Strategies to meet their expectations. Indian home textile consumers are special: Strategies to meet their expectations. Welspun Retail Ltd.

Indian Retail R e f l e c t I o n s 2nd Most Attractive Developing market, ahead of China Ranked 5th amongst the 30 “Emerging Markets” for new retailers to enter Country with the Largest Youth population in the world- (around 80%) Over 867 million people below 45 years of age! Indian English Linguals more than the whole of Europe put together Over 300 million middle class - the Real consumers - is catching the attention of the world Over 600 million Effective Consumers by 2010 India to emerge as one of the Largest Consumer Markets of the world by 2010 Slide for discussion (Source: Images – KSA Technopak Study, 2005-06) Welspun Retail Ltd.

Indian Retail Story Business of making lesser mistakes and correcting the ones made quickly!!! India – One of the Largest Consumer Base with Diverse Charachteristics Limited History makes it Dynamic Iterative Evolution Emerging demographic dispersion favors migration to organized retail transactions – across segments Some broad causal themes that emerge from gazing in the crystal ball – A Large Diverse Consumer base, Migration to Organized Retail, India being a Late participant, having limited history of organized retail, Necessitating a Business Model with minimal errors and rapid resolution of fallbacks. Late participant among the Emerging Market Peer set – to witness a compressed cycle of evolution Welspun Retail Ltd.

homes are required every Growth Drivers Demographic inversion-Average age of an Indian homeowner has fallen to 27 from 40 years in the last decade Growth of nuclear family set up leading to shift in preference of home decoration Increase in Urbanization and changing fashion concepts GROWTH DRIVERS Housing boom - An estimated 2.5 Mn new homes are required every year Increase in number of working women, hence change in the outlook and tastes as also emergence of dual income households So very true… Increase in re-location of people for professional & other reasons Welspun Retail Ltd.

Organized retail industry is growing at more than 30% p.a Indian Retail T h e O p p o r t u n i t y 2006 2010 2015 All figures in US$ Billions The Indian Retail market is expected to more than double by 2015 All Figures in Current Prices Source: Technopak Analysis, CSO, BRIC report Organized retail industry is growing at more than 30% p.a Welspun Retail Ltd.

Indian Retail O r g a n i z e d Organized Retail Organized Retail Unorganized Retail Unorganized Retail 2006 2010 Source: Technopak Analysis The Share of Organized Retail is expected to zoom to 16 % by 2010 – 11. Organized retail expected to gain 13% additional share over next five years Welspun Retail Ltd.

Share of Organized Retail Across Various Countries Poland & China are the closest comparables @ 20 % organized retail. Source: Technopak Analysis Share of Organized Retail U.S. Taiwan Malaysia Thailand Brazil Indonesia Poland China India 85% 81% 55% 40% 36% 30% 20% 3.1% Welspun Retail Ltd.

Structural Growth Drivers Different Stages in Growth of Organized Retail in India Growth First Gear 1995 Second Gear 2004 Third Gear 2007 Fourth Gear 2012 New Retail Entrants Driving Growth Consumers demand organised formats Retailers strengthening back end system Retailers going global Lifestyle Retailing Value Retailing Create Awareness Increase Customer Expectation Strengthening Back-end Management Consolidation The awareness got created with the kick-off of Lifestyle Retailing, which increased Customer expectation leading to the forays into Value Retailing. In the current scenario strengthening back end systems have become a top-priority. This would be followed by a wave of consolidation with Retailers going global. Source: Paper on Indian Urban Retail Welspun Retail Ltd.

Indian Retail The Opportunity Current Indian Retail Industry estimated to be at USD 300 billion Retail Industry growing @ 5-6% p.a. Organized Retail is at barely 3 % of the Total Retail Scenario However it is growing @ over 30 % p.a. Highest density of Retail Outlets in the world (12 million +) However majority of these outlets have “shrink size” retail footage Organized Retail is here to stay – “Key Advantages” Wide spectrum of choices in each category under one roof Locational Suitability (Accessibility & Size) Economies of Size translating into “price cuts” to the end user Organized Retail is going to rock !! – Expected Investment commitments of over USD 25 billion in the next 5 years speak about its mammoth potential Slide for Discussion Source: Technopak Analysis, WRL Analysis & Industry sources) Welspun Retail Ltd.

