100 Malls Across India

Setting Up 100 Malls across India

Submitted By :Lipi Patel (11) Sharmin Jal (23) Vidya Krishnan (32) October 15, 2008

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Agenda  Assumptions  About Real Estate Industry  About Retail Industry  Organization Structure October 15, 2008

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Assumptions - SLV Company  Investment worth Rs 9,000 crore in the country over 5-7  Growth strategy  

100 entertainment and commercial centers Across India covering tier I, II and III cities

 Company will primarily be a developer  Format of the malls   

income levels market saturation level of malls infrastructure availability of the location selected

 Ideal format   

floor space of 10-25 lakh square feet approximately underground parking facilities Two to three storied

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Real Estate Industry October 15, 2008

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Why Invest In Indian Real Estate?

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Economy growing at 8.1%

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Presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus creating more demand for corporate space.



Real estate investments in India yield huge dividends - foreign investors  70 percent making profit  12 percent are breaking even.

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Organized retailing is at a very nascent stage

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Size and Structure of real estate & construction  Real Estate and Construction is a $12 billion industry in India  Highly fragmented sector – very few organized players    Real estate developers-only a local or regional presence  Modest participation of large corporations in the sector  Margins are higher in India (>20%) as compared to the developed markets (5-6%)  Lack of infrastructure caused development to be very concentrated in cities. October 15, 2008

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POLICY  100% FDI is allowed in real estate development subject to minimum scale norms of either:    25 acres in case of serviced plots or integrated townships or  50,000 sq. mtrs. of built-up area for construction development projects  Venture funds allowed to invest in real estate  Prominent Indian corporate like ICICI Bank, SBI and HDFC have promoted real estate venture funds    Foreign Real Estate and Finance companies like GE Commercial Finance, Tishman Speyer, Ascendas and Farallon Capital have entered the Indian market October 15, 2008

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Our competitors

Company

Revenue (2006, $million)

Real-Estate Developed (million sq.ft)

172

30

Mumbai, Chennai, Dubai

143

40

114

29.5

Delhi, Mumbai, Kolkata, Chennai, NCR*,Bangalore, Hyderabad Delhi, NCR*,

Hiranandani

Unitech

Mumbai, Mohali, Kolkata

DLF 80 Ansal October 15, 20088th Sept, 2007

Footprint

15

Punjab, Delhi, NCR*, Lucknow 8

GROWTH POTENTIAL  Several factors are expected to contribute to the rapid growth in Real Estate  availability of loans at low interest rates  tax incentives  growing middle class with higher savings  Increasing demand for commercial and office space especially from the rapidly growing Retail, IT/ ITeS and Hospitality sectors  The recently announced Urban Infrastructure Renewal Mission is expected to give a boost to the sector.  $11.5 billion earmarked over the next five years for 60 cities October 15, 2008

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INVESTMENT OPPURTUNITY  Investment opportunities exist in almost every segment of the business  Housing: About 20 million new units expected to be built in five years  Office space for IT/ITeS: Fivefold increase in office space requirement over the next 3 years  Commercial space for organized retailing: 200 sq. ft. by 2010 October 15,million 2008  Hotels & Hospitality: Over

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INVESTMENT OPPURTUNITY  Investment opportunity of over $50 billion in the next five years  Major foreign institutional investors including Morgan Stanley, Merrill Lynch, AIG, Blackstone and Calpers have shown interest in investing in Indian real estate

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Retail Industry October 15, 2008

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WHY INVEST IS RETAIL DOMAIN 

Fragmented in nature 

organized retailing contributes 5 percent of the total retail market



Growth in per capita income, household consumption, changing demographics and improved standards of living



Driving growth of organized retail

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More than 60 million sq.ft of quality retail space expected to come up during 2006-09

FDI in Retail allowed only in single brand stores with 51% Octoberequity 15, 2008 or through franchise route 

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DEMAND TRENDS AND DRIVERS OF RETAIL Structural changes in Indian Retail

Retail – another big growth driver Company Targets + 75% CAGR in shelf space expansion over next 4 years October 15, 2008

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Source: CLSA Asia-Pacific Markets, Company targets (incl

POLICY  100% FDI is allowed in Cash and Carry Wholesale formats  Franchisee arrangements are also permitted in retail trade  FDI upto 51% is permissible in the retail trade of single brand products October 15, 2008

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SIZE  In 2004 Retail sales were $206 billion approx 30% of GDP  ‘Organized Retail’ constitutes only 5% of total retail sales - $6.4 billion p.a.    Organized retail’ has been growing at over 20% p.a. in the last 5 years October 15, 2008

 Indian retail market is

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STRUCTURE 

Highly fragmented market : mostly owner-run ‘Mom and Pop’ outlets

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Over 12 million retail outlets with average outlet size less than 500 sq.ft

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Apparel retail is the largest organized segment in India

Now a few medium sized Indian retail chains like Pantaloon, Shoppers’ Stop, Food World (RPG Group) and October 15, 2008 Westside (Tata Group) drive the whole market.

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RETAIL GIANTS

Players

Revenues ($ million) (2005-06)

Space (sq. ft.)Dec 2004

Format

150

1,000,000

F&G, Specialty

135

590,000

100

740,000

Lifestyle International

53

325,000

F&G, Specialty Specialty Retail Specialty Retail

Trent (Tata)

38

270,000

Pantaloon Retail RPG Retail Shoppers’ Stop

October 15, 2008 Source: KSA Technopak, TSMG

F&G, Specialty

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SUCCESS STORY OF ORGANIZED RETAILING 

Expected to grow three-fold in the next 10 years from $206 billion to $660 billion by 2015  

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India is expected to be among the top 5 retail markets in the world in 10 years

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Likely to account for 12-15% of total retail sales by 2015 The high growth projected in domestic retail demand will be fuelled by

 The migration of population to higher income segments with increasing per capita incomes    An increase in urbanization.  Changing consumer attitudes especially the increasing use of credit October 15, 2008  19 cards  The growth of the population in the 20 to 49 years age band

OPERATING RETAIL FORMATS 

There is retail opportunity in most product categories and for all types of formats  

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Food and Grocery: The largest category; largely unorganized today  

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Home Improvement and Consumer Durables: Over 20% p.a. CAGR estimated in the next 10 years  

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Apparel and Eating Out: 13% p.a. CAGR projected over 10 years

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Opportunities for investment in supply chain infrastructure: Cold chain and logistics

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Significant potential to emerge as a sourcing base for many

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'India's Next Destination Cities' Targeting Tier II & III cities           

Chandigarh Ludhiana Nagpur Indore Kochi Jaipur Ahmedabad Surat Vishakapatnam Mysore Coimbatore

 Tier 1 Cities like Bangalore and Chennai October 15, 2008

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$7,785

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Rs.67,370

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$ 5142

$ 6277

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$ 2,891

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$3965

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$3,278

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$ 4,192

$ 3,737

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$3,687

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$3,687

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$4,844

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Organization Structure 31

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References  http://www.indianground.com  http://www.rediff.com  http://www.indianrealtynews.com  http://www.labnol.org/india  http://www.investmentcommission.in/retail.htm  http://www.indiaretailing.com October 15, 2008

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Thank You

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