investment opportunity internet vesion

For more information, please contact:

Aartee Roy, Vice President, KINDUZ Business Consulting Pvt. Ltd., Mobile: +91-9246185184 /

09246185184, Email: [email protected]

Investment Opportunity

Retail Chain Background and Company Overview




Industry Overview

• At current size of USD 13.1 billion organized retail penetration is 4%

• Retail consumption is expected to grow to USD 430 billion by 2010 and USD

650 billion by 2015, and the share of organized retail is expected to be

20%

• Organized retail has witnessed a CAGR of 35% over the past 5 years

accounting for 1.5% of the GDP

• Retail sector is expected to grow at a CAGR of 50% , to be worth USD 90

billion by 2010o

• Specialty stores and cash-and carry format are estimated to get a share of

22% and 16% respectively in the overall pie

• Bigger cities are likely to corner 62% of the total investment expected to be

made in urban retail

Growth Drivers

India is at a similar inflection point as the US in 60’s-70 and China in early 90’s

with favorable demographics, willingness to spend etc.

Following were the key drivers of growth in consumption in US & Chinese

markets:

• Increase in population pool in the 20-45 age brackets.

• Rapid economic growth leading to increased per capita income.

• Increased urbanization and movement of employment hubs towards cities

and large towns.

• Supply of quality real estate space.

• Increased use of plastic money thereby augmenting product demand.

Proposition

Opportunity to invest in established and growing Retail sector currently pegged at

USD 13 billion

Sector Expertise

• Among the top 5 organized value retailers in the country.

• Commenced operations in August 2005 and already ramped up operations

to 70 outlets spread over 0.5 Million sft. of retail space

• Strong bargaining power with vendors at existing scale of operations.




• Hugely experienced management, with proven capabilities in establishing

retail operations, ground up and scaling operations to achieve critical size

and efficiencies.

Promoters

• Principal promoter of the company, a post graduate in commerce having

over 20 years of experience in organized retailing. Has received “Retailer of

the year” award in the year 2005 & is credited with pioneering and

popularizing the “Supermarket” concept in India.

• The CEO of the company, an engineering and MBA graduate has over 8

years of experience in organized retailing.

Background and Company Overview

• One of top 5 organized value retailers in the country.

• Operating With 70 outlets spread over 0.5 Million sft of retail space

• Professionally managed

• Employee strength of more than 2000 personnel

• More than 80% of projected revenues from Tier 2 cities and non major

metros.

Business Segments and Activities

• Primary target customers – Middle class households with a disposable

income ranging from Rs. 10,000 upwards per month for Supermarkets and

from Rs. 25,000 upwards per month for Hypermarkets

• Operates four formats viz. Super Center, Hypermarket, Supermarket and

Cash & Carry

Categories of merchandise offered includes

• Kirana - daily grocery needs, including fresh fruits and vegetables. Broadly

include all daily kitchen needs of an average household

• FMCG – Personal care and daily FMCG needs

• Consumer Durables and general merchandise – branded consumer

durables such as TVs, refrigerators, washing machines and non

branded/private label small household appliances

• Apparels - all categories of apparels and accessories for men, women and

children




• Food Court - The Company operates a food court at all the Hypermarkets

and select Supermarkets under its own brand. The size and variety of

offering under this category depends on the location and ranges from small

chat stalls to full fledged restaurants.

Current Operations. oft No. of Stores Square Feet

Supermarket 55 115,817

Cash & Carry 1 60,000

Hypermarket 13 231,885

Super Center 1 100,000

Total 70 507,702

Infrastructure

• 0.5 Million sq ft. of operational retail space

• 70 outlets spread across 25 locations

• Total capital expenditure incurred till date Rs. 1 Billion of which Equity of Rs

460 Million funded entirely by promoters

• Achieved sales turnover of Rs. 678 million in FY07

• Achieved sales turnover of Rs. 1132 million in FY08

• Achieved sales turnover of Rs. 915 million in HY-I of FY09

Support Systems

Experienced category managers for procurement and merchandise management

Warehouse operations for marking, sorting, cleaning and packing as applicable to

categories

Control systems for accounting and monitoring of daily sale proceeds

Location Selection

A separate project management team, looking for the following while scouting a

potential location

• Proximity to residential complexes/ apartments, gated communities and

townships

• Extent of commercial/ shopping establishments

• Average income levels of addressable population

• Extent of competition




Overall Business Plan and Capital Requirement

• To rollout 2.1 Million sft. of retail space over a period of two years

o Spread across 6 states and

o Covering a total of 330 outlets

• Targeting a 65:35 mix between Hypermarkets and Supermarkets based on

the area of retail space to be covered

• Plans to rollout new outlets over the next 2 years

Need for Capital

Looking to raise private equity / investment to leverage current setup and meet

requirements for planned expansion

Transaction Overview

• Play on India’s high growth organized retail space.

• Hugely experienced management, with proven capabilities in, establishing

retail operations, ground up and scaling operations to achieve critical size

and efficiencies. Among the leading value retailers in the country

• Current size and scale achieved even with existing capital constraints.

Proven ability to acquire quality retail space at optimal costs




Profit and Loss Statement




Balance Sheet