i n f o c u s Home Retail In Focus Welspun Retail Ltd. Home Retail is currently estimated to be at INR 9300 crore Organized market accounts for around 6 % of the Total Home Retail This translates into a meagre INR 550 crore + Organized Home Retail presence However our analysis shows that the Potential for Organized Home Retail in India is over INR 8,000 crore by 2011-12 Thus a ‘Huge Potential’ of over USD 1.5 bn !! And thus a “Great Opportunity” to foray into given that Unorganized Local Players dominate the market - Major focus on Furnishings National Department Stores though present are weak in the Home category; their product profile ignores furnishings though it is a prime category with the exception of Atmosphere which caters only to Furnishings i n f o c u s Welspun Retail Ltd.

Home Furnishings Market Size And Growth Urban home textiles market is estimated to be Rs 9,300 Crores and expected to grow to Rs 20,000 Crores by 2011. Only 6% of the market is organized. Bed and Bath constitute about two thirds of the market. Home Furnishing Market Size Breakup Source: Technopak Analysis Welspun Retail Ltd.

Home Furnishings Retail Market Structure Home Furnishing Market Organized Market Un-organized Market General Retailers Small Niche Players (2,000-3,000 Sqft) Category Specific Retailers Hypermarkets Street Markets Small Niche Players (2,000-3,000 Sqft) Category Specific Retailers: Small Niche Players - SPACES, HomeMarts, Bombay Dyeing, Atmosphere General Retailers: Hypermarkets – Big Bazaar, Department Stores – Shoppers Stop Department Stores AUOR (5,000-10,000 Sqft) 94% share of market Others Welspun Retail Ltd.

Home Furnishings Retail Market Structure Retailers like Maspar, Bombay Dyeing, Welspun, Atmosphere etc. are slowly organizing the home textiles retail business especially in the metro and mini metro cities. Shift from Unorganized to Organized Set-ups with focus on Medium to High end segment and emphasis on VM, Branding & Imagery – Basically the softer aspects have come into limelight. Unorganized Targeted towards mass market Crammed and clumsy store frontage More emphasis on price than towards quality of merchandise Organized Targeted towards medium and high end Emphasis on visual merchandising, branding and retail imagery and quality of merchandise on offer. Welspun Retail Ltd.

Home Furnishings Retail Market Structure Unorganized players are mostly in small size stores (<1000 sq ft.) selling unbranded products or export surplus. These stores are typically in high streets or furniture markets but lack any “quality retail” positioning or imagery. Unorganized Cluttered product display Dependence on store staff for showing products Organized In-store Visual Merchandising and Ambience Emphasis on product display and customer service Welspun Retail Ltd.

Fluid Landscape (Home Retail) Buyer Evolution Retailer Evolution Market Evolution Buyer Evolution Retailer Evolution 200 Mn + Households % Spend on Home – insignificant currently – Home is dominant high-ticket segment and hence needs special attention Categories of preference are yet to get fully defined – making it an Iterative process How does one buy? What Matters to him/her!!! What drives the Purchase – Utility/ Value/ Fashion The Right Price Points!!! Buying Habits and Merchandise preference are still to evolve – an iterative process How to be consistent? Positioning/ Experience/ Delivery How To be Relevant? Location/ Formats / Channels How To Churn MONEY? Cash/ Profits/ ROI Early stage of rollout-makes it an iterative process across all key variables. In my view the current retail landscape is very fluid. Its like walking on a moving floor; seeing moving objects and having movable resources to reach the target !!! A triple jolt. Revolution~ Rapid Simultaneous Iterations Towards Change Welspun Retail Ltd.

Market Evolution WRL Trade Blocs Local Regional Tier I Tier I--III Fragmented, Unorganized, Limited Categories… Consolidation, Organization, Wider Categories… Forward & Backward Integration, Strategic Complementary Initiatives Matured Categories… Potential Sales WRL The market is evolving from the fragmented & unorganized local & regional set-ups with limited categories to more organized set-ups offering wider categories starting from the Tier 1 Cities to the next level cities. As this becomes a national phenomenon a lot of possibilities for Forward & Backward Integration would be explored not only at the Retailing Level but also at the Manufacturing to Retailing Level when the categories would have matured. Trade Blocs Local Regional Tier I Tier I--III National Global Welspun Retail Ltd.

