european business group - india and retail

8/3/2019 European Business Group - India and Retail

1/21

Retail Evolution, Trends & Business

Opportunities in India

Mr. Rajan Bharti Mittal

Vice Chairman and Managing Director

Bharti Enterprises Limited.


2/21

India:An Emerging Economic Power

Evaluating New Business Opportunities

Indian Retail: Potential and trends

The Bharti Story


3/21

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 peakof 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


4/21

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 agepopulation in the world by 2010.

Largest working age population worldwide by2050.

25

34 37 38

44

0

10

20

30

40

50

India

China

US

R

ussia

J

apan

0-19 yrs

41.8%20-59 yrs50.7%

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 valueadded - one of the lowest among Asian countries.

Growing urban & Working population

Powerful production & consumption force

Demographic Profile

Population Median Age (In Years): 2008E


5/21

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)


6/21

Macro Economic EnvironmentDriving 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 Toovercome the dual tax regime;simplified structure; creating a unifiedmarket.

Direct tax:Proposed Direct Tax codeaiming at substantial increasein

income tax limit

Disinvestment

Plans to dilute 10% in many profit

making PSUs

A source of spending in socialinfrastructure

Social Programs

72% of population in rural areas

35% of govt. spending is towardsrural schemes; spend has grown by45% annually during last 2 yrs.


7/21




The Bharti Story


8/21

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

Started manufacturing telephones in technical collaboration with Siemens AG

Tie-up with Takacom corp., Japan for answering machines in 1986, LG, South Korea forcordless phones & Systema for telephone terminals in 19881985

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 DelhiBest in class Global partners since beginning - Singapore Telecom, E M Warburg Pincus,USA, British Telecom, UK, Telia, Sweden, New York Life International, AsianInfrastructure Fund(AIF)

1995

1992

1982

Our Beginnings


9/21

Bharti Airtel

India & SAARC Region

Telecom Seychelles

Seychelles Islands

Jersey Airtel

Channel Islands

Comviva Technologies

Telecom software

Bharti AXA Life Ins

Life Insurance

Bharti Realty

Real Estate

Indus Towers

Passive Infra Sharing

Bharti TeletechComm. & Media Devices

Bharti Retail

Retail

Guernsey AirtelChannel Islands

Bharti Wal-MartWholesale Cash & Carry

Bharti AXA Gen Ins

General Insurance

Bharti Infratel

Passive Infra

Bharti AXA Investment

Managers

Asset Management

FieldFresh Foods

Agri Exports

Centum Learning Ltd

Training & Dev

TELECOM

SERVICES

FINANCIAL SERVICES RETAIL /

WHOLESALE

EMERGING

BUSINESSES

Bharti FoundationCSR activities

Our Businesses


10/21

TELECOM

SERVICES

FINANCIAL SERVICES RETAIL /

WHOLESALE

EMERGING

BUSINESSES

Our Partners


11/21

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 CoreCompetence

Outsourcing

Scalability

Operating

Principles

PartnershipWorld-class

partnerships


12/21



Indian Retail:Potential and trends

The Bharti Story


13/21

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


14/21

Key emerging sectors in India

InfrastructureStepping up spending; 5% in 2006-07 to 9% of the GDPby 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% by2012

Successful execution in the PPP mode

Over 60% private sector contribution in ports,

airports and telecom

EducationLargest capitalized space in India with $30 Bn ofgovernment spend (3.7% of GDP).

Private education is currently estimated at $50 Bn(14%CAGR over FY08-FY12E); expected to reach $115 Bn inhe 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% perannum to touch $77 billion by 2012

Healthcare facilities to contribute to 70% of the total sectortouching a figure of $54.7 billion by 2012.

Investment of $14.4 Bn needed by 2025 to increase itsbed 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 at16% 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


15/21




The Bharti Story


16/21

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


17/21

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 chainefficiency

Impact on producers, farmers; direct sourcing from SMEs and farmers;providing critical connect to market place

Investmentsin the range of USD 30+ Billion expected by 2011 in Retail andSupply 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


18/21

Key Challenges

Immense ethnic diversity

Absence of Infrastructure and good retail space

Workforce Management (talent crunch)

IT Infrastructure

Supply Chain

Legal


19/21

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, andan 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


20/21

Big TransformationsBrave Actions...


21/21

Thank You

european business group - india and retail

Documents