Retail Evolution, Trends & Business Opportunities in India

1
Retail Evolution, Trends Business Opportunities
in India
Mr. Rajan Bharti Mittal Vice Chairman and
Managing Director Bharti Enterprises Limited.
2
India An Emerging Economic Power
The Bharti Story
Evaluating New Business Opportunities
Indian Retail Potential and trends
3
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
• Opening up sectors for investment
• Promising consumer markets
• Significant investment in infrastructure
  development

YESTERDAY

• 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

4
Demographic Dividend
Population Median Age (In Years) 2008E
Growing urban Working population

• 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.
• Largest working age population worldwide by 2050.

Powerful production consumption force
Demographic Profile

• 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.

5
Present global crisis An opportunity for India

• Indian economy coped with the crisis better
  Clear signs of recovery
• Revised government growth projection for 09-10 at
  6.9 Q2 GDP growth at 7.9
• GDP forecast for 2010-11 is 7.9
• 2010-11 to be a year of consolidation launch
  into the high growth mode
• Indias 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)

6
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
• A source of spending in social infrastructure

• 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.

7
India An Emerging Economic Power
The Bharti Story
Evaluating New Business Opportunities
Indian Retail Potential and trends
8
Our Beginnings
Founded in 1976 with an initial capital of
1000. Started with small scale manufacturing
units
1976
Import of portable power generators from Japan
for distribution in India
1982
Started manufacturing telephones in technical
collaboration with Siemens AG Tie-up with Takacom
corp., Japan for answering machines in 1986, LG,
South Korea for cordless phones Systema for
telephone terminals in 1988
1985
Formed a Consortium with Vivendi and others to
bid for Cellular Licences
1992
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)
1995
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Our Businesses
TELECOM SERVICES
FINANCIAL SERVICES
RETAIL / WHOLESALE
EMERGING BUSINESSES
Bharti Airtel India SAARC Region
Bharti AXA Life Ins Life Insurance
FieldFresh Foods Agri Exports
Bharti Retail Retail
Bharti Teletech Comm. Media Devices
Bharti AXA Gen Ins General Insurance
Bharti Infratel Passive Infra
Bharti Wal-Mart Wholesale Cash Carry
Bharti AXA Investment Managers Asset Management
Bharti Realty Real Estate
Indus Towers Passive Infra Sharing
Telecom Seychelles Seychelles Islands
Comviva Technologies Telecom software
Bharti Foundation CSR activities
Jersey Airtel Channel Islands
Centum Learning Ltd Training Dev
Guernsey Airtel Channel Islands
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Our Partners
TELECOM SERVICES
RETAIL / WHOLESALE
FINANCIAL SERVICES
EMERGING BUSINESSES
11
Bharti Group Our Key Differentiators
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India An Emerging Economic Power
The Bharti Story
Evaluating New Business Opportunities
Indian Retail Potential and trends
13
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 2009-11
  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

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Key emerging sectors in India

• Infrastructure
• Stepping up spending 5 in 2006-07 to 9 of the
  GDP by end of 2012.
• 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

• Education
• Largest capitalized space in India with 30 Bn of
  government spend (3.7 of GDP).
• Private education is currently estimated at 50
  Bn (14CAGR over FY08-FY12E) expected to reach
  115 Bn in he next 10 years
• 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 to grow
  23 per annum to touch 77 billion by 2012
• 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.

• 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

15
India An Emerging Economic Power
The Bharti Story
Evaluating New Business Opportunities
Indian Retail Potential and trends
16
Retail Sector poised for phenomenal growth
The Indian Retail Sector, currently the Fifth
largest in the world, is poised for phenomenal
growth in the coming years
Size Position in the current Scenario
Current Size Future growth of Organized Retail
in India
ORGANISED RETAIL EXPECTED TO GROW 35-40 CAGR
Source India Shopping Trends, 2008 - Technopak
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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 SMEs 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 Indias demographic
dilemma Dec08
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Key Challenges

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

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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

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Big TransformationsBrave Actions...
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Thank You