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

October 15, 2008 2

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

October 15, 2008 3

 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

October 15, 2008 5
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.
October 15, 2008 6
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
October 15, 2008 7
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

October 15, 2008 9

 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

October 15, 2008 11

 Retail Industry
October 15, 2008 12
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
15, 2008 or through franchise route 13
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

October 15, 2008 14

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
October 15, 2008 15
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
October 15, 2008 16
 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
October 15, 2008 17
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
October 15, 2008 
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

October 15, 2008 20

 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

October 15, 2008 21

 $7,785
Rs.67,370

October 15, 2008 22

 $ 5142

$ 6277

October 15, 2008 23

 $ 2,891

October 15, 2008 24

 $3965

October 15, 2008 25

 $3,278

October 15, 2008 26

 $ 4,192

$ 3,737

October 15, 2008 27

 $3,687

October 15, 2008 28

 $3,687

October 15, 2008 29

 $4,844

October 15, 2008 30

 Organization
October 15, 2008
Structure
31
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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

October 15, 2008 37

 Thank You

October 15, 2008 38