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Pantaloon Retail (India) Ltd.

TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview..............................................................................................4 Key Facts...............................................................................................................4 Business Description...........................................................................................5 History...................................................................................................................7 Key Employees.....................................................................................................9 Key Employee Biographies................................................................................10 Major Products and Services............................................................................13 Revenue Analysis...............................................................................................15 SWOT Analysis...................................................................................................16 Top Competitors.................................................................................................23 Company View.....................................................................................................24 Locations and Subsidiaries...............................................................................26

Pantaloon Retail (India) Ltd. © Datamonitor2 Pantaloon Retail (India) Ltd. Company Overview

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COMPANY OVERVIEW

Pantaloon Retail (Pantaloon), a part of the Future Group, is a leading Indian operator of multiple retail formats. The company's leading formats include Pantaloon, a chain of fashion outlets; BigBazaar, a hypermarket chain; Food Bazaar, a supermarket chain; and Central, a chain of malls.Pantaloon has operations across 73 cities in India. It is headquartered in Mumbai, India and employs about 33,500 people.

The company recorded revenues of INR63,477 million ($1,328.6 million) during the financial yearended June 2009 (FY2009), an increase of 25.6% over 2008. The operating profit of the company was INR63,497.5 million ($1,329 million) in FY2009, an increase of 25.9% over 2008. The net profit was INR1,405.8 million ($29.4 million) in FY2009, an increase of 11.6% over 2008.

KEY FACTS

Head Office

Pantaloon Retail (India) Ltd.

Knowledge House Shyam Nagar Off Jogeshwari Vikhroli Link Road Jogeshwari East Mumbai 400 060 IND Phone Fax Web Address 91 22 3084 1300 91 22 6644 2222 http://www.pantaloon.com

Revenue / turnover 63,477.0 (INR Mn) Financial Year End Employees Bombay Ticker June

33,500 523574

Pantaloon Retail (India) Ltd. © Datamonitor3 Pantaloon Retail (India) Ltd. Business Description

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BUSINESS DESCRIPTION

Pantaloon Retail (Pantaloon or “the company”) operates multiple retail formats in both the value and4444 lifestyle segments in India. It operates over 1000 stores across 73 cities in India, and occupies retail space of about 12 million square-feet. The company offers its products in various lines of businesses such as food, fashion, home and electronics, telecom and IT, general merchandise, leisure and entertainment, wellness and beauty, books and music. The company also offers products through its Internet retailing store futurebazaar.com.

Pantaloon offers food products through retail formats such as Brew Bar, Cafe Bollywood, Food Bazaar, and Sports Bar. Brew Bar offers over 15 brands of domestic and imported beer. Brew Bar also offers snacks and set meals. Cafe Bollywood (Bollywood refers to the Indian film industry) is a fast food retail chain offering eateries in a Bollywood ambience. It offers Indian street food, burgers, pizzas, and juices. Food Bazaar is a chain of supermarkets which offers pre-packed commodities. Sports Bar is a concept bar that focuses on the world of sports. Sports Bar offers domestic and imported spirits, beers and wines.

Pantaloon offers fashion related products under banners such as aLL, Big Bazaar, Blue Sky, Brand Factory, Celio, Central, Ethnicity, fashion@Big Bazaar, Lee Cooper Navaras, Pantaloons and Planet Sports. aLL is a fashion store for plus size men and women. It offers ready-to-wear fashionable clothes and accessories in western wear, Indo-western or ethnic wear in both formal and casual categories. Big Bazaar is a fashion and general merchandise hypermarket. It offers fashion products, home furnishings, utensils, crockery, cutlery, and sports goods. Blue Sky stores offer branded and private label sunglasses and watches. Some of the private label watch brands which Blue Sky offers are Cube, Koenig, RIG, Lombard and UMM. Brand Factory operates a chain of discount stores that offer branded apparel for men, women, and infants along with accessories, cosmetics, footwear, sportswear, luggage, and home linen at discounted prices. These discount stores stock fashion brands such as Levis, Pepe Jeans, Dockers, Wrangler, ProVogue, Arrow, Nike, Adidas, Reebok, Louis Phillip, Allen Solly, Reid and Taylor, Gini and Jony, amongst others. Celio, a market leader in men's ready to wear clothing in France, is retailed through selected stores of Pantaloons and Central in India.

Central, the mall concept of Pantaloon, offer over 300 brands across categories such as apparel, footwear and accessories for women, men, children and infants, and the product ranges such as,

Lee Cooper is a reputed international brand which is distributed through exclusive brand stores and large format stores such as Central and Pantaloons. insurance. coffee shops.music. super markets (food bazaar). formal. books. Navaras is a jewelry store that offers branded jewelry in a hypermarket set-up. pubs and discotheques. Planet Sports is a sports and lifestyle specialty retail chain with Pantaloon Retail (India) Ltd. ethnic. party and sports wear for men. fashion. finance. and ethnic accessories. Central also offers services such as travel. Fahion@Big Bazaar offers fashion apparel and accessories men. Indian ethnic homewares. © Datamonitor6 Pantaloon Retail (India) Ltd. fine dining restaurants. food courts. ladies. Business Description Page 5 . costume and semi-precious jewelry. investment. Pantaloons stores offers fashion products such as casual. Ethnicity stores sell merchandise for kids. Ethnicity is a concept store in India to offer everything Indian under one roof. women and kids. concert/cinema ticket booking and bill payments. kids and infants at reasonable prices.