Buyer Evolution Comes by Chance… Comes by Choice… Comes by Compulsion… Right Location Right Positioning Right Merchandise Mix - Depth - Width Right-Priced Merchandise Differentiated Service/ Experience Continuous Innovation Average Ticket Size (ATS) WRL The Customer could come by chance if the location is right. They would come by choice if the Positioning is Right & the Depth & Width of Merchandise reinforces that Positioning. But they would come by compulsion if the Merchandise is priced to suit them, with a differentiated experience and continuous innovation to keep them excited in the offerings. It is only then that we would be able to pull up the Suspects of Today to the Advocates of tomorrow. Suspect Prospect First Timer Repeat Loyal Advocate Welspun Retail Ltd.

Retailer Evolution COMPETE COMPLEMENT COMPLETE Product Focus & Awareness Build Positioning & Merchandise to fit that Positioning Take-Off with Refined Positioning & Continuous Innovation Informal Organization Learning Organization Knowledge Organization Return on Investment (ROI) WRL Erratic Delivery Mechanism Starting from a phase where the formats were not defined and singular focus was to compete, there is a move towards refining the formats while complementing the array of offerings available to the customer. There would be a phase where the formats get defined and the focus of retailers would be not only to compete but also to complement thereby completing the offerings. Evolved Supply Chain Management Refined Supply Chain Management No Defined Formats Format Refinement Defined Formats Welspun Retail Ltd.

Welspun Retail Ltd…The Story so far Novice… Reactive Participant… Adaptive Player… Proactive Veteran… No Prior History Presence of a few Established Home Brands Different Untested Proposition Format Refinements Intuitive Site Selection Merchandise Experiments Scientific Revisit of – Formats Locations Brands Segmentation - Value WELHOME - Lifestyle SPACES Defined Source-code for Site Selection Merchandise Formats Pricing Modular approach to build scale Welspun Retail Ltd.

Challenge is to aim 3 Birds with 1 Arrow ! Who is your TARGET? The one who BUYS it ? The one who DECIDES to buy it ? BUYER DECISION MAKER END USER Wallet Share Mind Share Sensory Appeal Challenge is to aim 3 Birds with 1 Arrow ! At this juncture the most important thing to ponder over is.. The one who USES it ? Welspun Retail Ltd.

There is a fabric for every space and a space for every fabric There is a fabric for every space and a space for every fabric. There is a reason to decorate, or perhaps spontaneity. For all of this, simple, elaborate, beautiful, functional and a vivid sense of style, there is Spaces, Home and Beyond celebrates the joie- de vivre of a young professional, home maker and entertainer... fulfilling the aspirations of a decorator as an Individual or Family. The brand targets the middle and upper middle class of India’s Metros. We retail through 2 flagship stores, MBO’s and Shop in Shops: Lifestyle, Shoppers Stop and @ Home The brand dwells on the many manifestations of our heritage, craftsmanship, ever evolving pioneers, maverick and bohemian tempraments. Indian perhaps, always Modern though and certainly International. At this juncture the most important thing to ponder over is.. Welspun Retail Ltd.

At this juncture the most important thing to ponder over is.. Welspun Retail Ltd.

Welspun Retail Ltd…Our thoughts A Booming Opportunity !! SPACES – 6 mn Households WELHOME – 46mn Households SPACES – 3 % 200 mn + Households WELHOME –22 % The pyramid when sliced according to our Target Audience relevance suggests 50 mn households to be focused at. Welspun Retail Ltd.

A Multi-Dimensional Boom Talent Boom Retail Boom Real Estate Boom Process Boom Retail boom would be complete only after it triggers many other parallel booms ! Capital Boom Welspun Retail Ltd.

thank you Home-Run Finally Welspun Retail Ltd. How we define a Home is evolving each day… How we define a Home Maker is evolving each day… How we define Home Products is evolving each day… Home Retailers who are poised to deal with this evolving phase will strike a Home-Run thank you Welspun Retail Ltd.