Retail evolution trends & business ppt @ bec doms


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Retail evolution trends & business ppt @ bec doms

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  • Fiscal balance
    Driven by stimulus packages fiscal deficit currently at 6.8% of GDP; to be brought down to 3% over 5 years; A balancing act by the Finance Minister-budget 10-11
    Tax Reforms
    Indirect tax: GST roll out delayed to 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; sharp rise in disposable income.
    Plans to dilute 10% in all profit making PSUs
    A source of spending in social infrastructure
    Social Programs
    Outlay for NREGS (National Rural Employee Guarantee Scheme) which guarantees 100 days of wages and work for one member in every rural family, has gone up by 30% to Rs. 39,100 Cr (USD 8,555 million) from Rs. 30,000 Cr (USD 6,564 million) in 2008-09.
    With the aim of creating 12 million jobs every year, the government plans to recharge the nation’s employment exchanges to bring employers and job-seekers on a seamless online platform.
    The Union Governments expenditure on primary education has gone up by 12% from Rs. 26,026 Cr (USD 5,695 million) last year to Rs. 29,099 Cr (USD 6,367 million).
  • Telecom
    Bharti Airtel - largest private integrated telecom company in India.
    Over 102 Mn customers
    Mobile services in Seychelles, Channel Islands, Sri Lanka
    Bharti Infratel – Tower company for passive infrastructure sharing
    Financial Services
    Pan India Presence
    Over 203 Branches and ~ 30K advisors for the LI Business
    Over 66 Branches for the GI Business.
    Average AUM of ~ Rs. 2.5 Bn.
    Emerging Businesses
    Bharti Teletech - Over 580 distributors, 25,500 dealers strong network and 29 warehouse spanning across the 3600 towns in India
    Comviva - Deployed products and solutions in over 70 countries for over 100 customers.
    FieldFresh Foods - offers fresh and processed fruits & vegetables in domestic and international markets like Europe, USA & Middle East
  • Achieved 11% growth in 2008-09 over the previous year.
    Foreign investment up to 100% is now allowed without GOI approval in almost all sectors under the automatic approval route except those subject to sectoral caps/policy.
  • Infrastructure
    Roads and bridges, telecom, ports, airports, storage, and gas distribution are projected at upward contribution than 30%, with over 60% in ports, airports and telecom.
    The budget 2009-10 stepped up allocation by 45% to Bharat Nirman, the United Progressive Alliance government’s flagship plan to build rural infrastructure.
    Outlays for rural housing, roads, electrification and irrigation have been raised by 63%, 57%, 27% and 75%, respectively, over the allocations made in 2008-09.
    The budget 2009-10 proposed to spend Rs 12,887 Cr to build urban infrastructure, an increase of 87% over the previous year.
    There is a 23% increase in allocation for the National Highways Development programme and a Rs. 5,000 Cr increase in the spending on railway
    100% FDI is allowed through the automatic route, no rules or regulations for foreign universities to be recognized under the UGC (University Grants Commission).
    India will see a shortfall of 4 million seats in higher education by 2015 and 7 million by 2020.
    Higher number of graduates in Humanities and Arts, while industry needs much higher numbers of Engineering, Medical, Finance, and Service professionals.
    Emerging segments – Vocational Training, Online Education, and Educational Material
    Health Care
    Growth of 9.3% between 2000-2009, comparable to the sectoral growth rate of other emerging economies such as China, Brazil and Mexico.
    Growth mainly driven by healthcare facilities, medical diagnostic and path-labs and the medical insurance sector.
  • Grown from USD 2 Bn in 2002 to USD 37 Bn today in total of USD 350 Bn
    Retail will be a critical driver of the economy – employment, contribution to GDP
    Improved tax realization for the government - Significant revenue loss happening under the present fragmented unorganised retail set up.
    Changes in the Retail strategy over the past years – moving beyond infancy
    Re-Sizing and Relocation - With a drop in rentals many retailers renegotiating rentals and relocating stores which are not economically viable.
    New Formats - Experiment with new formats to attract consumers.
    Reaching to new customers - Modern retail currently serves 7%-8% of the total population; Focus is shifting from upper income consumers to middle class, urban poor and rural markets.
    Spreading to new geographies - Focus shifting from metros and mini metros into smaller towns and rural areas.
    Restructuring of Operations - Restructuring of operations by combining the operations of various formats to reduce overheads and achieve economies of scale.
  • Immense diversity – 16 official languages, 1650 dialects, Culture, food habits, dressing styles vary by community / region
    Absence of Infrastructure & good retail Space
    Inadequate infrastructure - only 0.05 km of constructed road per vehicle (Source – India – Highway Data, - 58.86 Mn Motor Vehicles vs. 3.3 Mn Km of Roads)
    Inadequate real estate in terms of availability and affordability; lack of proper city planning models; delays in project delivery & quality of development. Rentals are globally are @ 3-5 % of sales revenue, in India @ 10-15 %
    Workforce Management
    Exponential growth requires more talent than is currently available; high attrition rates in the industry
    IT Infrastructure
    Low automation levels in supply chain and point of sale systems; no real time link between suppliers-warehouses-retail stores
    Fragmentation of supply chain
    Multi – layered tax regimes
    2 % CST on intra-state sales
    Companies have to maintain small warehouses in every state to avoid paying CST
    Decentralized procurement and storage
    high inventory costs, increased working capital, other overheads
    Poor ‘availability’ and ‘usage’ of warehouses
    Non integrated cold chain supply - Negligible facilities of multiple temperature storage chains & Shortage of refrigerated trucks
    Legal – more than 21 licenses to open a single store, takes 1-2 months time to obtain. Rigid building laws makes acquisition and modification of retail space difficult
  • Retail evolution trends & business ppt @ bec doms