Pantaloon operates food courts. The company operates specialty stores in the wellness and health retailing. It operates Star & Sitara . Brand Factory. interactive video games. golf. Noodle Bar. women and kids. offers a range of gaming options ranging from bowling. The company also operates Bowling Co. Pantaloons operates retail formats such as Big Bazaar. Pantaloon's F 123. home furnishings. fine dine specialty restaurants. Blue Sky. In a joint venture with Blue Foods. crockery. a family entertainment centre. Pantaloon has presence in the leisure and entertainment space through an affiliated company. Galaxy Entertainment. thali restaurants. banquets and multiple kiosks with brands such as Copper Chimney. Big Bazaar is a retail store chain in a hypermarket format that offer fashion products. and sports goods. a gaming and entertainment zone. bumper cars along with fun foods and services for junior and adult banqueting.. basketball. cutlery. pool.extensive offerings for sportswear and equipment across all categories including running. Bombay Blue. Central. Navaras. Pantaloon and Shoe Factory. Shoe Factory. utensils. Big Bazaar Wholesale Club. training. motor sports as well as other lifestyle products. in Mumbai. Spaghetti Kitchen and The Spoon. tennis. In the general merchandise category. a footwear retail store chain offers branded footwear and accessories to men. fitness.

In the home and electronics retailing. download kiosks. furnishings. accessories. Star & Sitara provides skin and hair related beauty services for men and women. blue tooth accessories.and Fit & Healthy. multimedia (CD-ROMs) products and gift items. Electronics Bazaar. the company offers the furniture. and mobile trinkets. Page 6 . Pantaloon has presence in the books and music category through 'Depot' which offers books. mobile phones. In the telecom and IT category. e-zone. airtime recharges. and M Port. landline instruments. Fit & Healthy section housed within Big Bazaars and Food Bazaars provides health products and health related tips. Home Bazaar and Home Town retail formats. © Datamonitor8 Pantaloon Retail (India) Ltd. One Mobile. home videos. Furniture Bazaar. The retail store brands that offer these products are Gen M. Pantaloon Retail (India) Ltd. home accents and electronic products through Collection I. music CDs and cassettes. the company offers products such as gadgets. information and advice.

In the same year. Pantaloons. In 1991. it launched John Miller. 'Food Bazaar' was also launched. in Kolkata. It entered into an alliance with SAP. the company launched Pantaloons trouser.History HISTORY Pantaloon was incorporated as Manz Wear Private Limited in 1987. In the same year. India's first formal trouser brand. The company made its initial public offer in the following year. a franchised menswear store across India in 1994. Pantaloon launched a family store. It also started Pantaloon Shoppe. In the following year. India's first hypermarket chain 'Big Bazaar' was launched. the jeans brand.2 million) in revamping IT infrastructure in the following three years. a business software . the formal shirt brand. The company launched the 'Central' mall in Bangalore in 2004. Pantaloon initiated distribution of branded garments through multi-branded retail outlets throughout India. In 1995. Pantaloon announced its plans of investing INR10 million ($0. In the same year. Pantaloon launched BARE. In 1997. In 2001. India.

an online business to business office products company. to expand its refined edible oil business in the same year. It entered a joint venture agreement with ETAM Group. The company also entered a joint venture with Generali. a producer and supplier of edible oils. launched the real estate funds Kshitij and Horizon. an Italian insurance company. In the same year. EZone and Depot. a subsidiary of the company. Staples. Pantaloon launched multiple retail formats including Collection i. a store that caters to plus-size market. a US based office products company. Pantaloon entered an agreement with Ruchi Soya Industries.com. SAP Advanced Planning Tool for Merchandise Planning and SAP Apparel and Footwear Solutions across the organization. to foray into the Indian insurance market. The company's financial arm. entered a joint venture with Future Office to establish 'Staples Future Office' for offering office products in India during 2007. Future Office. Pantaloon also launched aLL. In the same year. to market ETAM products through a network of 40 outlets in 20 cities in India. and entered the office products market. its online retail store in 2007.solutions provider. Shoe Factory. Furniture Bazaar. to implement its mySAP Business suite. . in 2006. acquired the operations and management of Officedge. a French retailer of women innerwear. and the private equity fund Indivision in 2006. Future Capital Holdings. The company launched futurebazaar.

launched a unique eZone Concept Store. into independent subsidiaries.In 2008. Food Bazaar.000 million ($76. Specialty Retail Business Activities and Property and Mall Management Division. It also entered into a joint venture with United Arab Emirates-based Axiom Telecom to establish 750 new mobile phones stores in India. an IT and business transformation service provider. including Big Bazaar. the company's flagship format opened its first store in Guwahati. © Datamonitor11 Pantaloon Retail (India) Ltd. the company decided to make four of its business divisions. Pantaloon’s electronics specialty store. eZone. which1111 Pantaloon Retail (India) Ltd. Also. Pantaloon planned to invest INR3.37 million) in a retail joint venture with National Textile Corporation (NTC). History Page 7 . In the same month. Pantaloon outsourced its IT operations across all its outlets to Wipro Infotech.

