Developing a Mall in a Tier-3 City: Case of CETL in Jalgaon


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Developing a Mall in a tier-3 City: Case of CETL in Jalgaon

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Developing a Mall in a Tier-3 City: Case of CETL in Jalgaon

  2. 2. Late one afternoon of March 2010 Ashesh Jain, the director of CETL, had just concluded ameeting with his management team which included the CMO, CFO and Project Head at thehead office located in Mittal Towers in Nariman Point, the premier business district in Mumbai.The CMO, Mrs. Sangita Jain had just presented a detailed marketing plan for their newshopping centre venture namely Khandesh Central which was finding it difficult to find tenantsfor its floor space.On that very day Ashesh had invited his advisors to discuss how they could help him wriggle outof this potentially disturbing situation which showed all promises to turn into a gigantic mess.As he looked across the hallway leading into the conference room in which they were havingthe discussion, Ashesh told the advisors that he needed them to help him out.As the meeting ended Ashesh came back to his original thoughts of how to come up with asolution that would put Khandesh on the fast track to success. He knew the job was difficultsince work had to carry on at the site which was binding up a lot of cash.BACKGROUND OF CETLCrescent Entertainment & Tourism Ltd was formed primarily with the intention of developingthe Khandesh Mill property in Jalgaon, Maharashtra.The Khandesh Mill Property was a defunct spinning and rolling mill. The entire propertymeasures approximately 47acres and is centrally and strategically located in the heart of thecity. The mill property is adjacent to the railway station, about 1.5 km from the new S.T. BusStand & the Gaothan area of Jalgaon where traditional gold market thrives. The JalgaonMunicipal Corporation office, commercial complexes, wholesale and retail markets, etc are inthe close proximity of the property. 2
  3. 3. Vijay Ramakrishnan CFO of CETL, revealed that in 1985 the mill got into liquidation due tosustained inefficiencies. CET: acquired the property after the original owners cleared the duesin court, freed the property of liquidation. Due to proximity to the railway station & itsprominent location in the heart of the city, the owners of the property from time to time havedeveloped and leased parts of property abutting the roads. However, in view of the perceivedpotential of the site, CETL decided to undertake comprehensive redevelopment of the mill andthe first seeds of Khandesh Central were sown.The real estate and retail business is however a fairly new territory for CETL, as it is a start upand the promoters core expertise lies in manufacturing chemicals. As enumerated by Ashesh,being a family owned enterprise and decision making fairly centralized the company is still fairlyunstructured. The company is being led primarily based on the vision of Ashesh and thus astable management cadre with well defined responsibilities/KPI, is not in place.INTEGRATED RETAIL DEVELOPMENT IN INDIA.The Indian retail market, which is the fifth largest retail destination globally, has been ranked asthe most attractive emerging market for investment in the retail sector by AT Kearneys eighthannual Global Retail Development Index (GRDI), in 2009. As per a study conducted by the IndianCouncil for Research on International Economic Relations (ICRIER), the retail sector is expectedto contribute to 22 per cent of Indias GDP by 2010.With rising consumer demand and greater disposable income, the US$ 400 billion Indian retailsector is clocking an annual growth rate of 30 per cent. It is projected to grow to US$ 700 billionby 2010, according to a report by global consultancy major Northbridge Capital. The organizedbusiness is expected to be 20 per cent of the total market by then. In 2008, the share oforganized retail was 7.5 per cent or US$ 300 million of the total retail market. A McKinseyreport, The rise of Indian Consumer Market, estimates how the Indian consumer market islikely to grow four times by 2025. 3
