarily apparel stores comprising a mix of clothes, footwear, and accessories for men, women and children Established its outlets in Mumbai, Pune, Bangalore, Hyderabad, Chennai, New Delhi and Kolkata Landmark Company acquired a 79 per cent stake in this Chennai based books and music retail chain The chain has its presence in Bangalore, Mumbai, Vadodara and Chennai Star India Bazaar First store opened in Ahmedabad (Gujarat) with which company entered the Value retailing segment Store offers wide range of products like staples, perishables, health and beauty products The company is planning to open such stores in Mumbai and Bangalore as well Infinity Retail Limited The company has set up a new store Croma which sells electronic consumer durables For this a sourcing agreement has been signed with the Australian retailer Woolworths Company plans to alliance set up around 100 more such stores in coming years the worlds leading M&A
Financial snapshot
2005-06 (EUR Millions) 60.24 4.23 2.50 50.35 191.83
4. Globus Stores Pvt ltd

Background
Set up in 1998 as a part of Rajan Raheja Group Currently runs 14 stores across India The group is completely into apparel stores with prime focus on the private labels GLOBUS and F21 are the two private labels
Globus caters to apparel and accessories markets for men, women and children F21 primarily targets the youth
Company is ISO 9001 certified with ERP-enabled supply chain Website: www.globus.in
Globus Stores Pvt ltd

Business Strategy
The company started as a departmental store, but gradually shifted its focus to the apparels and
private labels has an in-house team of designers and merchandisers responsible for quality Actual production activity is outsourced The company is mainly targeting smaller cities like Vadodara, Muradabad, Jamshedpur Ranchi, Udaipur Bhopal, Ludhiana The group is planning to set up 100 stores by 2008 across the country Up-coming stores are to set up in Varanasi, Hyderabad and Noida Financial information of Globus Stores Pvt Ltd is not available as the company is a privately held company.
5. Piramyd Retail Ltd
Piramyd Retail Ltd

Background
Promoted by the Mumbai-based Ajay Pirmal Group in 1998 Runs family entertainment centres called Jammin Recently sold one of its mall Crossroads to Pantaloon Retail Limited To increase the presence Retail chain operates in both Lifestyle Retail Piramyd Megastore Supermarket TruMart Website: www.piramyd.com
Business Strategy
Apart from the metro cities like Bangalore, Hyderabad and Chennai the company is also planning to
expand to Tier II and Tier III cities The company will continue with mall development project in Pune, Bangalore, Chennai, Ludhiana, Jalandhar, Chandigarh and Hyderabad The company is also planning to revamp its product mix to focus primarily on the womens segment Also trying to increase its share of private labels by newer categories like womens ethnic wear and children wear
Financial Snapshot
2006 (EUR Millions) 17.24 - 1.30 3.48 20.72 22.36
6. Arvind Brands Ltd
Arvind Brands Ltd

Background
Subsidiary of Arvind Mills, a major garment manufacturing player Caters to the domestic market and is also involved in exports It has 3 large manufacturing units, 2 warehouses and 400 sales outlets across the country The company has its owned brands and licenses from reputed international brands like Lee,
Wrangler, Gantt, Arrow and Tommy Hilfiger for selling in the Indian market It distributes its products through Multi-Brand Outlets (MBOs), organised retailers and Exclusive Brand Outlets (EBOs) The company manages various brands like Flying Machine, Newport and Ruf & Tuf in denim trousers and Excalibur in shirts Website: www.arvindmills.com
Arvind Brands Ltd