Pantaloon acquired the rural retail chain. Under the agreement AQUAlife's products would be available at all Home Town stores. a 50:50 joint venture company between Pantaloon and Alpha Group by the end of 2008. Future Capital Holdings1212 made an Initial Public Offering. Also in 2008. Italy's leading supplier of luxury bath products in 2008. Big Bazaar crossed the 100-store mark and total operational retail space of the company crossed 10 million square feet mark in 2008.would feature dedicated displays by numerous brands. HomeTown. Due to the uncertain external economic environment. for the DENOVO range of Exclusive Italian kitchens in HomeTown stores. In Mumbai. The company's flagship format. in Mumbai. the company's retail store tied up with AQUAlife. category wise displays. Italy's modular kitchen maker. Central. Pantaloon initiated various cost control measures . Pantaloon’s subsidiary. HomeTown also entered an agreement with ARAN Cucine. Further. Aadhar which was present in 65 rural locations. the company's hypermarket format. The company divested its holding in Alpha Future Airport Retail. instead of the conventional multi-brand. the company opened its destination mall. opened its first store in Nagpur and Big Bazaar was opened in Gwalior during the year. Pantaloons.

the hi-fashion French men’s apparel brand marketed by Pantaloon in India launched its1313 exclusive store in Mumbai in March 2009. Sach and launched of Sach toothpaste in March 2010. a town of Mohali district and Tinsukhia. T24 services rollout is expected to begin131313131313 in 2010. the company's hypermarket format. In February 2010. In January 2009. A range of intimate wear designed for the Indian woman was launched in Pantaloons and Central Stores in October 2009.The alliance between the companies brings unique marketing concept of ‘Retailer-Telco Partnership’ to India—for the first time. a wholly-owned subsidiary of Pantaloon entered an agreement with SKECHERS. Winner Sports. a global leader in the lifestyle footwear industry to license and distribute SKECHERS footwear and apparel in India. the business capital of Assam.and conducted scenario planning exercises in FY2008. . These initiatives enhanced the efficiency and productivity of the company. Tata Teleservices in strategic partnership with Future Group launched new telecom Brand -T24. Celio.on GSM Platform. Pantaloon in association with Sachin Tendulkar co-created a brand. Big Bazaar was launched in Zirakpur.

© Datamonitor14 Pantaloon Retail (India) Ltd.Pantaloon Retail (India) Ltd. Key Employees Page 8 KEY EMPLOYEES Name Kishore Biyani Job Title Board Compensation 30968602 INR 5683404 INR 18794600 INR Managing Director Executive Board Director Director Director Director Director Director Director Director Director Non Executive Board Non Executive Board Non Executive Board Senior Management Senior Management Non Executive Board Non Executive Board Non Executive Board Non Executive Board Gopikishan Biyani Rakesh Biyani Vijay Biyani Vijay Kumar Chopra Shailesh Haribhakti S Doreswamy D O Koshy Bala Deshpande Anil Harish 442000 INR 558000 INR 580000 INR 540000 INR 400000 INR 440000 INR .

He is also the Chief Executive Officer at Future Group.Pantaloon Retail (India) Ltd. Gopikishan Biyani . Key Employee Biographies Page 9 KEY EMPLOYEE BIOGRAPHIES Kishore Biyani Board: Executive Board Job Title: Managing Director Since: 1997 Age: 49 Mr. © Datamonitor15 Pantaloon Retail (India) Ltd. Biyani has been the Managing Director at Pantaloon since 1997.

Biyani is currently a Director at Pantaloon. textiles and retail industry and has been actively involved in the financial. He is a commerce graduate and has been involved in category management. He is a commerce graduate and has more than twenty years of experience in the textile business. Vijay Biyani Board: Non Executive Board Job Title: Director Mr. . Biyani is currently a Director at Pantaloon. retail stores operations. audit and corporate governance related issues within the company. Rakesh Biyani Board: Non Executive Board Job Title: Director Mr. Biyani is currently a Director at Pantaloon. He has more than 20 years of experience in manufacturing. IT and exports.Board: Non Executive Board Job Title: Director Mr.

Chopra is currently a Director at Pantaloon.Vijay Kumar Chopra Board: Senior Management Job Title: Director Pantaloon Retail (India) Ltd. Oriental Bank of Commerce. Key Employee Biographies Page 10 Mr. © Datamonitor17 Pantaloon Retail (India) Ltd. Chopra’s banking career spans over 31 years and he has served senior management1717 positions in Central Bank of India. Shailesh Haribhakti . SIDBI. Mr. Corporation Bank and SEBI. He is a fellow member of The Institute of Chartered Accountants of India (ICAI) by profession and is a Certified Associate of Indian Institute of Bankers (CAIIB).

He is the Deputy Managing Partner of Haribhakti & Co. Haribhakti also serves on the Boards of Indian Petrochemicals Corporation. Haribhakti has been a Director at Pantaloon since 1999. Ambuja Cement Eastern. He holds a doctorate from IIT. Doreswamy is currently a Director at Pantaloon. Delhi and is the Director .Board: Senior Management Job Title: Director Since: 1999 Mr. D O Koshy Board: Non Executive Board Job Title: Director Mr. He is the former Chairman and Managing Director of Central Bank of India and serves on the Board of DSP Merrill Lynch Trustee and Ceat. S Doreswamy Board: Non Executive Board Job Title: Director Mr. Koshy is currently a Director at Pantaloon. Mr.