  4. 4. India continues to be among the most attractive countries for global retailers. Foreign directinvestment (FDI) inflows as on September 2009, in single-brand retail trading, stood atapproximately US$ 47.43 million, according to the Department of Industrial Policy andPromotion (DIPP).As a democratic country with high growth rates, consumer spending has risen sharply primarilydue to the fact that young population (more than 33 percent of the country is below the age of15) has seen a significant increase in its disposable income. Consumer spending rose animpressive 75 per cent in the past four years alone. The organized retail sector, which currentlyaccounts for around 5 per cent of the Indian retail market, is all set to witness maximumnumber of large format malls and branded retail stores in South India, followed by North, Westand the East in the next two years. Tier II cities like Noida, Amritsar, Kochi and Gurgaon, areemerging as the favored destinations for the retail sector with their huge growth potential.Further, this sector is expected to invest around US$ 503.2 million in retail technology servicesolutions in the current financial year. This could go further up to US$ 1.26 billion in the nextfour to five years, at a CAGR of 40 per cent. Buoyed by improved consumer spending, sales oflisted retailers increased by 12 per cent in the September 2009 quarter compared with thesame period in 2008.Policy Initiatives: • 100 per cent FDI is allowed in cash-and-carry wholesale formats. Franchisee arrangements are also permitted in retail trade. • 51 per cent FDI is allowed in single-brand retailing.According to industry experts, the next phase of growth is expected to come from ruralmarkets. According to a new market research report by RNCOS titled, Booming Retail Sector inIndia, 4
  5. 5. • Number of shopping malls is expected to increase at a CAGR of more than 18.9 per cent from 2007 to 2015. • Rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50 per cent. • Organized retailing of mobile handset and accessories is expected to reach close to US$ 990 million by 2010. • Driven by the expanding retail market, the third party logistics market is forecasted to reach US$ 20 billion by 2011PROFILE OF JALGAONGeographical settings:Jalgaon, an important trading and distribution centre of tea, gold, pulses and other agriculturalproduce in North Maharashtra is situated at 21.05 N Latitude and 75.40 E Longitude. (ReferExhibit 1). Jalgaon is a district headquarters and located within a productive and irrigatedagricultural region in northern Maharashtra commonly known as Khandesh. Jalgaon district isbounded by West Nimar and Badhwani districts of Madhya Pradesh in the north direction,Dhulia district in west, Nasik district in south west, Aurangabad in south and Buldhana in theeast.The region is famous for the production of pulses & bananas, major cash crops for the farmers.Jalgaon district has the distinction of contributing to 40% of the total banana production of thecountry. The region has rich agricultural hinterland and Jalgaon acts as a node for trade andcommerce activities of Khandesh region. The leading products produced here are millet andraw cotton; the regions rich volcanic soil is particularly well suited to cotton production.Jalgaon district has an area of about 11,700 sq km and a population of about 4.0 million. Thedistrict has some well known temples like Padmalaya, Manudevi and Patnadevi. The majortourist attractions are Pal hill station at Raver, Patnadevi temple at the confluence of Tapi and 5
  6. 6. Purna rivers, hot water springs at Unapdev in Chopda Taluka. The World famous Heritage siteAjanta Caves are approximately 60 km form Jalgaon City.Linkages and connectivity:Jalgaon is an important business destination from major cities like Mumbai, Nagpur, Pune,Surat, Bhopal etc and is within 8-10 hours drive from most of them, having excellent rail androad connectivity with the same.Jalgaon is a major rail junction on the Mumbai – Howrah main line. A rail link also connectsJalgaon to Surat in Gujarat. Jalgaon is connected to Mumbai by NH3, to Dhulia, Nagpur andKolkata by NH6 and to Aurangabad-Pune by State Highway. The city is also linked to otherimportant towns in Jalgaon district by major district roads like Mohadi Road, Avanhe Road,Asoda – Khedi Road and Jalgaon Nimkhedi Road.Population of Jalgaon:The working population (i.e. population in the age group from 15 to 59) in Jalgaon is 56.35 % ofthe total population. The city has youthful population with about 75% people below 40 years ofage.The work participation ratio of Jalgaon is 30%. This indicates that the ratio of workingpopulation to non working population (dependent population) is nearly equivalent to 1:2,which is an indication of greater probability of availability of disposable income. As thedependent population includes population under the age of 18 years and above the age of 60years, and also the non working population in the age group of 18 to 60 years, this ratio ofunder 1:2 indicates better economic situation of the society as a whole. (Refer exhibit 2). Theworking population ratio for some other cities like Nasik, Pimpri, Chinchwad, Pune is 33.97%,34.5% and 34.1% respectively. Jalgaon is not far behind these cities.Social infrastructure: 6