Business Strategy
Excalibur the companys own brand is revamped as a lifestyle brand
Expanding the product portfolio to include knits, jackets, t-shirts, blazers and suits Planning to set up 100 Excalibur outlets Recently entered into a 40-60 Joint Venture with VF Corporation, a US-based lifestyle apparel maker and owner of 50 brands, to market its products in India VF Corporation owns brands such as Lee, Vanity fair, Wrangler, Nautica, JanSport and Kipling This tie-up has also made the company an exclusive franchisee of Gantt Its a distributor for the brand across India, Sri Lanka and Bangladesh VF Arvind brands Pvt. Ltd. Plans to open 13 Nautica Stores Arvind Mills plans to open around 100 megamart stores across 100 cities thereby enhancing their existing network 54 outlets in 16 cities This would increase its presence in Tier II cities as well
Financial Snapshot
Financial and Operating Performance (of Arvind Mills ) Total Sales PAT Equity Net Worth Market Capitalization (as on 5th April 07)
2006 (EUR Millions) 275.93 22.11 36.40 256.62 156.91
7. Provogue (India) Pvt Ltd
Provogue (India) Pvt ltd

Background
Incorporated in 1997 as Acme Clothing Private Limited Manufacturer-cum-distributor of ready to wear garments mainly deal in mens casuals It launched its fashion brand Provogue in 1998 Company was rechristened as Provogue India Private Limited in 2005 It also started its hospitality business under the brand name Provogue Lounge The company has entered into mall development through a wholly owned subsidiary Prozone Website: www.provogue.net
Business Strategy
Retail Formats followed by the company:

Provogue Mega Studios stores a wide range of merchandise The company operates through its stores Provogue Studio These are stores that are managed directly by the company or through contracts Located mainly in malls Have allocated space in other departmental stores on a shop-in-shop basis
Financial Snapshot
2006 (EUR Millions) 26.36 2.077 2.816 18.93 149.23
8. The Raymond Group
The Raymond Group

Background
Incorporated in 1925, transformed from textile a major to a conglomerate
Along with manufacturing and brand building,
the company has also come retail sector in a big way
Raymond forayed into garment manufacturing through ventures like

Silver Spark Apparel Ltd for tailored suits, trousers and jackets EverBlue Apparel Ltd Jeanswear Celebrations Apparel Ltd Shirts
The group has its presences in the retail sector through a chain Of the following:
Exclusive stores - The Raymond Shop - Premium retail store offering complete range of mens wear Stand alone stores for Manzoni, Park Avenue, ColorPlus, Parx, Be: and Zapp Website: www.raymondindia.com
The Raymond Group
The Raymond Retail Shops are premium retail stores offering complete range of mens wardrobe. the largest one stop retail network in the country. There are over 350 stores exclusive 'The Raymond Shop' (TRS) in prime locations, in 150 cities in India 27 overseas outlets in 15 cities across the Middle East, Sri Lanka, Bangladesh and Nepal
Includes top-of-the-line brands - Raymond, Manzoni, Park Avenue, ColourPlus and Parx.
Reach of the brand is spread all over the country across big cities and smaller towns thereby targeting a wide spectrum of consumers Also extended its presence in some of the leading Malls with new retail format
The Raymond Group
Brand Stores exclusive stand-alone stores for brands - Manzoni, Park Avenue, Parx, ColorPlus, Be: and Zapp! Each store makes available to customers the entire product range of garments and accessories The highlight of these stores is that they provide customers a unique and leisurely shopping experience Encompassing a look to suit every new occasion formal, casual, outdoor and travel etc.
The Raymond Group

Zapp - a fun place for kids to hang out and shop for colourful clothes and accessories Be: - a chain of 15 stores, presenting customers the best of international fashion from well-known Indian designer, right under one roof Parx - for a cool trendy and chilled out out of office look ColorPlus - exclusive stores where one can shop for smart casual shirts, trousers and elegant accessories. The Park Avenue store - offers the perfect premium lifestyle experience and address the customers need for Business, Evening, Leisure, Travel and Heritage Wear
The Manzoni Luxury Boutique in New Delhi and Mumbai