© Datamonitor19 Pantaloon Retail (India) Ltd. Welspun India and Indus League Clothing. Mr. Koshy has set up NIFT centres in Delhi. Ahmedabad. Anil Harish Pantaloon Retail (India) Ltd. She also serves on the Boards of Deccan Aviation. Chennai and Bangalore. He has 24 years of experience in the textiles and garment industry. He is currently the Director General and Chief Executive Officer of ATDC Network of 58 Institutes / Centres and two premier campuses of Institute of Apparel Management. Key Employee Biographies Page 11 . Bala Deshpande Board: Non Executive Board Job Title: Director Ms. Deshpande is currently a Director at Pantaloon.of National Institute of Design (NID). Nagarjuna Construction.

is a leading Indian operator of multiple retail formats. Major Products and Services Page 12 MAJOR PRODUCTS AND SERVICES Pantaloon Retail (Pantaloon). Harish is currently a Director at Pantaloon. IndusInd Bank and Hinduja TMT. a part of the Future Group. Associates & Solicitors. Unitech. Pantaloon Retail (India) Ltd. He is the partner of DM Harish &Co. He also serves on the Boards of Mahindra Gesco. © Datamonitor20 Pantaloon Retail (India) Ltd. Mr. The company's key products and services include the following: .Board: Non Executive Board Job Title: Director Mr. Harish holds an LLM degree from University of Miami.

Products: Accessories Books Clothes Electronic products Entertainment products Food products Footwear Furniture General merchandise Health and beauty products Sports goods Brands: Food: Brew Bar Cafe Bollywood Chamosa Food Bazaar Sports Bar .

Fashion: aLL Big Bazaar Blue Sky Brand Factory Central Fashion Station Lee Cooper Navaras Pantaloons Home and Electronics: Collection i Pantaloon Retail (India) Ltd. Major Products and Services Page 13 . © Datamonitor22 Pantaloon Retail (India) Ltd.

Electronics Bazaar e-zone Furniture Bazaar Home Bazaar Home Town Telecom and IT: Gen M One Mobile M Port General Merchandise: Big Bazaar Blue Sky Brand Factory Central Navaras Pantaloon Shoe Factory .

Leisure and Entertainment: Bowling Co. F 123 Wellness and Beauty: Fit & Healthy Star Sitara Books & Music: Depot Pantaloon Retail (India) Ltd. Revenue Analysis . Page 14 © Datamonitor24 Pantaloon Retail (India) Ltd.

an increase of 25. Pantaloon's only geographical market. accounted for 100% of the total revenues.6 million) during the financial year ended June 2009 (FY2009).328. Revenues from India reached INR63. the retail division recorded revenues of INR63.6 million) in 2009. the company's only geographic market. accounted for 100% of the total revenues in FY2009.6 million). an increase of 25. India.328.477 million ($1. an increase of 25.REVENUE ANALYSIS The company recorded revenues of INR63.477 million ($1. Revenues by Geography India.6% over 2008.6% over 2008. .6% over 2008. For FY2009.477 million ($1. Pantaloon generates revenues through one business division: retail (100% of the total revenues during fiscal year 2009).328. Revenues by Division In FY2009.

SWOT Analysis Page 15 SWOT ANALYSIS Pantaloon Retail (Pantaloon). Strengths Weaknesses .Pantaloon Retail (India) Ltd. a part of the Future Group. high penetration of unorganized retail players coupled with expansion of large foreign players increased the competition in the market which might lead to market share erosion and high pressure on margins. this enabled Pantaloon to tap a large market and at the same time engage in high margin business will sustain profitability for Pantaloon. © Datamonitor26 Pantaloon Retail (India) Ltd. The company balanced its value and lifestyle portfolio there by having presence in the mass market. is a leading Indian operator of multiple retail formats. However.

Balanced value and lifestyle portfolio High debt (compared to competitors) will increase financial risk Logistics network and backward integration will improve margin Pantaloon is a dominant player and is expanding through collaborations and acquisitions Opportunities Threats Booming Indian retail market and prefences of the Indian middle class Intensely competitive market with high penetration of unorganized retailers is set Increased penetration of private labels will to become even more so with entry of large improve margins foreign players High lease rentals and investments will adversely affect profitability and expansion Well positioned to foray into the online channel through futurebazaar.com plans Strengths Balanced value and lifestyle portfolio Pantaloon’s dominant presence in the value retail segments capitalizes on the attractive demographic2727 .

In a survey conducted by KPMG. Since value retail is a preferred format in India. SWOT Analysis Page 16 Food Bazaar and expanded the formats aggressively in major eight cities of the country with favorable . respondents chose value retailing formats like supermarkets. they serve as a one-stop shop for customers and offer distinct advantages of convenience and time effectiveness compared to the small unorganized retail sector in India. supermarkets. discount and convenience stores. © Datamonitor28 Pantaloon Retail (India) Ltd.profile of the country. It launched Big Bazaar and Pantaloon Retail (India) Ltd. Pantaloon focused on formats catering to this segment. hypermarkets and discount stores to have the most potential for growth in the Indian market. India’s major population currently is and in the future is expected to be in the2828 middle class income group. This group. by natural inclinations. prefers value retailing formats like hypermarkets. Since value retail stores are usually large.

