INDIAS ORGANISED RETAIL INDUSTRY Indian Retail sector consists of small family-owned stores, located in residential areas, with

a shop floor of less than 500 square feet. At present the organized sector accounts for only 2 to 4% of the total market although this is expected to rise by 20 to 25% YOY basis. Retail growth in the coming five years is expected to be stronger than GDP growth, driven by changing lifestyles and by strong income growth, which in turn will be supported by favorable demographic patterns. The structure of retailing will also develop rapidly. Shopping malls are becoming increasingly common in large cities, and announced development plans project at least 150 new shopping malls by 2008. The next cycle of change in Indian consumer markets will be the arrival of foreign players in consumer retailing.

INDIA: #1 EMERGING RETAIL GROWTH MARKET

As we can see form the above table that India is witnessing an emerging retail boom. According to A.T. Kearney GLOBAL RETAIL DEVELOPMENT INDEX, India was placed at 5th position in the year 2003. Within a span of 2 years, India has topped the charts placed at 1 st

position.

WHY INDIA IS #1 RETAIL GROWTH MARKET?

MARKET GROWTH 8-10 % annual growth with 30% + growth for modern format retail.

STRONG ECONOMY
Fourth largest economy on Purchasing Parity Basis.

MARKET OPPORTUNITIES
Growing consumer aspirations together with very low penetration of modern retailing. format

INFRASTRUCTURE INTRODUCTION - REAL ESTATE

Household consumption continues to be a key growth driver for the Indian economy (accounting for about 65% of GDP) supported by an upward movement in housing demand, which has helped to provide some buoyancy to the real estate market. The importance of the housing in real estate sector in India can also be gauged from the fact that for every one rupee invested in the construction of houses, an estimated 75-80% (Rs0.75-0.80) is added to the GDP and the sector assists to the development of over 250 other ancillary industries The real estate sector is amongst the top 3 employment generators in India. Real estate in India at an average of 10-12% annualy with an upsurge in commercial real estate on account of the Indian BPO and insurance boom. Lease rentals have been picking up steadily and there is a gaping demand for quality introduction. Almost 80% of real estate developed is residential space and the rest comprised of office, shopping malls, hotels and hospitals. Commercial real estate development is being driven increasingly by the off-shoring business, including high-end technology consulting, call centers and programming houses which in 2003 were estimated to have accounted for 10mn sq. ft. of real estate development.

RECENT TRENDS IN REAL ESTATE

The real estate market in India has been witnessing increased activity. Demand for real state is on a strong upswing reflected in higher prices despite increased supply. Prices are buoyed further as new construction lags demand Property Prices moving up; Demand Supply Gap expected to widen Based on discussion with market participants, it has been analysed that residential prices have increased about 15-20% on average in the last one year. There has been strong growth in demand supported by rising disposable incomes, low in rates, fiscal incentives on both interest and principal payments and increasing urbanization. In 1995 EMI (Estimated Monthly Installments) as a part of salary was 54% as compared to 28 % in 2005. Also, as per industry estimates, the average age of a house buyer has fallen from 42 to 31yrs.

RETAIL GROWTH STORY Over the next five years a CAGR of 6%+ is expected in real incomes; urbanization will accelerate and the proportion of young people will increase (53% of population is under 5 years).This indicates a bright future for retail. The target market for modern retailers lies in Indias biggest 67 cities that have a population of more than 500,000 that are home to about 14% of the population and contribute more than 27% to countrys GDP. According to the NCAER survey, about 75% of Indias superrich, 70% of the sheer rich, 64% of the clear rich and 58% of the near rich live in these 67 cities. On the other hand, less than 7% of the countrys deprived live in these cities vs. 93% in the rest of India. It is in these 67 cities that the majority of Indias middle-class and 55% of Indians with salaries of greater than USD 10,000 live. Besides the top six, the other 61 cities with a population of more than half a million represent about 7% of the nations population and contribute about 13% to GDP. Income growth has been rising fast in the smaller cities. According to NCAER, while the main metros remain the countrys richest cities, the pace of growth has been far higher in the smaller cities. The number of malls is expected to rise from the current 40 to around 250 by 2010. In terms of total area, India shows that in just 5 cities Northern Capital Region (region around Delhi), Mumbai, Bangalore, Hyderabad and Pune there is currently 12.40mn sqft of retail mall space which is expected to rise to 55.7mn sqft by 2007 end for the 5 cities in aggregate.

Household consumption continues to be a key growth driver for the Indian economy (accounting for about 65% of GDP) supported by an upward movement in housing demand, which has helped to provide some buoyancy to the real estate market. The importance of the housing in real estate sector in India can also be gauged from the fact that for every one rupee invested in the construction of houses, an estimated 75-80% (Rs0.75-0.80) is added to the GDP and the sector assists to the development of over 250 other ancillary industries The real estate sector is amongst the top 3 employment generators in India.

Real estate in India at an average of 10-12% annualy with an upsurge in commercial real estate on account of the Indian BPO and insurance boom. Lease rentals have been picking up steadily and there is a gaping demand for quality introduction. Almost 80% of real estate developed is residential space and the rest comprised of office, shopping malls, hotels and hospitals. Commercial real estate development is being driven increasingly by the off-shoring business, including high-end technology consulting, call centers and programming houses which in 2003 were estimated to have accounted for 10mn sq. ft. of real estate development.