Retail Evolution, Trends & Business Opportunities in India

India: An Emerging Economic Power

The Bharti Story

Evaluating New Business Opportunities

Indian Retail: Potential and trends

The India Story

TODAY

One of the fastest growing economies ; 9%+

growth rate for 5 years prior to current crisis of the global crisis

Resilient Economy 5-6% growth at the peak 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

Demographic Dividend
Population Median Age
50 40 30 20 10 0 25 34 37 38

(In Years):

2008E
44

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.

China

Russia

India

US

Demographic Profile
60yrs & above 7.5% 20-59 yrs 50.7%

Japan

Largest working age population worldwide by 2050.

Powerful production & consumption force Enormous consumption force: Large youth population Global production force in service:

0-19 yrs 41.8%

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.

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)

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
overcome the dual tax regime; simplified structure; creating a unified market.

Indirect tax: GST roll out by FY11 To

Direct tax: Proposed Direct Tax code

aiming at substantial increase in income tax limit

Disinvestment
making PSUs

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.

Plans to dilute 10% in many profit

A source of spending in social

infrastructure

India: An Emerging Economic Power

The Bharti Story

Evaluating New Business Opportunities

Indian Retail: Potential and trends

Our Beginnings
1976 Founded in 1976 with an initial capital of $ 1000. Started with small scale manufacturing units

1982

Import of portable power generators from Japan for distribution in India

Started manufacturing telephones in technical collaboration with Siemens AG 1985

Tie-up with Takacom corp., Japan for answering machines in 1986, LG, South Korea for cordless phones & Systema for telephone terminals in 1988

1992

Formed a Consortium with Vivendi and others to bid for Cellular Licences

1995

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)

Our Businesses
TELECOM SERVICES Bharti Airtel
India & SAARC Region

FINANCIAL SERVICES

RETAIL / WHOLESALE Bharti Retail

Retail

EMERGING BUSINESSES FieldFresh Foods

Agri Exports

Bharti AXA Life Ins

Life Insurance

Bharti Infratel
Passive Infra

Bharti AXA Gen Ins

General Insurance

Bharti Wal-Mart
Wholesale Cash & Carry

Bharti Teletech
Comm. & Media Devices

Indus Towers
Passive Infra Sharing

Bharti AXA Investment Managers

Asset Management

Bharti Realty
Real Estate

Telecom Seychelles
Seychelles Islands

Comviva Technologies
Telecom software

Jersey Airtel
Channel Islands

Bharti Foundation CSR activities

Centum Learning Ltd

Training & Dev

Guernsey Airtel
Channel Islands

Our Partners
TELECOM SERVICES FINANCIAL SERVICES RETAIL / WHOLESALE EMERGING BUSINESSES

Bharti Group: Our Key Differentiators

Transformation
Significant impact on the lives of people Attract and nurture top talent

Focus on Core Competence

Outsourcing Scalability

Operating Principles
Innovation
Business model Market offering

Partnership
World-class partnerships

India: An Emerging Economic Power

The Bharti Story

Evaluating New Business Opportunities

Indian Retail: Potential and trends

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 200911 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

Key emerging sectors in India

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

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

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

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
annum to touch $77 billion by 2012 to grow 23% per

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

Healthcare facilities to contribute to 70% of the total sector touching a figure of $54.7 billion by 2012.
of $14.4 Bn needed by 2025 to increase its bed density to at least two per thousand population.

Investment

India: An Emerging Economic Power

The Bharti Story

Evaluating New Business Opportunities

Indian Retail: Potential and trends

Retail Sector poised for phenomenal growth

Size & Position in the current Scenario

The Indian Retail Sector, currently the Fifth largest in the world, is poised for phenomenal growth in the coming years

Current Size & Future growth of Organized Retail in India

ORGANISED RETAIL EXPECTED TO GROW 35-40% CAGR

Source: India Shopping Trends, 2008 - Technopak

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

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

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

Thank You