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Setting Up 100 Malls

across India

Submitted By :-
Lipi Patel (11)
Sharmin Jal (23)
Vidya Krishnan (32)

October 15, 2008 1


Agenda
 Assumptions

 About Real Estate Industry

 About Retail Industry

 Organization Structure

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Assumptions - SLV Company
 Investment worth Rs 9,000 crore in the country over 5-7
 Growth strategy
 100 entertainment and commercial centers
 Across India covering tier I, II and III cities
 Company will primarily be a developer
 Format of the malls
 income levels
 market saturation level of malls
 infrastructure availability of the location selected
 Ideal format
 floor space of 10-25 lakh square feet approximately
 underground parking facilities
 Two to three storied

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Real Estate Industry
October 15, 2008 4
Why Invest In Indian Real Estate?

 Economy growing at 8.1%

 Presence of a large number of Fortune 500 and other reputed


companies will attract more companies to initiate their
operational bases in India thus creating more demand for
corporate space.

 Real estate investments in India yield huge dividends - foreign


investors
 70 percent making profit
 12 percent are breaking even.

 Organized retailing is at a very nascent stage


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Size and Structure of real estate
& construction
 Real Estate and Construction is a $12 billion industry in
India

 Highly fragmented sector – very few organized players  

 Real estate developers-only a local or regional presence

 Modest participation of large corporations in the sector

 Margins are higher in India (>20%) as compared to the


developed markets (5-6%)

 Lack of infrastructure caused development to be very


concentrated in cities.
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POLICY

 100% FDI is allowed in real estate development subject


to minimum scale norms of either:  
 25 acres in case of serviced plots or integrated
townships or
 50,000 sq. mtrs. of built-up area for construction
development projects
 Venture funds allowed to invest in real estate
 Prominent Indian corporate like ICICI Bank, SBI and
HDFC have promoted real estate venture funds  

 Foreign Real Estate and Finance companies like GE


Commercial Finance, Tishman Speyer, Ascendas and
Farallon Capital have entered the Indian market
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Our competitors

Revenue Real-Estate Footprint


(2006, Developed
Company $million) (million sq.ft)
172 30 Mumbai,
Chennai, Dubai
Hiranandani
143 40 Delhi, Mumbai,
Kolkata,
Chennai,
Unitech NCR*,Bangalore,
114 29.5 Hyderabad
Delhi, NCR*,
Mumbai, Mohali,
DLF Kolkata
80 15 Punjab, Delhi,
NCR*, Lucknow
Ansal
October 15, 20088th 8
Sept, 2007
GROWTH POTENTIAL

 Several factors are expected to contribute to the rapid


growth in Real Estate
 availability of loans at low interest rates
 tax incentives
 growing middle class with higher savings

 Increasing demand for commercial and office space


especially from the rapidly growing Retail, IT/ ITeS and
Hospitality sectors

 The recently announced Urban Infrastructure Renewal


Mission is expected to give a boost to the sector.
 $11.5 billion earmarked over the next five years for
60 cities

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INVESTMENT OPPURTUNITY

 Investment
opportunities exist in
almost every segment
of the business
 Housing: About 20 million
new units expected to be
built in five years
 Office space for IT/ITeS: Five-
fold increase in office space
requirement over the next 3
years
 Commercial space for
organized retailing: 200
October 15,million
2008 sq. ft. by 2010 10

 Hotels & Hospitality: Over


INVESTMENT OPPURTUNITY
 Investment opportunity of over $50 billion in
the next five years

 Major foreign institutional investors including


Morgan Stanley, Merrill Lynch, AIG, Blackstone
and Calpers have shown interest in investing in
Indian real estate

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Retail Industry
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WHY INVEST IS RETAIL
DOMAIN
 Fragmented in nature
 organized retailing contributes 5 percent of the total retail
market

 Growth in per capita income, household consumption,


changing demographics and improved standards of living

 Driving growth of organized retail

 More than 60 million sq.ft of quality retail space expected


to come up during 2006-09

 FDI in Retail allowed only in single brand stores with 51%


Octoberequity
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DEMAND TRENDS AND DRIVERS OF RETAIL
Structural changes in
Indian Retail

Retail – another big growth driver


Company Targets + 75% CAGR in
shelf space expansion over next
4 years

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Source: CLSA Asia-Pacific Markets, Company targets (incl
POLICY

 100% FDI is allowed in Cash and


Carry Wholesale formats

 Franchisee arrangements are also


permitted in retail trade

 FDI upto 51% is permissible in the


retail trade of single brand products
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SIZE

 In 2004 Retail sales were


$206 billion approx 30%
of GDP

 ‘Organized Retail’
constitutes only 5% of
total retail sales - $6.4
billion p.a.  

 Organized retail’ has


been growing at over
20% p.a. in the last 5
years
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 Indian retail market is
STRUCTURE

 Highly fragmented market :


mostly owner-run ‘Mom and
Pop’ outlets

 Over 12 million retail outlets


with average outlet size less
than 500 sq.ft

 Apparel retail is the largest


organized segment in India

 Now a few medium sized


Indian retail chains like
Pantaloon, Shoppers’ Stop,
Food World (RPG Group) and
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Westside (Tata Group) drive
the whole market.
RETAIL GIANTS

Players Revenues Space (sq.


($ million) ft.)Dec 2004 Format
(2005-06)
Pantaloon
150 1,000,000 F&G, Specialty
Retail
RPG Retail 135 590,000 F&G, Specialty
Specialty
Shoppers’ Stop 100 740,000
Retail
Lifestyle Specialty
53 325,000
International Retail
Trent (Tata) 38 270,000 F&G, Specialty

Source: KSA
October 15, Technopak, TSMG
2008 18
SUCCESS STORY OF ORGANIZED
RETAILING

 Expected to grow three-fold in the next 10 years from $206


billion to $660 billion by 2015  

 India is expected to be among the top 5 retail markets in the


world in 10 years

 Likely to account for 12-15% of total retail sales by 2015

 The high growth projected in domestic retail demand will be


fuelled by
 The migration of population to higher income segments with
increasing per capita incomes  
 An increase in urbanization.
 Changing consumer attitudes especially the increasing use of credit
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cards 19

 The growth of the population in the 20 to 49 years age band


OPERATING RETAIL FORMATS
 There is retail opportunity in most product categories and for
all types of formats  

 Food and Grocery: The largest category; largely unorganized


today  

 Home Improvement and Consumer Durables: Over 20% p.a.


CAGR estimated in the next 10 years  

 Apparel and Eating Out: 13% p.a. CAGR projected over 10


years

 Opportunities for investment in supply chain infrastructure:


Cold chain and logistics

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 Significant potential to emerge as a sourcing base for many
'India's Next Destination Cities'

Targeting Tier II & III cities

 Chandigarh
 Ludhiana
 Nagpur
 Indore
 Kochi
 Jaipur
 Ahmedabad
 Surat
 Vishakapatnam
 Mysore
 Coimbatore
 Tier 1 Cities like Bangalore and Chennai

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$7,785
Rs.67,370

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$ 5142

$ 6277

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$ 2,891

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$3965

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$3,278

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$ 4,192

$ 3,737

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$3,687

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$3,687

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$4,844

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Organization
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Structure
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References

 http://www.indianground.com

 http://www.rediff.com

 http://www.indianrealtynews.com

 http://www.labnol.org/india

 http://www.investmentcommission.in/retail.htm

 http://www.indiaretailing.com

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Thank You

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