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European Business Group - India and Retail Landscape 4th Feb 10v1 5

European Business Group - India and Retail Landscape 4th Feb 10v1 5

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Published by: Rahul Pratap Singh Kaurav on Nov 18, 2011
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Retail Evolution, Trends & Business Opportunities in India

Mr. Rajan Bharti Mittal Vice Chairman and Managing Director Bharti Enterprises Limited.

India: An Emerging Economic Power

The Bharti Story

Evaluating New Business Opportunities

Indian Retail: Potential and trends

The India Story
TODAY

• •

One of the fastest growing economies ; 9%+ growth rate for 5 years prior to current crisis Resilient Economy – 5-6% growth at the peak of the global crisis

YESTERDAY

• Opening up sectors for investment • Promising consumer markets • Significant investment in infrastructure
development

• Socialist policies – minimal private sector role • Bureaucratic • Protected market • Small consumer markets • Underdeveloped infrastructure

An Enabling Environment

• Largest democracy; Stable government. • Dominant private sector; Increasing withdrawal of
government from business

• Robust banking sector; Capital markets • World class IT & telecom infrastructure • A ‘connected economy’; Economic efficiency &
quality of governance

Demographic Dividend
Population Median Age
50
40

(In Years):
38

2008E
44

Growing urban & Working population

34 25

37

30 20
10

• 2nd largest urban population: 29% of the total (2007) • Projected to reach 37.8% by 2025. • To register the largest addition to the working age
population in the world by 2010.
Japan

0

China

Russia

India

US

• Largest working age population worldwide by
2050.

Demographic Profile
60yrs & above 7.5% 20-59 yrs 50.7%

Powerful production & consumption force

0-19 yrs 41.8%

• Enormous consumption force: Large youth population • Global production force in service:
• •
Large pool of professionals and technocrats Largest pool of English speaking manpower after the US

• Manufacturing force: Labour costs, as a % of value
added - one of the lowest among Asian countries.

Present global crisis: An opportunity for India
Indian economy coped
7.9% • GDP forecast for 2010-11 is 7.9% • 2010-11 to be a year of consolidation; launch into the high growth mode with the crisis better; Clear signs of recovery

• Revised government growth projection for 09-10 at 6.9%; Q2 GDP growth at

India’s long term strengths still valid
• Growth primarily driven by the strong domestic market. • Domestic savings rate at more than 35% • India projected to be the 5th largest consumer market by 2025, worth over USD 1,500 Bn – CAGR of 7.3% (McKinsey Institute)

Macro Economic Environment
Driving the unfinished agenda Fiscal Balance
 Driven by stimulus packages fiscal deficit currently at 6.8% of GDP.  To be brought down to 3% over 5 years

Tax Reforms
 Indirect tax: GST roll out by FY11 To
overcome the dual tax regime; simplified structure; creating a unified market.

 Direct tax: Proposed Direct Tax code
aiming at substantial increase in income tax limit

Disinvestment
 Plans to dilute 10% in many profit
making PSUs

Social Programs
 72% of population in rural areas  35% of govt. spending is towards
rural schemes; spend has grown by 45% annually during last 2 yrs.

 A source of spending in social
infrastructure

India: An Emerging Economic Power

The Bharti Story

Evaluating New Business Opportunities

Indian Retail: Potential and trends

Our Beginnings
1976 Founded in 1976 with an initial capital of $ 1000. Started with small scale manufacturing units

1982

Import of portable power generators from Japan for distribution in India

Started manufacturing telephones in technical collaboration with Siemens AG 1985
Tie-up with Takacom corp., Japan for answering machines in 1986, LG, South Korea for cordless phones & Systema for telephone terminals in 1988

1992

Formed a Consortium with Vivendi and others to bid for Cellular Licences

1995

Bharti Airtel – First mobile service operator in Delhi
Best in class Global partners since beginning - Singapore Telecom, E M Warburg Pincus, USA, British Telecom, UK, Telia, Sweden, New York Life International, Asian Infrastructure Fund(AIF)

Our Businesses
TELECOM SERVICES
Bharti Airtel
India & SAARC Region

FINANCIAL SERVICES

RETAIL / WHOLESALE Bharti Retail
Retail

EMERGING BUSINESSES FieldFresh Foods
Agri Exports

Bharti AXA Life Ins
Life Insurance

Bharti Infratel
Passive Infra

Bharti AXA Gen Ins
General Insurance

Bharti Wal-Mart
Wholesale Cash & Carry

Bharti Teletech
Comm. & Media Devices

Indus Towers
Passive Infra Sharing

Bharti AXA Investment Managers
Asset Management

Bharti Realty
Real Estate

Telecom Seychelles
Seychelles Islands

Comviva Technologies
Telecom software

Jersey Airtel
Channel Islands

Bharti Foundation CSR activities

Centum Learning Ltd
Training & Dev

Guernsey Airtel
Channel Islands

Our Partners
TELECOM SERVICES FINANCIAL SERVICES RETAIL / WHOLESALE EMERGING BUSINESSES

Bharti Group: Our Key Differentiators

Transformation
• Significant impact on the lives of people • Attract and nurture top talent