The company’s logistic network that carries an average of two million pieces everyday2929 . Pantaloon is increasing2929 its focus on lifestyle stores to create a balance between value and lifestyle retailing.demographics. Hence. Central and Brand Factory ranges between 20–23% while that of the value segment ranges below 15%. EBITDA margin in the lifestyle segment which includes Pantaloons. While value retailing provides volumes on account of better bargains and lower ticket size. Logistics network and backward integration will improve margins Pantaloon has a large and efficient logistics and inventory management system in place to cater to a large market. lifestyle stores provide a better shopping experience and branded quality merchandise. Pantaloon has balanced its value and lifestyle portfolio thereby having presence in the mass market enabling it to tap a large market at the same time engaging in high margin business will sustain profitability for the business.5% of the total retail sales in FY2009. Consequently.6% in FY2009. the margin in the Central format is highest at 22. Due to lease model. The two formats increased their share over the years to reach 71. operating margin in the lifestyle segment is higher than that in the value retail segment. thereby providing cushion to its operating margin. attracting major investments in this format.

which till now outsourced the procurement. K.with peak single-day transactions reaching four million pieces. has now decided to set up a separate division headed by Mr. PRlL has also set up a hub. there were third parties handling the fruits and vegetables category at its various Big Bazaar and Food Bazaars. Until now. A specialized company Future Logistic Solutions Limited (FLSL) handles all the related functions. Implementation of advanced Warehouse Management System (WMS) and Automatic Replenishment System (ARS) has significantly improved inventory visibility across warehouses which will facilitate improved order fulfillment and accuracy. Radhakrishnan who had established Food World for Spencer's and was handling . where it takes the delivery now instead of to separate warehouses. Another significant step that Pantaloon has taken is to reduce intermediaries. Pantaloon rationalized the number of warehouses as fewer and bigger warehouses facilitate economies of scale and at the same time. The company created highly automated Distribution Centers (DCs) that ensured higher vertical space utilization and higher throughputs. This has led to higher efficiency in costs and higher inventory turnover. During the year. Pantaloon. consolidation of merchandise in fewer locations has also resulted in higher product availability and wider choice to customers. A fleet of over 800 vehicles from over 4000 vendors to 50 warehouses to stores in over 70 cities are transported on a regular basis.

7% in FY2007. rice mills and other suppliers directly to save costs. Pantaloon also took advantage of the downturn last year to cut out intermediaries in its supply chain. cost reduction methods and adoption of better inventory management and supply chain management systems.the hypermarket and value retail format at Reliance Retail. the operating profit margin of the company improved to 10. © Datamonitor31 Pantaloon Retail (India) Ltd. with economies of scale rising from increased space under operations. To reduce its reliance on wholesalers. SWOT Analysis Page 17 Pantaloon is a dominant player and is expanding through collaborations and acquisitions . it approached oil mills. The efficient logistics and inventory management is a competitive advantage in an environment where margins are low and competition is further pressurizing them. However. Pantaloon Retail (India) Ltd.5% in FY2009 from 6.

The company has tied up around 10 million sq ft. It demonstrated aggressive growth in recent years and touched over 12 million sq ft in retail space. In 2010. Similarly.7) in 2008 to INR792 ($16. To further strengthen its presence Pantaloon has also focused on inorganic expansion. this share is close to 50%. Pantaloon is the fastest to achieve the first 100 hypermarket stores expansion through organic growth. build new categories and develop new brands in the FMCG space. This formidable share allows Pantaloon to define the market. Average ticket size increased from INR750 ($15. In certain cities like Ahmedabad. Pantaloon has also has highly successful conversion rates from 41% in 2008 to 43% in 2009. According to industry sources Food Bazaar captures3232 around 28% of total sales of FMCG products in modern retail. Globally. Pantaloon also formed a 50-50 joint venture with the UK-based .Pantaloon is one of the largest retailers in India. of retail space with developers at rentals lower than industry average. Foot falls increased from 115 million in 2007 to 163 million in 2008 and 185 million in 2009.6) in 2009. Pune and Kolkata. all the factors contributing in increasing the revenues further strengthening the company’s presence. the company has acquired a South Africa-based Shoprite Holdings' store in Mulund area of Mumbai and renamed it as FoodRite. indicating the high rate of penetration into the market.

Future Group entered an agreement with French retailer Carrefour. Pantaloon in collaboration with Capital Foods.7 million). Such a tie-up would give Pantaloon access to a larger investment war chest. manufacturing brands like Clarks. to open the Carrefour branded franchise stores in India. technological and other expertise from Carrefour. Weaknesses High debt (compared to competitors) will increase financial risk .C&J Clark International to engage in wholesaling of Clark's branded products in India. women and children. a FMCG company. the strong presence and aggressive expansion will better equip Pantaloon to effectively deal with competition which has intensified in the market. It will be able to flex its muscle to improve efficiencies in pricing and supply chain. The company has plans to open between 150 and 300 Carrefour-branded hypermarkets in the next 5 years. The company through its established presence is able to capture a large addressable market. C&J Clark is one of the largest makers of casual shoes in the world. is also planning to form a special purpose vehicle (SPV) to set up two mega food parks with an investment of INR3000 million ($62. Additionally. Bostonian and K Shoes for men. The deal will allow Future Group to source products and seek technical. Also.

