French Retailer Auchan enters India

The Euro 45 billion (Rs 3 lakh crore) French retailer Auchan Group  has entered the expanding Indian retail market through  a franchise agreement with the Dubai based Landmark Group who have recently ended their agreement with Dutch retailer Spar International.
The only change that  the current Spar Hypermarkets in India would  have is  a new name ' Auchan' though the look and merchandise remains the same .
With the rebranding process in place, Auchan plans to change the visual aspects of the stores with the India model evolving progressively.
The company intends to open 12 to 15 hypermarkets every year.

' India Fifth most Attractive Retail Market '

Despite the recent flip-flops over enhancement of FDI cap in the retail sector, India has emerged as the fifth most favorable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia.

"India remains a high potential market with accelerated retail growth of 15-20% expected over the next five years. Growth is supported by strong macro economic conditions, including a 6-7% rise in GDP, higher disposable incomes, and rapid urbanization," said a recent report by global management consultancy firm A T Kearney.

The approval of 100% FDI in single brand retail, especially, will give a fillip to the sector in the country prompting several international retail chains to explore the market either on their own or through local partners, the report said.

Companies such as GAP, IKEA, Abercrombie & Fitch have already stepped up inquiries for an entry into the market, despite the rider of 30% local sourcing for single brand foreign retail chains.
  
According to the entity's Global Retail Development Index (GRDI) 2012, India ranks fifth after Brazil, Chile, China and Uruguay.

With the developed markets witnessing an economic turmoil, emerging countries are fast becoming the retail hotspot for foreign brands, with most of them seeing faster growth here compared to their home markets.

In the past five years, retail chain giants like Walmart, Tesco, Metro Group, saw revenues in developing countries grow 2.5 times faster than their home markets, the report said.

Even in the food and beverage industry, India is fast becoming an important investment destination for foreign players with companies like Starbucks which is planning to enter India this year and American brand Dunkin' Donuts which recently entered the country in partnership with local franchisee Jubilant FoodWorks.

The Times of India. June 27, 2012

IKEA Plans Entry into India

Swedish homeware company Ikea has announced its plans to invest Euro 1.5 billion in India for setting up 25 retail stores as wholly-owned subsidiaries following months of clarificatory discussion with the government on the compulsory clause of domestic sourcing of inputs from local small companies.
A formal proposal was submitted to the foreign investment promotion board or FIPB on Friday requesting it to grant approval to Ikea India to hold 100% FDI in 25 stores across the country. The proposed investment in the stores would be to the tune of Euro 600 million in the first stage and Euro 900 million in the second stage.

 Source : Economic Times

Hariyali Bazaar downing Shutters

Reliable sources inform that the largest retailer in rural India is shutting shop. The 300 plus store chain is owned by the DCM Shriram Consolidated Ltd group whose chairman is Ajay Shriram. 
Hariyali has been operation for the last 9 years in rural India and each store is stocked with the categories of Agri products, Food and Groceries, Household goods including white goods and electronics and Lifestyle products such as apparel and footwear.
The chain operates under 2 formats - the larger Centers which were built on plot sizes of 2-5 Acres with a built up area of around 10000 sq ft. and the smaller Stores with an area of 1500 to 5000 sq ft. The larger centers are owned by the company and many of these have  a petrol pump as well as LPG to offer. 
The process of issuing notices to staff  has already begun and liquidation of stocks is well underway.
It is believed that mismanagement, location of the stores and lack of transparency ( particularly in the last 2 years ) led to this downfall.

Indian Consumer Electronics and Durables to reach Rs 52,000 crores

According to a press release by Assocham on 27th April, the Indian Consumer Electronics and Durables Sector to reach Rs 52,000 crores  ( US$ 10,000 Million)

Growing at a compounded annual growth rate (CAGR) of about 15 per cent, the consumer electronics and durables sector in India is likely to reach Rs 52,000 crore by 2015, apex industry body ASSOCHAM said today.