  7. 7. Jalgaon being a district headquarter serves as destination for higher order health and educationfacilities for the entire district. Jalgaon has 6 colleges imparting engineering (degree / diploma)courses and one college imparting management course. Jalgaon also has arts, commerce andscience degree college. Jalgaon has a civil hospital built by the Municipal Corporation. There areseveral private clinics and hospitals in the city. Majority of the private clinics and hospitals arelocated near Bhaskar Market area.Jalgaon has large number of hotels and dormitories. Apart from a few hotels majority are in thebudget category. Majority of visitors in these hotels are on business trips.Jalgaon is grossly deficient in terms of leisure and recreational activities. The city has only twoparks (Gandhi Park – near new S T Stand and Mehrun Park – near Mehrun Tank). The city has acouple of playgrounds and a stadium is under construction. Jalgaon has five cinema halls.Majority of these have poor seating facilities and sound systems and are not maintained well.Growth direction of the City:Jalgaon has limited expanse. All the major retail and commercial activities are located in theheart of the city. The outer areas on the east, north and southern sides of the city arepredominantly residential areas. The MIDC area is on the east of the city. The prime residentialareas are located in south and south-west of the city.The growth direction of the city is predominantly towards west and the south. New residentialdevelopments are coming along NH6 and Pimprala Road in the west and along Mohadi roadand Shirsoli Road in the south.Opportunities:Despite being a major trading and business centre Jalgaon lacked a mall type retaildevelopment. Prevalent retail typologies are traditional markets and commercial complexeswith a composite development of shops on the ground floor and offices above. Also Jalgaondoes not have any major national / international brand operating in the city (in the apparels,footwear and jewellery categories) and not even a single commercial centre that gives a 7
  8. 8. wholesome shopping experience. Thus CETL decided to develop a regional destination andcommunity centre “Khandesh Central” offering space for leisure, shopping, food,entertainment, hotels, restaurants, multiplex, services, farmers market and fitness covering550,000 sq ft in Jalgaon.The project is the first and only project which is coming up in the catchment comprising the 9districts of Jalgaon, Dhule, Buldhana, Akola (Maharashtra) & Nandurbar, Khandwa, Burhanpur,Barwani and Khargaon (MP). According to the estimates of the promoters, the project would becatering to about 2.25 crores people of this region. This ‘all-in-one’ destination is located in theheart of Jalgaon City at the cross section of the M.G Road and Jilha Road and is adjacent to theRailway Station.A comprehensive tenant mix offering a range of products, services and activities will form a partof the project. The project would provide composite infrastructure and amenities like adequatecar parking, pantry on each floor, fire fighting systems, power supply, generator power back up,common lighting, water pumps and 24 hr. security, to name a few. A large demand exists fromthe population of this region for such a project as suggested by various surveys. The center isdesigned to host brands catering to all income groups and would become the hub for leisure,shopping and entertainment at Jalgaon. CETL is investing Rs.162 crores in the project by way ofEquity (102crores) and debt (60crores). 8
  9. 9. CUSTOMERS, CONSUMERS AND COMPETITORSBeing an integrated ‘all-in-one’ destination, the project would offer a platform for National /International retailers who intend to reach out to the target catchment area which comprisesthe 7 districts as mentioned above. Thus these national, international and local retailers areCETL’s prospective customers. Their customers in turn are the consumers, therefore it becomesimperative to understand the consumer’s needs.Consumer survey:Ashesh describes how much effort he and his team had put in while coordinating with JonesLang Lasalle Meghraj to conduct an in-depth survey of the market, namely Jalgaon. As it was ahuge decision for them, moving out from his traditional business of chemicals to the more riskyretail format, this study had to be accurate to justify the huge amount of investment the projectdemanded.The study showed that in Jalgaon and adjoining areas 83% of the shoppers do their shoppingnear their residence, 15% near their work place and 