© Datamonitor34 Pantaloon Retail (India) Ltd.51 times in the .7 million ($38. 0.182.500 million ($595.5 and 0. SWOT Analysis Page 18 additional borrowing for funding the growth plans. 0.852. Interest and financial charges outflow has increased from INR1. the company has high debt. 0. Comparing Pantaloon with its Asian peers. which translates into a debt to equity ratio of 1.13. Parkson retail group. As a result.25 times. the interest and financial charges cover during the year under review has fallen down to 2.02. Lifestyle International Holdings.7 million) in 2007-08 to INR3. Golden Eagle Retail Group and Giordano International respectively.2 million ($66.7 million) at the end of FY2009.59. For instance.04 are the debt equity ratios of Lotte shopping.The company reported debt of INR28. Its Asian peers have far lower debt to equity. The increase in interest and financial charges is on account of Pantaloon Retail (India) Ltd.5 million) in 2008-09.12 times as compared to 2. 1.

15% to 11. internal accruals will not be sufficient to fund expansion plans. A direct impact of this is that cost of capital would further increase. hence. making it even more costly to fund the expansion. Higher debt also increases the risk in the business as the interest and finance cover reduces. Opportunities Booming Indian retail market and prefences of the Indian middle class The retail industry in India is large owing to a large population and is set to grow as several factors . Pantaloon has raised funds through qualified institutional placement during 2009 and the debt equity ratio would reduce to a certain extent in 2010. higher debt might be required to fund the expansion. high amounts of debt will raise the cost of funding and also increases the amount of recurring expenses for Pantaloon.37% on account of higher cost of funds/ borrowings driven by market conditions. Therefore. Additionally. High interest rates are recurring expenses which will affect the margins adversely. Consequently. The retail business runs on wafer thin margins and. Pantaloon will need additional debt for its expansion plans. However. weighted average cost of borrowing has marginally increased from 11.preceding year.

or large chains. This is driven by the emergence of shopping centers and malls.4%. Industry reports forecast that total retail sales will grow from INR16. population expansion. The consumer spending per capita is estimated to increase from $793 in 2010 to $1. as middle and upper class consumer base expands. India's nominal GDP is a forecast at $1. GDP per capita is forecast to rise by over 75% by the end of the forecast period. Another key advantage is the low penetration of organized retail which provides immense scope for Pantaloon.52 trillion in 2010.238. With the population expected to increase from 1. making it one of the fastest growing economy in the world. Organized retail.0 billion) in 2010 to INR25 trillion ($543. The greater availability of personal credit and a growing vehicle population are to improve mobility which will also contribute to a trend towards annual retail sales growth of 11.2 billion) by 2014. according to data from .contribute.3 trillion ($353.160 in 2014.25 billion by 2014. and a middle class of close to 300 million people that is growing at just under 2% a year. Strong underlying economic growth. the increasing wealth of individuals and the rapid construction of organized retail infrastructure are key factors behind the forecast growth. make up only 6% of the market but is expected to expand at 20% a year. Average annual GDP growth of 7.8% is predicted through to 2014. there will also be opportunities in India's second and third-tier cities. reaching $2. Also.19 billion in 2010 to 1.

Mass grocery retail is unexploited to the full potential and sales in India from this channel are forecast to undergo enormous growth. modern outlets. Industry sources predict that sales through mass grocery retail outlets will increase by 154% to reach $15. Pantaloon has established its presence in the market and is a dominant player. SWOT Analysis Page 19 Increased penetration of private labels will improve margins Pantaloon has been focusing on increasing the share of private label sales. Pantaloon Retail (India) Ltd.National Council of Applied Economic Research (NCAER) and World Bank.29 billion by 2014. Its aggressive growth plans through organic and inorganic means will enable it to effectively tap into the high growth market. These labels are priced . This is a consequence of shift from small independent retailers to large. © Datamonitor37 Pantaloon Retail (India) Ltd.

while that in food and general merchandise is lower at 5-8%. Pantaloon has created many private label brands that are sold under various formats like Pantaloons. Well positioned to foray into the online channel through futurebazaar. E-retailing reduces the capex and increases the reach of the . Home Town. Cleanmate (home care). respectively. The share of private labels is different for various segments operated by the company. Caremate (personal care products). Big Bazaar. Pantaloon has been launching private labels in FMCG category.com through Futurebazaar India Ltd (FBIL).com Pantaloon launched futurebazaar. private labels contribute 20% to Pantaloon’s top line. Tasty Treat (food. to leverage on several advantages that the channel offers. Food Bazaar.lower than national brands while having better margins. It has launched Fresh and Pure (food and staples). Brand Factory and E-zone. The company plans to launch more private labels in the FMCG space to generate better margins from the segment. snacks. Increased penetration of private label brands through new launches will enable the company to increase the profits affecting profitability positively. the private label margins are as high as 25 to 40%. Its share in the fashion and electronics segment is higher at 80% and 20%. and Pantaloon expects to increase its share to 25%.3838 While the national brands have margins at 12 to 17%. cola and soft drinks) and Premium Harvest (packaged pulses and rice). Currently.

