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IRMC Analysis on

India Retail Opportunity

December 16, 2005

© Integrated Retail Management Consulting


INDIA: #1 EMERGING RETAIL
GROWTH MARKET

A.T. Kearney Global Retail Development Index (GRDI)

Most
Unsaturated:

Modern Retail
Penetration:
< 3%

Large Market:

Retail Market Size:

~US$ 330
billion

Source: A T Kearney
GRDI

© Integrated Retail Management Consulting 2005


WHY INDIA IS #1
RETAIL GROWTH MARKET

Market Growth: 8 - 10% annual growth with 30% + growth Market


rate for modern format retail. Growth:

Overall
Strong Economy: Fourth largest economy on Purchasing
Growth:
Parity Basis.
8 – 10%
Market Opportunities: Growing consumer aspirations CAGR
together with very low penetration of modern format
retailing.
Modern Format
Infrastructure: Large amount of quality retail space being Growth:
added.
25 - 35%
CAGR

© Integrated Retail Management Consulting 2005


INDIA RETAIL GROWTH OPPORTUNITY

(% Penetration) Tremendous
100 Head Room for
90 Growth:
80
75
70
60
55 < 3%
50 40 Penetration
35
40 30
30 20 17
20
10 2.5
0
Taiwan M alaysia Thailand Brazil Indonesia Poland China India

Taiw an Malaysia Thailand Brazil


Indonesia Poland China India

Source: IRMC Research

© Integrated Retail Management Consulting 2005


LARGEST RETAIL CHAINS

Largest retailers (number of stores)


Number
Sector Retailer of Stores Largest Chains
Public Distribution System 46300 in Public
Post Offices 16000
Petrol Pumps 1800 Sector:
KVIC 7000
Defense Stores 3400 Large Chains:
Footwear Bata 4700
Health and Beauty care Shahnaz 350
Apparel and textiles Raymond 320 Small
Café Café Coffee Day 200 overall store
Watches Titan 196
Food and grocery Subhiksha 142
numbers
Restaurants Pizza Hut 120
Pharmacies Apollo 90
Music Retail Planet M 75
Jewellery Tanishq 67
Consumer Durables Vivek's 50
Books Retail Crossword 35
Department stores Shoppers' Stop 20
Source: IRMC Research

© Integrated Retail Management Consulting 2005


INDIA: A NATION OF SHOPKEEPERS

Traditional
Indian
Retailing

Number of retail

outlets:

12 million

© Integrated Retail Management Consulting 2005


SHARE OF MODERN RETAIL FORMATS

(US$ billion) Largest


16.00 Opportunity in
14.00 Food Retailing:
12.00
Size of Food
10.00 Retail :
8.00
US$ 151
6.00
billion
4.00
2.00 Share of Modern
Food Retail:
0.00
Health and M edical care Home décor Consumer Jewellery and Books, Clothing Footwear
beauty and durables watches M usic, Gifts < 1%
products furnishing

Traditional Retail Modern Retail


Source: IRMC Research

© Integrated Retail Management Consulting 2005


INDIA NEW MALL DEVELOPMENT

Large Space
Mall Space in Key Indian Cities Development:

25 Additional Mall
20 Space:
Million Sft

15
47 million
10
sft.
5

0
Mumbai NCR Hyderabad Pune Bangalore

Q 1 2005 Additional Space by 2007

Source: Knight Frank

© Integrated Retail Management Consulting 2005


CHINA Vs. INDIA RETAIL

(US$ per capita) Replicating


(US$ billion)
China
1400 700
Retail
1200 600
Success:
1000 500
800 400
Eight
600 300
400 200
year lag
200 100
0 0
1997 1998 1999 2000 2001 2002 2003 2004 2005

China GDP / capita (USD) India GDP / Capita (USD)


China Retail sales (USD bn) India Retail sales (USD bn)

Source: M+M Planet Retail

© Integrated Retail Management Consulting 2005


INDIA NEW MALL DEVELOPMENT

Large Space
Development:
Mall Space in Key Indian Cities

25 Additional Mall
Space:
20
Million Sft

15 47 million
10 sft.
5

0
Mumbai NCR Hyderabad Pune Bangalore

Q 1 2005 Additional Space by 2007

Source: Knight Frank

© Integrated Retail Management Consulting 2005


INDIA RETAIL: REAL ESTATE RENTALS

(US$ per sft per month) Low Rentals for


Prime Real
90
Estate:
80
70
60 US$ 5 / sft
50 per month
40
30
20
10
0
Hong Singapore Shanghai Beijing Bangkok Jakarta Delhi Manila
Kong

Source: CBRE Research

© Integrated Retail Management Consulting 2005


INDIA RETAIL: SALES PER SQUARE FOOT

Opportunity to
Leverage Low
Rentals:

Rent multiples:

15 X

Sales / sft multiples

3X

Source: M+M Planet Retail

© Integrated Retail Management Consulting 2005


INDIAN CONSUMER

© Integrated Retail Management Consulting 2005


Unmatched Demography

Large Young
Working Class
Base:

Population below
25 years of age :

55%

Source : Statistical Outline of India

© Integrated Retail Management Consulting 2005


INDIA CONSUMER BOOM

Ramp-up in mobile subscriber base Large

400
Consuming
Class:
350 India China

New Mobile
300
Connections:
250
1.5 million
Mn Subscribers

200 per month


150
India in Sept 2001 is equal to
100 China’s customers in mid 95

50

0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: CLSA Asia-Pacific Markets

© Integrated Retail Management Consulting 2005


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India
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FAX: +91-80-25205097
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Email: bikash.kumar@integratedretail.com

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© Integrated Retail Management Consulting 2005