2% at other places. The frequency ofindulging in watching movies or eating out is very less. Majority of respondents watch moviesonce in three months, while the frequency of eating out is once in a month. A large number ofrespondents do not indulge in watching movies (in cinema halls) and eating out at restaurants.Poor patronage for leisure and entertainment facilities could be attributed to non availability ofgood cinema halls and eating outlets in the city rather than willingness and spending power ofthe people.Majority of shoppers spends up to INR 500 per month on each shopping, leisure andentertainment activities. (Refer exhibit 3A). The retail property market in Jalgaon has notdeveloped in terms of presence of national brands, ambience and destination. In leisure andentertainment too, the city offers limited options. These could be cited as the major reasons forminimal expenditure in shopping and pursuing leisure and entertainment activities. 9
  10. 10. Pricing of goods / services, comfort, location (convenience) and ambience (in descending order)have emerged as the important factors for shopping, leisure and entertainment activities.(Refer exhibit 3B). On the other hand pricing of goods / services, novelty, brand loyalty, shoployalty and discount schemes (in descending order) have emerged as the attraction criteria forshopping, leisure and entertainment activities.( Refer exhibit 3C) It is observed from theseillustrations that the shoppers in the city are price sensitive. Also the people’s attraction fornovelty may benefit the first retail mall type development in the city.Shopping centre with moderately priced goods is the most preferred shopping format formajority of the population. High street shops and shopping centre with branded products arethe other formats favored by the respondents. (Refer exhibit 3D)The shoppers have expressed a good response for a mall development and have expressedtheir willingness for visiting the proposed development once it is operational. (Refer exhibit3E& 3F)Majority of the respondents would prefer a mall with multiplex type of development. Theyechoed a strong opinion for presence of moderately priced products and local products in theproposed retail development. (Refer exhibit 3G)It was observed that the city has a sizeable amount of population that could be classified theconsuming class who have sufficient disposable income for spending on consumer durables andconsumer non durables (Refer Exhibit 3H).Retailer’s Survey Analysis: 10
  11. 11. The per capita organized retail space in Jalgaon is about 1.5 sq ft per person. This figure is lessthan the national average of organized retail space, which stands at 2.0 sq ft, per person. ThusJalgaon has a fair distance to go in terms of organized retail markets.Considering the fast growth of organized retail in the country in the last year, it was estimatedthat the organized retail would prosper in the coming years. This phenomenon would certainlyhave a bearing on the retail markets of Jalgaon. • Majority of retailers felt that a mall development would be well received by population of the city. About 70% retailers have shown willingness in buying space in the proposed retail development. (Refer Exhibit 4A) • Apparels (men’s wear and ladies wear), electronic goods, jewellery, consumer durables, mobile phones and accessories, grocery, food (sweet mart, refreshments), interior finishes, furnishings and medicine / pharmacy emerged as the favored categories in the proposed retail development. (Refer Exhibit 4B) • Majority of retailers (29%) showed preference for shop sizes ranging from 201 sq ft to 500 sq ft. About 22% retailers preferred larger shop sizes ranging from 1001 sq.ft to 2000 sq.ft. (Refer Exhibit 4C) • Major chunk of retailers preferred shops located on the ground floor. (Refer Exhibit 4D) • Majority of retailers prefer owned properties rather than leased properties. (Refer Exhibit 4E) • Majority of the retailers operated from shops in the range of 210 sq ft to 500 sq ft. Also a sizeable number of retailers (25%) operate from large premises in the range of 1001 to 2000 sq.ft. (Refer Exhibit 4F)Competitor Analysis 11