It creates time utility for customers by saving travelling cost for the customer and transportation cost for the company. Pantaloon combined the online portal with catalogue retailing through kiosks located in malls and shopping centers to attract a new set of customers. Furthermore. The online customers were offered the same deals like that are available at Big Bazaar. India’s e-commerce is estimated to grow well above 30%. Pantaloon is further is further creating synergy in both the brick and mortar format and e-retailing by providing similar deals on both platforms. Threats Intensely competitive market with high penetration of unorganized retailers is set to become even more so with entry of large foreign players . The Indian e-commerce market is set to boom and as the e-commerce market in rest of the world is growing at 8-10%.company at minimal extra cost. Pantaloon through its presence3939 in the segment will be able to increase the potential customer base and will effectively participate in the booming e-commerce market. It also reduces costs like rental. employee cost and inventory carrying costs which would have to be incurred in a brick and mortar format.

which makes them the preferred retailers for a large pool of customers in India. Also. SWOT Analysis Page 20 customers as they specialize in serving a selected group of customers and are well aware of the needs and requirements. these stores also provide high customer service and informal credit service as well. Hence. Additionally. The shift in this perception will .India’s retail environment is characterized with a large pool of independent retailers who are currently4040 dominant players in the market. the kirana stores (as independent small retailers are referred to) stock only the products that are highly suitable for their Pantaloon Retail (India) Ltd. There are close to 12 million independent retailers with a market share of close to 94%. © Datamonitor40 Pantaloon Retail (India) Ltd. These independent retailers have low operational costs and require very low start up costs. the penetration into the markets is higher and their small formats provide a unique advantage of convenience compared to large organized retailers. The customer perception of value is higher for these kirana stores.

. while it has also seen multinationals enter the country through wholesale joint ventures in order to begin building functions for a time when they can operate alone. The recent uptick in expansionary investment is also a product of growing sentiment suggesting that the government might reverse its restrictive stance on international investment. 2009 signifying that the Indian retail sector is at a peaking stage. The prospect of a rule change has seen local players expand fast in order to secure a dominant position before the seemingly inevitable arrival of multinationals. India has been ranked first on Global Retail Development Index. This lead to large Indian players like Reliance Industries. foreign companies are not allowed to own stakes in multi-brand retail businesses. Aditya Birla Group and Bharti Airtel to expand aggressively to tap the huge growth potential opportunities. According to the current FDI norms. It is also the perfect time for existing players to undergo aggressive expansion.take some time to set in and until then organized retail has to increase efforts to capture a large addressable market required to leverage the high start up and operational costs of these organized retailers like Pantaloon. a rule designed to protect India's vast independent retail sector. This has made the next three to four years the best time for foreign retailers and other Indian corporate retailers to enter India. is developing quickly and is ready for modern retail.

Although India is a large country with immense opportunities most of these players are entering through large metro areas where the market is mature and there are large players competing. several large international players have entered the Indian market. the player are competing with in the 6% of India’s retail market.Additionally. Tesco. the UK's largest retailer has a tie-up with Trent for a franchise agreement for its hypermarket chain. which operates under its own brand name. And the prospect of retail liberalization has seen4242 an aggressive investment by the Indian peers to expand the market share. the organized retail is a nascent stage and although set to grow at a fast pace. All these factors have increased the competition in the market which might lead to market share erosion and high pressure on margins. UK's Marks & Spencer operates an apparel retail chain and has a joint venture with Reliance Retail. WalMart has a joint venture with Bharti Enterprises and it has launched two wholesale stores and plans to open another 10-12 over two-three years. Pantaloon derives 60% of its revenues from top eight cities in the country. . Germany's Metro has its own cash-and-carry business. Increasing number of players entering the market will intensify the competition leading to margin pressure. In the lifestyle segment. Additionally.

000 ($313. retailers in India can sustain rents Pantaloon Retail (India) Ltd.9) in Noida and INR385 ($8) in Gurgaon. The percentage in other4343 countries is as low as 4% to 5%.5) for the same space in that time. © Datamonitor43 Pantaloon Retail (India) Ltd. some of the largest metropolitan regions in . ft per month if they do business of about INR15.High lease rentals and investments will adversely affect profitability and expansion plans The lease rentals and infrastructure investments have led to the retail sector in India being that of high investment and low return business. INR478 ($9. Rentals in India are considered to be among the highest in the world and account for 10% to 15% of the retailer’s operating cost.6) per sq. rents had topped INR650 ($13. However.1) per sq. SWOT Analysis Page 21 of INR150 ($3. According to industry experts. ft per month in New Delhi.

Another factor that restricts the availability of desirable retail space is that malls and large retail complexes are developed only in few top cities in the country. The rents are very high for the business as according to the company estimates the per square feet sales are to come in the vicinity of INR9. Indian infrastructure remains hugely underdeveloped and this necessitates massive supply chain investments before a single store. can be opened.Mumbai. Furthermore. specifically to penetrate into rural India.4444 .1) per month as the economy revives.000 ($188. These factors have contributed to the investments being large and the operational costs are also high owing to high lease rentals. These factors have been constantly pressurizing the returns on investments and profitability and have been acting as barriers for quick expansion. high oil prices and high labor costs. Pantaloon’s margins might be adversely affected owing to such high costs. let alone a nationwide network. According to estimates made. This challenge will remain a big one for large retailers like Pantaloon to develop a national chain. at least 750 malls are being built in the country and retailers in cities such as . Delhi and Chennai see cannibalization due to presence of retailers who offer the same goods and services.India.

Spencer’s Retail4545 .Pantaloon Retail (India) Ltd. © Datamonitor45 Pantaloon Retail (India) Ltd. Shoppers' Stop Metro AG Reliance Industries Limited Wills Lifestyle Trent Ltd. Top Competitors Page 22 TOP COMPETITORS The following companies are the major competitors of Pantaloon Retail (India) Ltd.