Focus on Core Competence
•Outsourcing •Scalability

Operating Principles
Innovation
• Business model • Market offering

Partnership
•World-class partnerships

India: An Emerging Economic Power

The Bharti Story

Evaluating New Business Opportunities

Indian Retail: Potential and trends

Rising index of global investor confidence
 Rising FDI flow despite conservative global market condition:
 Increased to $27.3 Bn in 08-09 from $24.5 Bn. in 2007-08

 World Investment Report placed India in top 5 most attractive locations for FDI for 200911 alongside China, the US, Brazil, and Russia.

 The Top 5 sectors attracting FDI inflows (Apr 2000 – Oct 2009) are:
 Services ($22 billion)  Computer Hardware & Software ($9.4 billion)  Telecom ($8.4 billion)  Housing & Real Estate ($7.5 billion)  Construction ($6.7 billion)

 Enabling environment:
 100% foreign investment allowed except for sensitive sectors like retail and insurance

Key emerging sectors in India
Infrastructure
Stepping up spending; 5% in 2006-07 to 9% of the GDP
by end of 2012.

Education
Largest Private
capitalized space in India with $30 Bn of government spend (3.7% of GDP). education is currently estimated at $50 Bn (14%CAGR over FY08-FY12E); expected to reach $115 Bn in he next 10 years

Total investment projected - USD514 billion (2007-2012). Increasing share of private sector: • From 20% in total spend in 2002-07 to 30% by
2012

• •

Successful execution in the PPP mode Over 60% private sector contribution in ports, airports and telecom

100% FDI allowed through the automatic route, Future potential: • Massive shortfall • Emerging segments

Health Care
Growth of 9.3% between 2000-2009 Current size is USD 35 billion; Projected
annum to touch $77 billion by 2012 to grow 23% per

Insurance
  
   4th largest insurance market in Asia excluding Japan. Rapid growth over years; Life Insurance at 31% CAGR over the last six years, General Insurance at 16% over the last six years Low penetration with huge potential: Life insurance was 4% of GDP in 2009 up from 1.7% in 2000 General Insurance was 0.6% of GDP in 2009 Large untapped rural market

Healthcare facilities to contribute to 70% of the total sector
touching a figure of $54.7 billion by 2012.

Investment

of $14.4 Bn needed by 2025 to increase its bed density to at least two per thousand population.

India: An Emerging Economic Power

The Bharti Story

Evaluating New Business Opportunities

Indian Retail: Potential and trends

Retail Sector poised for phenomenal growth
Size & Position in the current Scenario

The Indian Retail Sector, currently the Fifth largest in the world, is poised for phenomenal growth in the coming years

Current Size & Future growth of Organized Retail in India

ORGANISED RETAIL EXPECTED TO GROW 35-40% CAGR

Source: India Shopping Trends, 2008 - Technopak

The Indian Retail Landscape
 Organized retail has grown from USD 2 Bn in 2002 to USD 37 Bn today in a total of USD 350 Bn



  

Impact on the consumer; low price and assured quality through supply chain efficiency
Impact on producers, farmers; direct sourcing from SME’s and farmers; providing critical connect to market place Investments in the range of USD 30+ Billion expected by 2011 in Retail and Supply Chain Scale: Size of organized retail likely to touch USD 70 billion by 2011 Employment: Over 850K direct jobs to be created in Retail in the next 5 years.

Source: India retail report 2009 by Images Retail, CII BCG report on India’s demographic dilemma Dec’08

Key Challenges
 Immense ethnic diversity  Absence of Infrastructure and good retail space  Workforce Management (talent crunch)  IT Infrastructure  Supply Chain  Legal

Key Opportunities
 Supply Chain Investments • Setting up logistics and supply chain infrastructure

Import of know how and logistics techniques from developed retail countries

 IT Infrastructure • IT is the enabler behind communication, collaboration with suppliers, and an efficient supply chain

 Manpower • •  Potential tie-ups with universities and setting up dedicated retail institutes Utilize experience of international retailers to train local talent

Large Rural market

Big Transformations…Brave Actions...

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