  12. 12. Jalgaon being the trade and business hub of the entire Khandesh region has an active retail market. All the retail activities are predominantly located in the heart of the city. The predominant retail topology observed in Jalgaon is commercial complexes and high retail along major streets in the heart of the city. All the commercial complexes are composite developments with retail on the lower floors and commercial (office) spaces on the upper floors. Jalgaon has more than thirty five commercial complexes. Municipal Corporation owns about 27 of these commercial complexes in the city and is proactive in development of its prime land parcels in the city. The city has few commercial complexes built by private developers. Poor occupancy levels have been observed in the complexes developed by the private developers. Higher sale prices and purchase by investors could be cited as the major reasons for poor occupancy levels in these complexes.• Golani Market is the most preferred destination for shopping of vegetables and fruits. (Refer Exhibit 5B).• Phule Market, Golani Market and Dana Bazaar are the preferred destinations (in descending order) for shopping of grocery items. (Refer Exhibit 5C).• Phule Market has emerged as the most preferred destination for shopping of clothes and accessories. (Refer Exhibit 5D).• Phule Market and Station Road have emerged as the most favored retail areas for shopping of electronic goods and accessories. (Refer Exhibit 5E). It is evident from the above tables that Phule Market and Golani Market is the hub of retail activities in the city• Shri Natvar Cinema Hall in Navi Peth emerged as the most widely visited cinema hall for watching movies. (Refer Exhibit 5F).• National Highway (NH 6) has a large number of good hotels, restaurants and dhabas along it. These spots are the favored locations for eating joints. (Refer Exhibit 5G). 12
  13. 13. INTRODUCTION - KHANDESH CENTRALCETL thus decided to develop a massive regional destination and community centre “KhandeshCentral” offering space for Leisure, shopping, food, entertainment, hotels, restaurants,multiplex, services, farmers market and fitness covering 550,000 sq ft in Jalgaon, Maharashtra.The project aims to offer ‘value for money’ products to customers. The VALUE theme of theproject has been conceived with an intention to integrate easily with the local community andensure that there is no inhibition / fear / any negative perception towards the project in so faras the local community is concerned. Thus, at least 80% of the offering viz. retail, food,entertainment etc. would offer to the consumers, the benefits of quality at low and affordableprices.The catchment for development has been delineated by assessing the percentage probability ofthe preferences of people to travel the average distance for a particular usage. Based on thedistance criteria and based on the travel characteristics it was observed that major part of thecity is part of the primary catchment of the site. A distance of 5.0 km radius has beenconsidered assuming that most of the trip to site would take 10 to 15 minutes travel time inmotorized trip. The primary catchment covers major parts of the city, while the secondarycatchment covers the suburban areas of the city. (Refer Exhibit 6).The secondary catchment can be broadly divided based on physical contiguity of the city andthe other based on the dependency of nearby areas on the city. The secondary catchment fordevelopment at the property also covers Bhusaval and other nearby towns, as these aredependent on Jalgaon for higher order shopping, leisure, entertainment and higher orderhealth and educational facilities.The project would provide composite infrastructure and amenities like adequate car parking,pantry on each floor, fire fighting systems, power supply, generator power back up, commonlighting, water pumps and 24 hr. security, to name a few. (Refer Exhibit 7C) 13
  14. 14. A comprehensive tenant mix offering a range of products, services and activities form part ofthe project. (Refer Exhibit 7D)For further details on the mall cum community center refer to exhibit 7.Schemes offered to the Retailers:National Retailers: • Fixed Rental Model – Rs 55/- per sq ft per month on chargeable area OR Revenue Share Model - 12% of net sales as revenue share or Rs.45/- per sq. ft. per month on chargeable area as Minimum guarantee, whichever is higher • CAM charges: Rs. 12/- per sq. ft. per month on chargeable area fixed for first three years or as per actual. • Tenure: 9 Years • Lock in period: 5 Years (For further details on the financial scheme for national retailers please (Refer Exhibit 7E)Local Retailers: • Refundable deposit of Rs 6000 per sq ft. • Rent Rs 1 per sq ft per month • Common Area Maintenance charges as applicable The aforesaid prices will entitle the retailer/ investor a lease option of 9/18/27 years. (For further details on the financial scheme for local retailers please (Refer Exhibit 7G)Promotions and launch of the project in Jalgaon: 14