Pantaloon Retail (India) Ltd. sustainable and profitable growth. the report captures the transformation of an organization into a far more efficient and focused entity that gained strength from its commitment to ‘Rewrite Rules. Much like the economic environment of the past year. This is taken from the company's 2009 annual report. © Datamonitor46 Pantaloon Retail (India) Ltd.’ and is building a strong foundation46464646 for long-term. Company View Page 23 COMPANY VIEW A statement by Kishore Biyani. Managing Director of the company is given below. Retain Values. your organization too weathered a challenging business scenario and went through a phase of rapid transformation. As you will notice. It gives me immense pleasure to present before you the Annual Report for the Financial Year 2008-09. .

We are working on and have achieved considerable progress in increasing margins in every key category. we worked diligently to bring in productivity and efficiency to increase square foot sales. we worked harder on innovation and enterprise to offer more value to customers and make our retail chains the preferred destination for every segment of the society. we also identified four categories that we will focus on. While all of us were cognizant of this scenario. we had moved into a fairly high-cost economy and much like other organizations. At a strategic level. which include consumer electronics and furniture. energy or resources. general merchandise4747 and home.4747 real estate. We have also worked hard in allocating resources to businesses in a manner which give us better returns. These categories capture more than 60% of the consumers’ wallet. faster break even and faster return on capital. we were paying a higher price for almost every business input – whether it was talent. At the same time. With all these corrections we believe that your company will yield more positive results beginning with the forthcoming year. . the changes in the external environment forced us to act swiftly and decisively in bringing down costs and improving efficiency and productivity. In each of these categories. food. The categories are fashion.During the past couple of years.

At the same time. © Datamonitor48 Page 24 . coupled with the growth of modern retail will help grow consumption of value-added products in the economy. Economic growth. your company has been able to maintain healthy growth in same store sales. Despite the economic environment. Your company will not only benefit from the growth of consumption demand. your company will be focused on bringing down its inventory levels. containing it costs and generating higher return of capital employed. As the economy improves and consumer sentiment turns buoyant. we expect the per square feet sales to come in the vicinity of Rs 9. but is also among the few organisations Pantaloon Retail (India) Ltd.With the opening of nearly 14 new Pantaloons stores in the forthcoming year and another about 6-odd Central stores. At the macro-economic level.000 per month. the Indian economy is expected to cross $2 trillion during the next decade and more than a half of this will be contributed through private consumption demand. In turn this will help create new categories of consumption. the share of the fashion category and the lifestyle business is expected to go up.

I believe that all of us are proud to have created this organization with a culture focused on core values that can build upon itself in a positive manner. distribution to retailing to end-consumers. One of the biggest joys of being in the business of modern retail and that too in the context of the Indian economy is that it allows us to get in touch with millions of stakeholders and act as a positive . For long. Company View that are primed to benefit from the growth of value added products through its presence across the value chain . This has ensured that we sustain what is unique to us as we grow. branding. we could never find a49494949 difference in the work we do every day and the ‘good work’ that a responsible organization is supposed49494949 to do. we have resisted the temptation of setting up a corporate social responsibility department that has a select few employees working with a defined budget and regularly speaks out on the ‘good work’ that it does. The primary reason for this is as an organization.from sourcing.Pantaloon Retail (India) Ltd.

Locations and Subsidiaries Page 25 .change agent in society. which cares for its community. As a sustainable business that nurtures its supply partners. Pantaloon Retail (India) Ltd. helping small and medium supply partners and entrepreneurs develop markets for their products and services or generating employment for those who come from economically and socially marginalized sections. Whether it is through providing consumers a larger choice of quality products. socially and environmentally responsible organization is the best and the most efficient way to earn the trust and goodwill of millions of customers and stakeholders. the business of modern retail gives us the largest possible canvas to create new opportunities for people and transform societies and communities. empowers its employees and strives to be a positive change agent in society. © Datamonitor50 Pantaloon Retail (India) Ltd. we are confident that your company will be the one which retains the trust of society and builds a strong foundation for long-term. sustainable growth. It has always been our belief that being an ethically.

1B Block By Block Shopping Mall Plot No. Fourth Floor Block No . Andheri East . Plot No. 117 Road No. Marol. Army & Navy Press MIDC.5 Action Area .BG.LOCATIONS AND SUBSIDIARIES Head Office Pantaloon Retail (India) Ltd. Knowledge House Shyam Nagar Off Jogeshwari Vikhroli Link Road Jogeshwari East Mumbai 400 060 IND P:91 22 3084 1300 F:91 22 6644 2222 http://www. 18 Opp.com Other Locations and Subsidiaries Pantaloon Retail (India) Limited East Zone Pantaloon Retail (India) Limited West Zone 03-097.pantaloon.

Kolkata 700 156 IND IND Mumbai 400 093 Pantaloon Retail (India) Limited North Zone Pantaloon Retail (India) Limited South Zone 3rd Floor Plot Number 82 Sector 32 Near NIIT Corp Office Gurgaon Haryana 122 001 IND IND Pasadena No 18 1 10th Main Ashoka Pillar Road Before Rani Sarla Devi School 1st Block Jayanagar Bangalore 560 011 Pantaloon Retail (India) Ltd. © Datamonitor52 Page 26 .