Financial snapshot
2006 (EUR Million) 229.55 21.26 10.67 206.91 360.00
9. Madura Garment
Madura Garments
Background
Established in 1988 as the garment division of the Indian subsidiary
of Coats Viyella (UK) In 1999, Aditya Birla Group acquired Madura Garments and is now a part of Aditya Birla Nuvo Limited focuses on mens shirt and trousers and has also diversified into jeans and western wear for women The company owns several brands like Louis Philippe, Van Heusen, Allen Solly, SF Jeans and Peter England Website: www.adityabirlanuvo.co.in
Madura Garments
Business Strategy
Plans to strengthens its portfolio in womens wear, premium clothing and
accessories Has tie-up with ESPIRIT, an international lifestyle brand Expanding its retailing network by marketing womens wear under the Van Heusen brand Recently the company acquired Trinetra, chain of 174 convenience stores in South India
Financial Snapshot
2006 (EUR Millions) 457.51 32.50 10.41 379.76 1,701.92
10. Reliance Retail
Reliance Retail Limited

Background
Its a wholly owned subsidiary of Reliance Industries Limited Its a potential player which is entering the domestic retail market
with an estimated investment of around Rs. 250 billion The company intend to set up chains of hypermarkets, supermarkets, discount stores, department stores, convenience stores and specialty stores These various retail formats and distribution and stocking hubs will be spread across the 784 cities and 1600 rural towns in the country The company intends to open MBO for the apparels and consumer durables The company already started its operations with Reliance Fresh supermarket Reliance is following a Twin Model for its expansion, which includes both owning and leasing retail space Website: www.ril.com
Reliance Retail Limited

Initially targeting the five states of Maharashtra, Gujarat, Punjab, West Bengal and Andhra Pradesh To establish pan India presence in all formats, targeting not only major metros and cities, but also the second-tier, semi-urban and rural centres, thereby reaching its target of 784 cities and 1600 rural towns
Wills Lifestyle - ITC's Lifestyle Retailing Business Division
Wills Lifestyle
Background: Over the last five years, ITC's Lifestyle Retailing Business Division has established a nationwide retailing presence through its Wills Lifestyle chain of exclusive specialty stores. Beginning with its initial offering of Wills Sport relaxed wear, it has expanded its basket of offerings with Wills Classic formal wear, Wills Clublife evening wear and a tempting range of Designer accessories. With a distinctive presence across segments at the premium end, ITC has also established John Players as a brand that offers a complete fashion wardrobe to the youth segment. Strategy: With its brands, ITC aspires to build a dominant presence in the apparel market through a robust portfolio of offerings. Wills Lifestyle has been established as a chain of exclusive specialty stores providing the consumer a truly 'International Shopping Experience' through world-class ambience, customer facilitation and clearly differentiated product presentation. To enhance product availability through expansion of Wills Lifestyle chain of exclusive stores in high potential catchment malls. The brand is now available in over 150 locations through exclusive brand outlets (EBOs) and shop-in-shops.
Murjani Group
Murjani Group
Background: Founded in 1930, by Mr. B. K. Murjani, the group based its initial success on full vertical integration in the apparel industry. In 1966, the group commenced its transition from manufacturing to designer lifestyle brand development and marketing. In 2001, Vijay Murjani, Managing Director of the Murjani Group, moved to India to head the Indian initiative. Strategy: The India strategy for Murjani, revolves around the creation of a unique Multi-Brand Retail Platform, with world renowned, premier international brands. In the first phase, Murjani opened eight free standing Tommy Hilfiger stores, across six cities. In addition, the group also launched several licensed categories including eyewear, watches, shoes and fragrance through relationships with some of Indias largest and most respected organizations. In the second phase of its India strategy, in 2005, Murjani identified several major international brands, to add to its brand portfolio and secured exclusive, long term rights to India, for 6 world renowned, premier brands: Gucci, Jimmy Choo, Calvin Klein, French Connection, Tumi & Build A Bear.
Landmark Group Lifestyle Stores