  15. 15. The promoters needed to raise capital fast as they had to clear their first installment of debt.Thus they decided to target the following: A. Investors: To invest for returns B. Existing Retailers: To shift / expand their business. C. New Business Entrepreneurs : for new retailing opportunities D. Brokers who can bring investors as well as retailers.CETL invited the above mentioned groups to a seminar. For agenda of the seminar see (Referexhibit 8A). The seminar was not very successful.CETL followed the seminar with advertisements in the Marathi newspapers on the front page.The advertisement and hoarding designs are displayed in exhibit 9A-E. CETL’s campaign was totarget the local farmers who wanted their children to get into business, by offering themfranchisees and new business opportunities. To do this, CETL also invited Franchisee India tocome and present their franchisee models for the new age entrepreneur whilst also explainingthe scheme to existing retailers and investors.After putting hoardings on all major highways coming in and going out of Jalgaon and coveringall the major markets and chowks the marketing team realized that there was too muchinformation and people passing by in vehicles were unable to read everything on the hoardings.Thus they decided to give more prominence to the things CETL wanted to be highlighted andchanged the hoardings at all the prominent locations. (Refer Exhibit 9 F-H for all thepromotional material published).The challenges faced by CETL: • CETL got close to 200 calls on the same day as the advertisement. 30 prospective buyers also came in to the site. Despite this response CETL was unable to translate more than 12 shops into sales (leasing of shops for 9/18/27) years. 15
  16. 16. • The question was, despite a successful advertising campaign and an overwhelming response why was CETL unable to convert the other leads into sales?The promoters of CETL Ashesh, along with the top management, stared at theseuncomfortable situation as they discussed during the meeting for possible way outs from thissituation. Why the time-tested resources, who have scripted many success stories before,were failing now? Ashesh realized that answers had to be found very quickly, or unless hisdream of a mall in a Tier-III city will not be realized and he will have to taste his first everdefeat. 16
  17. 17. EXHIBIT 1 17
  18. 18. EXHIBIT 2EXHIBIT 3A:Monthly expenditures of Jalgaon people on various activities Monthly expenditure Shopping of Watching Eating out on various activities clothes & movies accessories up to 500 96 68 56 501 to 750 4 0 15 751 to 1000 0 0 1 1001 to 2000 0 0 0 2001 to 3000 0 0 0 3001 to 4000 0 0 0 above 4000 0 0 0 Total 100 68 72 18
  19. 19. EXHIBIT 3B:Important factors for shopping, leisure and entertainmentEXHIBIT 3CAttraction criterion for shopping, Leisure and entertainment activities 19
  20. 20. EXHIBIT 3DPreferred format of shopping Jalgaon % Preferred format of Number Distribution shopping Shopping Centre 45 45 (moderately priced products) High street shops 26 26 Shopping Centre (branded 25 25 products) Shopping mall 3 3 Sahakari bhandar 1 1 Total 100 100EXHIBIT 3EResponse for a mall type development in Jalgaon Response for a mall type Number % development in Jalgaon Distribution Excellent 49 49.00 Good 40 40.00 Fair 7 7.00 Poor 4 4.00 Total 100 100.00 20
  21. 21. EXHIBIT 3FWillingness of Jalgaon people to visit the mall. Willingness to visit the Number % mall Distribution Definitely 60 60.00 Most likely 24 24.00 Likely 13 13.00 Not likely 2 2.00 Very unlikely 1 1.00 Total 100 100.00EXHIBIT 3GType of retail format expected in the proposed retail development Type of retail format Cumulative % expected in the proposed preference Distribution retail development of respondents Exclusive brands 28 12.73 Local brands 45 20.45 Multiplex to be a part of 92 41.82 the mall Moderately priced 55 25.00 products Total 220 100.00 21
  22. 22. EXHIBIT 3HSocio Economic classification Number % DistributionOf the householdA1 9 9.00A2 26 26.00B1 25 25.00B2 26 26.00C 13 13.00D 1 1.00Total 100 100EXHIBIT 4AResponse for a mall type Number % Distributiondevelopment in JalgaonExcellent 23 38.98Good 26 44.07Fair 7 11.86Poor 3 5.08Total 59 100.00Willingness to have a shop Number %in the proposed retail Distributiondevelopment in Jalgaon EXHIBIT 4BDefinitely 10 16.95Very likely 11 Commodity 18.64 CumulativeLikely 20 33.90Not likely 2 3.39 figuresVery unlikely 16 22 27.12Total 59 100.00
