European businessgroup india and retail landscape 4th feb 10v1 5
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Transcript of European businessgroup india and retail landscape 4th feb 10v1 5
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Retail Evolution, Trends & Business Opportunities in India
Mr. Rajan Bharti MittalVice Chairman and Managing
DirectorBharti Enterprises Limited.
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India: An Emerging Economic Power
Evaluating New Business Opportunities
Indian Retail: Potential and trends
The Bharti Story
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The India Story
• Socialist policies – minimal private sector role
• Bureaucratic
• Protected market
• Small consumer markets
• Underdeveloped infrastructure
• One of the fastest growing economies ; 9%+ growth rate for 5 years prior to current crisis
• Resilient Economy – 5-6% growth at the peak of the global crisis
• Opening up sectors for investment
• Promising consumer markets
• Significant investment in infrastructure development
YESTERDAY
TODAY
• 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
An Enabling Environment
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Demographic Dividend
• 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.
• Largest working age population worldwide by 2050.
25
34 37 38
44
0
10
20
30
40
50
Ind
ia
Ch
ina
US
Russia
Jap
an
0-19 yrs41.8%20-59 yrs
50.7%
60yrs & above7.5%
• Enormous consumption force: Large youth population
• Global production force in service:
• 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.
Growing urban & Working population
Powerful production & consumption forceDemographic Profile
Population Median Age (In Years): 2008E
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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
India’s 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)
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Macro Economic Environment Driving the unfinished agenda
Fiscal Balance
Driven by stimulus packages fiscaldeficit currently at 6.8% of GDP.
To be brought down to 3% over 5years
Tax Reforms
Indirect tax: GST roll out by FY11 To overcome the dual tax regime; simplified structure; creating a unified market.
Direct tax: Proposed Direct Tax code aiming at substantial increase in income tax limit
Disinvestment
Plans to dilute 10% in many profit making PSUs
A source of spending in social infrastructure
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.
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India: An Emerging Economic Power
Evaluating New Business Opportunities
Indian Retail: Potential and trends
The Bharti Story
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Founded in 1976 with an initial capital of $ 1000. Started with small scale manufacturing units
Started manufacturing telephones in technical collaboration with Siemens AGTie-up with Takacom corp., Japan for answering machines in 1986, LG, South Korea for cordless phones & Systema for telephone terminals in 1988
1985
Import of portable power generators from Japan for distribution in India
Formed a Consortium with Vivendi and others to bid for Cellular Licences
1976
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)
1995
1992
1982
Our Beginnings
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Bharti AirtelIndia & SAARC Region
Telecom
SeychellesSeychelles IslandsJersey AirtelChannel Islands
Comviva
TechnologiesTelecom software
Bharti AXA Life InsLife Insurance
Bharti RealtyReal Estate
Indus TowersPassive Infra Sharing
Bharti TeletechComm. & Media Devices
Bharti RetailRetail
Guernsey AirtelChannel Islands
Bharti Wal-MartWholesale Cash & Carry
Bharti AXA Gen InsGeneral Insurance
Bharti InfratelPassive Infra
Bharti AXA
Investment
ManagersAsset Management
FieldFresh FoodsAgri Exports
Centum Learning
LtdTraining & Dev
TELECOM
SERVICESFINANCIAL
SERVICES
RETAIL /
WHOLESALEEMERGING
BUSINESSES
Bharti Foundation CSR activities
Bharti Foundation CSR activities
Our Businesses
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TELECOM
SERVICESFINANCIAL
SERVICES
RETAIL /
WHOLESALEEMERGING
BUSINESSES
Our Partners
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Bharti Group: Our Key Differentiators
Transformation• Significant impact on the lives of
people
• Attract and nurture top talent
Innovation• Business model
• Market offering
Focus on
Core
Competence•Outsourcing
•Scalability
Operating
Principles
Partnership•World-class
partnerships
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India: An Emerging Economic Power
Evaluating New Business Opportunities
Indian Retail: Potential and trends
The Bharti Story
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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 2009-11 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
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Key emerging sectors in India
InfrastructureStepping up spending; 5% in 2006-07 to 9% of the GDP by end of 2012.
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
EducationLargest 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
100% FDI allowed through the automatic route,
Future potential:
• Massive shortfall
• Emerging segments
Health CareGrowth of 9.3% between 2000-2009
Current size is USD 35 billion; Projected to grow 23% per annum to touch $77 billion by 2012
Healthcare facilities to contribute to 70% of the total sector touching a figure of $54.7 billion by 2012.
Investment of $14.4 Bn needed by 2025 to increase its bed density to at least two per thousand population.
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
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India: An Emerging Economic Power
Evaluating New Business Opportunities
Indian Retail: Potential and trends
The Bharti Story
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Retail Sector poised for phenomenal growth
Source:India Shopping Trends, 2008 - Technopak
ORGANISED RETAIL EXPECTED TO GROW 35-40% CAGR
The Indian
Retail Sector,
currently the
Fifth largest in
the world, is
poised for
phenomenal
growth in the
coming years
Size & Position in the current Scenario
Current Size & Future growth of Organized Retail in India
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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 SME’s 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 India’s demographic dilemma Dec’08
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Key Challenges
Immense ethnic diversity
Absence of Infrastructure and good retail space
Workforce Management (talent crunch)
IT Infrastructure
Supply Chain
Legal
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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
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Big Transformations…Brave Actions...
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Thank You