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

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. • Dominant private sector. Increasing withdrawal of government from business • Robust banking sector. Stable government.The India Story TODAY • • One of the fastest growing economies . Capital markets • World class IT & telecom infrastructure • A ‘connected economy’. Economic efficiency & quality of governance .

as a % of value added . Japan 0 China Russia India US • Largest working age population worldwide by 2050.8% by 2025. . • To register the largest addition to the working age population in the world by 2010. Demographic Profile 60yrs & above 7.8% • 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.7% Powerful production & consumption force 0-19 yrs 41.5% 20-59 yrs 50.one of the lowest among Asian countries.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.

launch into the high growth mode with the crisis better. worth over USD 1. Clear signs of recovery • Revised government growth projection for 09-10 at 6.9% • GDP forecast for 2010-11 is 7. Q2 GDP growth at India’s long term strengths still valid • Growth primarily driven by the strong domestic market.Present global crisis: An opportunity for India Indian economy coped 7. • Domestic savings rate at more than 35% • India projected to be the 5th largest consumer market by 2025.500 Bn – CAGR of 7.9% • 2010-11 to be a year of consolidation.9%.3% (McKinsey Institute) .

 To be brought down to 3% over 5 years Tax Reforms  Indirect tax: GST roll out by FY11 To overcome the dual tax regime.Macro Economic Environment Driving the unfinished agenda Fiscal Balance  Driven by stimulus packages fiscal deficit currently at 6.  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. simplified structure. spending is towards rural schemes.  A source of spending in social infrastructure . creating a unified market. spend has grown by 45% annually during last 2 yrs.8% of GDP.

India: An Emerging Economic Power The Bharti Story Evaluating New Business Opportunities Indian Retail: Potential and trends .

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 . E M Warburg Pincus. LG.. Asian Infrastructure Fund(AIF) .Our Beginnings 1976 Founded in 1976 with an initial capital of $ 1000. Japan for answering machines in 1986. British Telecom.Singapore Telecom. UK. USA. New York Life International. Sweden. 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. Telia.

& 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 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.

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 .

4 billion)  Telecom ($8.5 Bn. Brazil.4 billion)  Housing & Real Estate ($7.3 Bn in 08-09 from $24.7 billion)  Enabling environment:  100% foreign investment allowed except for sensitive sectors like retail and insurance .5 billion)  Construction ($6. and Russia. the US.Rising index of global investor confidence  Rising FDI flow despite conservative global market condition:  Increased to $27.  The Top 5 sectors attracting FDI inflows (Apr 2000 – Oct 2009) are:  Services ($22 billion)  Computer Hardware & Software ($9. in 2007-08  World Investment Report placed India in top 5 most attractive locations for FDI for 200911 alongside China.

USD514 billion (2007-2012). Education Largest Private capitalized space in India with $30 Bn of government spend (3.4 Bn needed by 2025 to increase its bed density to at least two per thousand population.Key emerging sectors in India Infrastructure Stepping up spending. 5% in 2006-07 to 9% of the GDP by end of 2012. Rapid growth over years. Projected annum to touch $77 billion by 2012 to grow 23% per Insurance       4th largest insurance market in Asia excluding Japan. 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 . airports and telecom 100% FDI allowed through the automatic route.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% of GDP).7 billion by 2012.7% in 2000 General Insurance was 0. . Investment of $14. Life Insurance at 31% CAGR over the last six years.3% between 2000-2009 Current size is USD 35 billion. 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. Future potential: • Massive shortfall • Emerging segments Health Care Growth of 9. 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.

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.Technopak . currently the Fifth largest in the world. 2008 . 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.

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. direct sourcing from SME’s and farmers.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. CII BCG report on India’s demographic dilemma Dec’08 . farmers. Source: India retail report 2009 by Images Retail.

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

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 .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.

.Big Transformations…Brave Actions...

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