  23. 23. Men’s wear 9 Ladies wear 6 Electronic goods 5 Jewellery 4 Consumer durables 3 Mobile phones and 3 accessories Grocery 2 Food 2 Furnishings 2 Pharmacy / medicine 2 distributors Interiors/ finishes / 2 hardware Footwear 1 Luggage / bags 1 Watches 1 Children’s wear 1 Music / CDs store 1 Computer and accessories 1 Furniture 1 auto mart 1 agro items 1 Others 1 Total 50EXHIBIT 4CResponse for the area people would like to purchase % Carpet area Number Distribution 100 to 200 sq.ft, 4 9.76 201 to 500 sq.ft, 12 29.27 501 to 750 sq.ft, 6 14.63 751 to 1000 sq.ft, 5 12.20 1001 to 2000 sq.ft, 9 21.95 > 2000 sq.ft, 5 12.20 23
  24. 24. Total 41 100.00 24
  25. 25. EXHIBIT 4DArea preference on floorsEXHIBIT 4E: Type of ownership preference Type of ownership of shop Number % Distribution Owned 36 87.80 Leased / rented 5 12.20 Total 41 100.00 25
  26. 26. EXHIBIT 4F: Area of their present shop in Jalgaon. % Area of the present shop Number Distribution 100 to 200 sq.ft, 3 5.26 201 to 500 sq.ft, 17 29.82 501 to 750 sq.ft, 8 14.04 751 to 1000 sq.ft, 6 10.53 1001 to 2000 sq.ft, 14 24.56 > 2000 sq.ft, 9 15.79 Total 57 100.00EXHIBIT 5A 26
  27. 27. EXHIBIT 5B EXHIBIT 5CPreferred location for Number Preferred location for Numbershopping of vegetables shopping of grocery itemsand fruits Phule Market 33Golani Market 32 Golani Market 13Shbhash Chowk 11 Dana Bazzaar 11Baliram Peth 8 Navi Peth 8Phule Market 8 Baliram Peth 5Sindhi Colony 5 Navjeevan shopee 5Gandhi Market 4 Shahu Complex 4Shivaji Nagar 3EXHIBIT 5E EXHIBIT 5DPreferred location for Number Preferred location for Numberoccasional shopping occasional shopping(clothes and accessories) (electronics and Market 76 accessories)New B J Market 4 Phule Market 28Navi Peth 4 Station Road 25Central Phule Market 3 Navi Peth 12Station Road 1 Tower Chowk 9 Golani market 6 Khandesh Complex 3EXHIBIT 5F EXHIBIT 5GPreferred location for Number Preferred location for Numberwatching movies eating outNatwar 51 Along NH 6 26Natraj 9 Tower Chowk 14Rajkamal 7 Navi Peth 9 27 Station Road 5 Ajantha Chowk 3
  28. 28. 28
  29. 29. EXHIBIT 6EXHIBIT 7A Project Statistics:Built up area 550000 sq ftFood court & Restaurants 50000 sq ftHypermarket area 50000 sq ft4 screen multiplex & Entertainment 40000 sq ftBanquet + hotel 50000 sq ftVanilla Retail Shops (different sizes) 200000 sq ftMini Anchor 80000 sq ftJewellery Anchor 25000 sq ftFarmer Market 25000 sq ftWarehousing space 25000 sq ftEXHIBIT 7B 29
  30. 30. Target Audience:Sr.No. Project Offering Target Audience1. Hyper Market House wives/families2. Multiplex Families / Youth3. Entertainment Families / Youth4. Food Families / Youth / Visitors / Tourists5. Disco & Pub Youth Youth / House wives / Tourists / Students6. Shops (all categories) etc.7. Restaurants Families / Visitors / Tourists8. Saloon All sections – middleclass & above Students, families, youth, senior citizens,9. Open area visitors Students, families, youth, senior citizens,10. Amphitheatre visitors11. Banquet halls/terrace All sections of the local community12. Community Centre All sections of the communityEXHIBIT 7CSalient features:  One stop leisure, retail, food, services, fitness and entertainment destination 30
  31. 31.  Located in City Centre and at the junction of M.G.Road & Jilla Road next to railway station High traffic density zone in commercial/ retail downtown area Part of a comprehensive development covering 35 lakh Sq.ft. In city centre. Huge open space (1.5 lakh sq ft) in front of mall to become a leisure destination of the city. Open space also to be used for promotional activities to enhance footfalls for the mall. Four Screen multiplex equipped with all modern leisure facilities. Air conditioned 2,50,000 sq ft parking space 6 escalators and 6 elevators Play area for children and kid zone Modern and artistic interiors 100% power backup facility Continuous water supply 24x7 Security and camera surveillance Firefighting equipments and fire exits 31
  32. 32. EXHIBIT 7DTenant MixSr. No. of Total Area Name LocationNo Shops (Sq. ft.) Accessories (Hand Bags, Ties, Belts1 Few 4500 LG, G, F etc.) Mens Apparels (Denims, Casuals,2 Many 23000 LG,G Formals, Ethnic)3 Artificial Jewellery 1 or 2 1000 F4 Bakery 1 or 2 1200 LG, S5 Bank Branch & ATM 3+4 18000 LG,G,F Bathroom Fittings(Home6 2 2000 F Improvement)7 Beauty Parlor & Hair cutting 1 1000 F8 Beauty Products 1 or 2 1000 F9 Books 1 to 3 4279 S10 Coffee Shop 1 1386 G11 Computer Parts 1 500 LG12 Cosmetic 1 500 F13 Cyber cafe & Business Center 1 1500 LG14 Discount Store 2 or 3 4500 LG 32
  33. 33. 15 Entertainment 1 6832 S16 Fashion Anchor 2 14000 G, F17 Flowers 1 200 G18 Food Court & Kitchens 14 22834 S19 Footwear’s (Formal, Women’s, Sports) 6 to 8 10000 LG, G, F Furniture Anchor (Home20 1 7000 F Improvement)21 Gift 2 1500 LG,G22 Gym & Sports Equipment 1 3575 S home Furnishing (Home23 1 to 3 2500 F Improvement)24 Hypermarket 1 35000 G25 Jewellery 1 16000 LG,G26 Kids Apparels 2 to 4 2000 F27 Kids Shoes 1 or 2 500 F28 Travel Agent and Money Exchange 2 386 LG,G29 Kitchen (Home Improvement) 1 or 2 1000 F30 Ladies Apparels Many 12000 F31 Leather Goods 2 to 4 1700 F32 Luggage 2 to 3 2500 LG,G 33