The consumer electronics and durables industry is currently poised at about Rs 34,000 crore according to a study titled ‘Emerging trends in Consumer Electronics and Durables Industry,’ released by The Associated Chamber of Commerce and Industry of India (ASSOCHAM).
While, global consumer electronics and durables industry is growing at about 10 per cent CAGR and is currently estimated at about Rs 16 lakh crore and is likely to cross Rs 21 lakh crore mark by 2015, according to the ASSOCHAM study.
“Demand for consumer electronics and durables is driven by a young demographic population, coupled with rising disposable incomes amid skilled and highly educated workforce,” said Mr D.S. Rawat, secretary general, ASSOCHAM while releasing the findings of the study.
“Besides, low penetration levels, easy availability of finance options, growing prominence of consumer electronics’ retail stores, online retail industry and a robust 400 million plus Indian middle class with a comprehensive rise in level of affluence is also fuelling the demand in this industry,” said Mr Rawat.
Multi-national companies (MNCs) with superior technology and better quality control account for a market share about 70 per cent of the overall consumer electronics and durables market in India and maintain a strong hold on the urban middle class segement growing at about 12 to 15 per cent, according to the ASSOCHAM study.
The consumer durables and electronics market in rural and semi-urban areas account for about 40 per cent of the overall market and is growing at about 30 per cent CAGR.
Consumer electronics and durables market in India is divided into three segements namely – white goods, brown goods and consumer electronics.
Air-conditioners, refrigerators, washing machines and other domestic appliances fall in the white goods’ category, while microwaves, chimneys, fans, irons, juicers, mixers and grinders fall in the category of brown goods. Television sets, audio and video players, personal computers, laptops, cell phones, digital cameras, camcorders and other electronic accessories fall in the category of consumer electronics.
Rising technological innovations and the decrease in import duty on flat panel LCDs/LEDs television sets in the budget is also likely to fuel demand in the industry.

Source :The Associated Chambers of Commerce and Industry in India

Consumer electronics & durables to reach Rs 52K crore by 2015: ASSOCHAM
Friday, April 27, 2012

UNION BUDGET AND ECONOMIC SURVEY

The link for the  detailed Union Budget and Economic Survey of India for the year 2012-13 of the Goverment of India is given below.

UNION BUDGET (2012-13) AND ECONOMIC SURVEY (2011-12) OF INDIA

Highlights of Union Budget 2012-13

MAJOR HIGHLIGHTS OF THE UNION BUDGET OF INDIA OF 2012-13

• Tax payer exemption limit to be raised to Rs 200,000 from Rs 180,000.
• Income Tax at 10% for Rs 2-5 lakh
• No change in corporate tax rates
• Cars to attract ad valorem rate of 27 per cent
• Customs duty on import of parts of aircraft, tyres and testing equipment fully exempted
• Withholding tax on power, airlines, road and bridges, ports and shipyard, fertilisers, dams and affordable houses lowered to 5 pc from 20 pc for 3 years
• Full exemption from basic customs duty for equipment for road and highway construction.
• Import of equipment for fertilizer plants fully exempt from customs duty for three years.
• Standard excise duty rate raised from 10 per cent to 12 per cent.
• Service tax to yield additional revenue of Rs 18,650 crore.
• All services except 17 in the negative list to be brought under service tax net.
• Rs 193,407 crore provision made for defence services in 2012-13.
•  Rs 3,915 crore to be spent on National Rural Livelihood Mission.
• Rs 1000 crore to be provided for National Skill Development Corporation in 2012-13
• Interest subvention of 7 pc to women self groups for loans up to Rs 3 lakh, additional 3 pc for those making timely repayment.
• Rs 20,822 crore earmarked for National Rural Health Mission against Rs 18,115 crore this year
• Rs 20,000 cr to be spent on rural infrastructure development, including Rs 5,000 cr for creating warehousing facilities.
• Agriculture credit target to be raised by Rs 100,000 cr to Rs 5,75,000 cr, says FM
• Additional 3 per cent interest subvention to farmers for promptly repaying their dues
• Rs 15,850 cr to be allocated to Integrated Child Development Scheme in 2012-13 as against Rs 10,000 cr this fiscal.
• Allocation for rural drinking water and sanitation scheme increased from Rs 11,000 cr in FY 12 to Rs 14,000 cr in 2012-13.
• National Backward Region Grant scheme outlay raised by 22 per cent to Rs 12,040 crore
• Government to set up Rs 5000 crore venture fund for MSME sector.
• India will become self-sufficient in urea production in five years, says FM
• External commercial borrowings to the extent of USD one billion to be allowed for aviation sector for next year.
• Infrastructure investment in 12th Plan to go up to Rs 50 lakh crore; half of it to come from pvt sector: FM
• Govt to double tax free bonds for infrastructure financing to Rs 60,000 crore in next FY: Pranab
• 8,800-km of highways to be developed under National Highway Development Project in 2012-13: FM
• Rs 15,888 cr to be provided for capitalisation of public sector and regional rural banks and NABARD
• Microfin institution regulation bill, natl housing bank regulation bill, reg bank regulation bill and public debt management bill this session.
• Rs 15,888 cr to be provided for capitalisation of public sector and regional rural banks and NABARD.
• Rs 10000 crore of tax fee bonds for power sector
• To allow ECB funding to finance working capital needs of airlines
• To become self sufficient in urea production in next 5 years
• Share of manufacturing in GDP will be increased
• To allow ECB to fund part finance power rupee debt
• Oil and gas pipelines to be eligible for viable gap funding
• Inflation & current account deficit to come down next year
• Focus on removing infrastructure bottlenecks
• IPO equity offer above Rs 10 crore will have to be made electronically in capital market reforms.
• Government to raise Rs 30,000 crore in 2012-13 from disinvestment of stake in PSUs.
• Income Tax deduction of 50 per cent on investments of up to Rs 50,000 in savings scheme named after Rajiv Gandhi.
• Efforts to arrive at broadbased consensus with state governments on allowing FDI in multibrand retail up to 51 per cent, says FM
• Ensure rapid rise in private investment
• Frame policies that trigger domestic demand recovery
• India's GDP to grow by 7.6 per cent in 2012-13; plus, minus 0.25 per cent
• India's GDP to grow by 6.9 per cent in 2011-12  
• Economy is now turning around, manufacturing appears to be on revival
• Headline inflation to moderate further in next few months
• We have to expedite decisions to improve delivery systems
• Have to accelerate the pace of reforms
• Numerous economic indicators suggest economy is turning around
• Govt to fully provide for food subsidy and food security act in 2012-13.
• Pilot project for direct transfer of subsidiary for kerosene has been initiated in Alwar, Rajasthan.
• To implement DTC at the earliest
• To bring down subsidy to 1.7 % of GDP in the next 3 years
• To roll out computerized scheme for fertilizer subsidy transfer
• Significant slowdown in growth over the last two years
• To address black money, corruption in public life
• To enhance supply side; cut infra bottlenecks
• To focus on domestic demand, raise private investment
• Manufacturing sector appears to be on a revival path
• Needs to improve supply side management of economy
• Fiscal deficit rose due to subsidy
• High crude oil prices hit growth, averaged $115/bbl in 2011-12