    1. 1. Retail Evolution, Trends & Business Opportunities in India
    2. 2. India: An Emerging Economic Power Evaluating New Business Opportunities Indian Retail: Potential and trends The Bharti Story
    3. 3. The India Story • Socialist policies – minimal private sector role • Bureaucratic • Protected market • Small consumer markets • Underdeveloped infrastructure • 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 TODAY • 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 An Enabling Environment
    4. 4. Demographic Dividend • 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. 25 34 37 38 44 0 10 20 30 40 50 India China US Russia Japan 0-19 yrs 41.8%20-59 yrs 50.7% 60yrs & above 7.5% • 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. Growing urban & Working population Powerful production & consumption forceDemographic Profile Population Median Age (In Years): 2008E
    5. 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 India’s 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. 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. 7. India: An Emerging Economic Power Evaluating New Business Opportunities Indian Retail: Potential and trends The Bharti Story
    8. 8. Founded in 1976 with an initial capital of $ 1000. Started with small scale manufacturing units 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 Import of portable power generators from Japan for distribution in India Formed a Consortium with Vivendi and others to bid for Cellular Licences 1976 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 1992 1982 Our Beginnings
    9. 9. Bharti Airtel India & SAARC Region Telecom Seychelles Seychelles Islands Jersey Airtel Channel Islands Comviva Technologies Telecom software Bharti AXA Life Ins Life Insurance Bharti Realty Real Estate Indus Towers Passive Infra Sharing Bharti Teletech Comm. & Media Devices Bharti Retail Retail Guernsey Airtel Channel Islands Bharti Wal-Mart Wholesale Cash & Carry Bharti AXA Gen Ins General Insurance Bharti Infratel Passive Infra Bharti AXA Investment Managers Asset Management FieldFresh Foods Agri Exports Centum Learning Ltd Training & Dev TELECOM SERVICES FINANCIAL SERVICES RETAIL / WHOLESALE EMERGING BUSINESSES Bharti Foundation CSR activities Bharti Foundation CSR activities Our Businesses
    11. 11. Bharti Group: Our Key Differentiators Transformation • Significant impact on the lives of people • Attract and nurture top talent Innovation • Business model • Market offering Focus on Core Competence •Outsourcing •Scalability Operating Principles Partnership •World-class partnerships
    12. 12. India: An Emerging Economic Power Evaluating New Business Opportunities Indian Retail: Potential and trends The Bharti Story
    13. 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
    14. 14. 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 (14%CAGR 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. 15. India: An Emerging Economic Power Evaluating New Business Opportunities Indian Retail: Potential and trends The Bharti Story
    16. 16. Retail Sector poised for phenomenal growth Source: India Shopping Trends, 2008 - Technopak ORGANISED RETAIL EXPECTED TO GROW 35-40% CAGR 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
    17. 17. 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 SME’s 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 India’s demographic dil Dec’08
    18. 18. Key Challenges  Immense ethnic diversity  Absence of Infrastructure and good retail space  Workforce Management (talent crunch)  IT Infrastructure  Supply Chain  Legal
    19. 19. 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
    20. 20. Thank You