  34. 34. 33 Medical 1 or 2 1500 LG34 Mobile Stores 1 to 4 1000 LG,G35 Multiplex 1 26300 LG,S36 Music 1 776 S37 Optician and Eyewear 1 2000 F38 Party Terrace 1 6000 S39 Perfumes 1 or 2 500 G40 Photo Shop 1 300 LG41 Repairs-Electronics 1 500 LG42 Restaurants 3 or 4 11190 LG,S43 Sogo Type Market 1 or 2 20000 F44 Sports Wear 1 or 2 1000 G45 Sweet Shop 1 or 2 1200 LG,S46 Toys 2 to 4 2500 LG47 Watches 2 to 3 1500 G48 Web world 1000 LG White Goods Anchor (Home49 1 5000 F Improvement)50 Woman Accessories 1 to 4 500 F 34
  35. 35. 51 Kerala Message 1 2000 S52 Optional (Music Instruments) LG53 Optional (Laundry) 35
  36. 36. EXHIBIT 7E 36
  37. 37. Exhibit 7F1 Efficiency Ratio 100:802 Compensation Free Period 60 days. 6 months i.e 2 month on signing of LOI, 23 Security Deposit month on signing of agreement & balance 2 months on possession for fit-out. Fixed Rental Model – Rs 55 per sq ft per month on chargeable area OR Revenue Share Model - 12% of net sales as revenue share or Rs.45/- per sq. ft. per month on chargeable4 Conducting Fees / License Fees area as Minimum Guarantee which ever is higher Rs. 12/- per sq. ft. per month on chargeable Common Area Maintenance5 area fixed for first three years or as per Charges Actuals.6 Tenure 9 Years (3+3+3)7 Lock in Period 5 years8 Escalation 15% after every 3 years9 Car Parking ample parking available10 Legal Fees Each party to bear their own Legal costs.11 Stamp Duty & Registration To be borne by Both the parties equally. 1. Signage space 2. Standard brick/ masonary walls with rough plaster 3. Main electricity cable (single point) with meter 4. Main phone Amenities to be provided by cable (single point) 5. Main internet cable12 the Lessor (single point) 6. Water supply for sprinkler system (single point) 7. Evaporating cooling system for Common area 8. 100% power back up Estimated date of13 On or before March 2010 Completion / Possession 37
  38. 38. EXHIBIT 7GPOLICY FOR JALGAON RETAILERSPRICING The pricing structure applicable, under this scheme would be a. Refundable deposit of Rs 6000 per sq ft. b. Rent Rs 1 per sq ft per month c. Common Area Maintenance charges as applicable The aforesaid prices will entitle the retailer/ investor a lease option of 9/18/27 years.Terms & Conditions 1. Only for those retailers/ investors booking shops under the scheme. 2. Furthermore, this rate would be applicable for a limited number of shops. 3. Thereafter the prices would increase and the terms offered would change. 4. These terms would not be applicable for any bookings for which applications are not made under this scheme. 5. In case, the demand exceeds supply, the shops would be allotted at the discretion of the management taking into account a. first come first serve basis b. Value being added by the retailer to the project (different service or product or anything else) In case of similar terms and demand, a lottery system would be used to determine the retailers who are to be allotted shops. 38
  39. 39. SALE OF RIGHTS 1. The aforesaid prices will entitle the retailer/ investor a lease option of 9/18/27 years. These prices are at a substantial discount over the prevailing market prices in the City. 2. There will be a lock in period of 3 years till which time, the retailer will not be permitted to assign/sell the rights to 3rd party. 3. The retailer/ investor has the flexibility to sale/ assign rights to a 3rd party after the expiry of 3 years lock in period. 4. This option enables the retailers/ investors to get appreciation of property value. 5. Based on studies and the prevailing market scenario, it is estimated that the value of this rights at the end of the lock in period of 3 years would be in the region of Rs 12000-15000 / sq ft thereby enabling the retailer/investor to reap huge gains from appreciation of property.EXHIBIT 8A Agenda for date of Seminar 1 Welcome 2 Registration- Hand over of brochure 3 Welcome drink/tea 4 Audio visual running on screen of current reyail scenario 10 mins 5 Audio visual of Khandesh central. 10 mins 6 Presentation of khandesh central by our speaker 15 mins 7 Franchisee india for presentation. 15 mins 8 Question and Answer Session 25 mins 9 Thanks giving speech 2 mins 10 Snacks and refreshments 11 Buying of application forms by prospective retailers. 39
  40. 40. EXHIBIT 9AAdvertisement No 1. 40
  41. 41. EXHIBIT 9BEXHIBIT 9C 41
  42. 42. 42
  43. 43. EXHIBIT 9DEXHIBIT 9E 43
  44. 44. 44
  45. 45. EXHIBIT 9FEXHIBIT 9G 45
  46. 46. 46
  47. 47. EXHIBIT 9H 47