Background: The $600 million Dubai-based The Landmark Group entered the Indian market in 1999, with its chain of premium 'Lifestyle Store. The Group has its presence in 5 cities - Chennai, Hyderabad, Bangalore, Mumbai and Gurgaon through 10 lifestyle stores The group plans to increase the number of Lifestyle stores, Home Centre chain and Max stores to 25, 9 and 35, respectively. It now has 9 Lifestyle stores, some 2 Home Centre chains and 4 Max outlets. While the Lifestyle stores will be spread over 60,000 sq ft each, Home Centre will occupy anywhere between 20,000 sq ft and 40,000 sq ft and Max retail stores will cover about 20,000 sq ft.
(source: The Economic Times Report)
Landmark Group Lifestyle Stores

Strategy:

Entered into franchising of international brands in the apparel and footwear categories in India through a separate corporate entity, LMG Brands India. It has already introduced two international brands Kappa (an Italian sportswear brand) and Bossini (a Hong Kong-based casual wear brand). Negotiations are on to launch more international brands to be sold through its Lifestyle and stand-alone stores. Landmark Groups Indian operations president (finance), Sundar Raman, said the groups expansion plans in India entails increasing the footprint of its existing retail formats Lifestyle, Home Centre and Max, and forging international apparel and footwear brands franchising agreements. Landmark group is currently in discussions with French hypermarket operator Carrefour to roll out the brand in India Also contemplating launching hypermarkets and concept stores in high-fashion apparel, children and footwear segments. Total investment to expand the groups existing retail formats is estimated at about Rs 775 crore by March 09. Of which Rs 450 crore will flow into expansion of Lifestyle and Home Centre outlets, and another Rs 150 crore into its recently launched value-retail format, Max Retail. The remaining Rs 175 crore has been set aside for international brands franchising agreements.
(source: The Economic Times Report)
Abbreviations & Definitions

RMG Readymade Garments MBO Multi-Brand Outlet EBO Exclusive Brand Outlet Supermarket - is a departmentalized self-service store offering a wide variety of food and household merchandise Specialty stores - are small stores which specialize in a specific range of merchandise and related items Department store is a retail establishment which specializes in selling a wide range of products without a single predominant merchandise line
usually sell products including apparel, furniture, appliances and electronics
Hypermarket - is a superstore which combines a supermarket and a department store

Includes products ranging from groceries to general merchandise They are planned, constructed, and executed keeping in mind satisfaction of consumers Eg: Carrefour
SBI Capital Markets Limited A Brief Introduction
June 2007
Strictly Confidential
About SBI Capital Markets Limited

State Bank of India Asian Development Bank
SBI Capital Markets Ltd. (SBI Caps) was founded in 1986 as a wholly owned subsidiary of the State Bank of India, the countrys largest bank. In January 1997, the Asian Development Bank took over 13.84% stake in the equity of SBI Caps As part of State Bank Group with the full backing of SBI, its Indian associates and its overseas subsidiaries, SBI Caps has direct links with a number of Multilateral Agencies and International Financial Institutions No.1 Fund Mobiliser in the Country, raising over Rs.1219.11 billion through public, rights issue and private placement of equity & debt during the past 5 years Pioneer in Securitisation and Privatization: Accomplished the first true Securitisation in the power sector in the country and the only investment bank to be co-opted on the RBIs Working Group on Asset Securitisation as a Special Invitee Advisor to Government of India on crucial issues like studying Indias Power requirements and Role of Central PSUs, Securitisation of SEB overdues and the only non-lending institution to be a participant in a nodal committee set up by the Ministry of Power Strong relationship with the Government, having worked for several fund-raising, strategic sale and other advisory transactions for Government of India and several State Governments.
86.16% stake
13.84% stake
Vision - To be the best India-based Investment Bank Mission- To provide credible, professional and customer focussed world- class Investment Banking services
Network of Offices & Human Resources at SBI Caps

