The Great Indian Retail Story

Retailers belong to a place called… 1

… a population of mastodons … always ready for cannibalism … invading green pastures worldwide … healthier than ever 2

Retailers – A population of mastodons Global Nine retailers belong to Fortune 100 3 Wal-Mart Home Depot Ahold Kroger Metro Sears Target Albertson's Carref. Retailers

Retailers: Always ready for cannibalism Reliance Fresh Adani Superstores Wal-Mart ASDA Carrefour Promod é s Comptoirs Modernes 4

Retailers: Invading green pastures worldwide International presence of top 20 retailers 5

Retailers – Always healthier than ever Source: IL & FS Investment Managers Limited 6 29% 63.7 1,727 Shopper’s Stop (Since Listing May 2005) 54% 40 991 Trent 89% 60.2 3,561 Pantaloon Retail CAGR Returns 3 Year or On listing (appox) P/E Market Cap Rs Mn Company

Global Retail Scenario 7 Fortune #1 “Wal-Mart” is a Retailer #1 50 Over 50 of the Fortune 500 companies are retailers 25 25 of the Asian Top 200 companies, are retailers 8 Global Retail industry is of size USD 8 Trillion

India’s increasingly affluent middle class - 300 million

Increasing proportion - higher disposable income 83,000 millionaires, India to be the fastest wealth creator by 2010

The New Age Indian Youth

– modern, well-informed, but still entrenched in

Indian value system - Price sensitive

Indian Retail Scenario 8

Market Growth: 8 - 10% annual growth with 30% + growth rate for modern format retail.

Strong Economy: Fourth largest economy on Purchasing Parity Basis.

Market Opportunities: Growing consumer aspirations

together with very low penetration of modern format

retailing.

Infrastructure: Large amount of quality retail space being added.

9 Indian Retail Scenario … Cont’d

Evolution of Indian Retail Weekly Markets Village Fairs Melas Convenience Stores Mom and Pop/ Kiranas PDS Outlets Khadi Stores Cooperatives Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency Historic/Rural Reach Traditional/Pervasive Reach Government Supported Modern Formats/ International 10

Source: A.T Kearny GRDI India: #1 Emerging Retail Growth Market 11

12 Unorganized Retail Organized Retail < 3% Over 12 Million Outlets in India Organized Retail expected to be around Rs.110,000 Cr (USD 25 b) by 2010 Set to grow to 8-10% by 2010

Source: Marketing Whitebook, 2006, Businessworld Consumer Expenditure in Organized Retail 13

• Hyper marts • Large supermarkets, typically (3,500 - 5,000 sq. ft) • Mini supermarkets, typically (1,000 - 2,000 sq. ft) • Convenience store, typically (7,50 - 1,000 sq. ft) • Discount/shopping list grocer • Traditional retailers trying to reinvent by introducing self-service formats as well as value-added services such as credit, free home delivery etc. Retailing Formats Source: CII Report/Retail Scenario in India ~ Unlimited Opportunity 14

Hypermarket

Big Bazaar

Giants

Shoprite

Star Bazaar

Entertainment

Fame Adlabs

Fun Republic

Inox

PVR

Department store

Lifestyle

Pantaloons

Pyramids

Shoppers Stop

Trent

Indian Retailers 15

Entrance of Private Equity 16 NA Bennett & Coleman Vishal Retail NA ICICI Ventures Crossword Rs 450 mn GW Capital Trinethra and Fabmall Rs 350mn ICICI Ventures Subiksha Rs 752 mn IIML, ICICI Ventures and Zodiac Clothing Shoppers Stop Rs 750 mn ICICI Ventures,Bennett & Coleman Pantaloon Retail Amount Investor Company

FDI in Indian Retailing

Franchise - Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango

Manufacturing – Bata India

Distribution - Swarovski, Hugo Boss

Wholesale Trading – Metro Cash & Carry

Food Outlets – McDonald’s, KFC, Pizza Hut, Dominos

17

Benefits of FDI 18

The Changing Indian Consumer

The urban consumer

Getting exposed to international lifestyles

Inclined to acquiring asset

More discerning and demanding than ever

No longer need-based shopping

Shopping is a family experience

Changing Mindset

Increasing tendency to spend

Post Liberalization children coming of age

100 mn 17-21 year olds*. Tend to spend freely.

Greater levels of education

19

• Automatic approval is not allowed for foreign investment in retail. • Regulations restricting real estate purchases, and cumbersome local laws. • Taxation, which favors small retail businesses. • Absence of developed supply chain and integrated IT management. • Lack of trained work force. • Low skill level for retailing management. Challenges of Retailing in India Source: CII Report/Retail Scenario in India ~ Unlimited Opportunity 20

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