SBI Caps Corporate Office is located in Mumbai and there are eight Regional Offices in Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad,
Chandigarh
Chandigarh and Guwahati and an alliance in Bangladesh. The Company has

Guwahati New Delhi Ahmedabad Kolkata Hyderabad Mumbai Bangalore
a strong force of professionals with rich and diverse experience in various spheres of Investment Banking.
SBI Caps pool of professionals constitutes the best talent drawn from every relevant field - finance, banking, management, accounting and taxation. The employees in the management and executive cadre consist of experienced
Chennai
bankers deputed from State Bank of India and direct recruits comprising
Broking Research
Investment Banking Sales & Distribution
various professionals from reputed Management Institutes and qualified Chartered Accountants.
SBI Caps is amongst the earliest players in the Indian Capital Markets with fully integrated operations offering the entire range of Investment Banking services under one umbrella
Strategic Associations / Tie-ups
SBICAP (UK)
SBICAP (UK) Limited, floated in 2006 is a wholly owned subsidiary of SBI
Capital Markets Limited to provide services in the areas of Cross Border M & A, FCCBs /GDRs, Private Equity, etc.
Tie-up with CLSA for overseas acquisition, strategic investors &
CLSA
international offerings such as ADRs and GDRs. SBI Capital Markets Limited is the Indian representative of M&A International Inc, which has International network in 38 Countries. SBICAP has entered into tie-ups with investment banks in Sri Lanka, Bangladesh, Oman and Qatar
M&A International
Other International Tie-ups
Domain Expertise
Mergers & Acquisitions & Advisory Privatisation Joint Venture M&A and Takeovers Private Equity/FCCB Placement Financial / Business Restructuring Business Valuation Rights Issues
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SBICaps IndianApparelRetailSector Overview June2007

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SBICaps IndianApparelRetailSector Overview June2007

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Indian Apparel Retail Sector An Overview

the worlds leading M&A alliance

Indian Apparel Retail Industry

RMG* Market Size : 2005-06

13.64 6.10 19.75

India is very strong in niche segment and short-run fashion garments

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Source: CRISIL Research, Readymade Garment (Annual Review) February 2007

Ready-Made Garment Industry

5.65 4.69 3.30

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Source: CRISIL Research, Readymade Garment (Annual Review) February 2007

Ready-Made Garment Industry

COATS CASUAL T-SHIRTS

JEANS WEAR SHIRTS

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Source: CRISIL Research, Readymade Garment (Annual Review) February 2007

Ready-Made Garment Industry

JEANS WEARS SHIRTS

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Source: CRISIL Research, Readymade Garment (Annual Review) February 2007

Ready-Made Garment Industry

Value (EUR Billion)

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Source: CRISIL Research, Readymade Garment (Annual Review) February 2007

SWOT Analysis of Indian Apparel Industry

WEAKNESSES Predominance of unorganized sector Technological obsolescence in the supply chain

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Foreign Direct Investment (FDI)

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Foreign Direct Investment

CASH & CARRY ( wholesale trade)

Cash & Carry (Wholesale Trade)

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Key Business Models for Manufacturing of Apparel

Business models can be categorized as following:

Brand owner may provide designs and/or raw materials

Distribute through own stores

Distribute through MultiBrand Outlets

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Key Business Model

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Distribution Channels in Indian RMG Industry

OWNED STORES / EXCLUSIVE BRAND OUTLET DISCOUNT STORES

MULTI-BRAND OUTLETS or SHOPPING MALLS

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Various Distribution Channels

Owned Stores / Exclusive Brand Outlets

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Various Distribution Channels

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Various Distribution Channels

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Comparison Between Different Distribution Channels

Advertising and fixed costs are lower RETAILERS & MBOs

High realizations, but advertising and fixed costs are high

DISTRIBUTION CHANNELS the worlds leading M&A alliance

the worlds leading M&A alliance

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Profile of Major Players

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1. Pantaloon Retail (India) Limited The Future Group

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