Source : Compiled by G.D. Bhatnagar,  Head IT  of Hariyali Kisaan Bazaar

Menswear Market in India

According to Technopak Advisors, a retail consultancy, the entire textile and apparel industry (2010 estimates), including domestic and exports, is pegged at Rs 3,27,000 crore and is expected to grow by 11% to Rs 10,32,000 crore by 2020. Currently menswear is the major chunk of the market at 43% (Rs 72,000 crore) and is growing at a compounded annual growth rate (CAGR) of 9%.

The menswear market in India is the fastest growing apparel segment. The India Menswear Market Analysis 2010-2014 by Venn Research found that total revenue from menswear was $11.8 billion in 2009, representing a CAGR of 8.6% from 2005 to 2009. Industry estimates peg the formal suits, jackets and blazers segment at Rs 4,500 crore.

Source : Economic Times 12.02.2012

Growth in the Indian Retail Sector

The retail sector in India has shown a healthy growth and is fast emerging as one of the largest sectors in the economy. The sector has grown from a level of US $ 201 Billion to a market size of US $ 425 Billion in 2010.

The Industry has been growing at a compound annual rate of 6.4% since 1998.

Source : EIU Euro Monitor

Retail Penetration in 2011

Organised retail in India is still in its nascent stage and hence offers immense potential. India currently has a small 6% penetration in organised retail , while a country like the US has a high  85% penetration. Given that there is a double digit economic growth projection for  India in the following decade, the future has immense potential for the growth of organised retail in India. 

The chart below shows  retail penetration across some countries.

Source : E&Y Report, Aranca Research                                

MONTHLY ECONOMIC REPORT - MINISTRY OF FINANCE

The monthly Economic Report issued by the Ministry of Finance, Goverment of India for the month of November 2011 can be accessed by following the link below

MONTHLY ECONOMIC REPORT - NOV 2011

This report is published on a monthly basis by the Ministry of Finance

RURAL BUYING DRIVES FMCG GROWTH

Noodles, macaronis and soft-drinks made rapid inroads into the rural markets driving up growth in the fast moving consumer goods (FMCG) industry - 10% by volume and 12% by value - in the first ten months of 2011. The consumption story for most part of last year dispelled slowdown fears as Indian rural households piped urban counterparts in growth sweepstakes.
Rural India had clocked a negative volume growth during 2010 (here volume growth is the increase in sales clocked over last year while value growth is volume growth plus price hikes). The urban FMCG market on the other hand, grew 4% by volume and 7% in value and was led by categories such as ready-to-eat mixes, deodorants, breakfast cereals and soups. Growth for personal care products such as toilet soaps, shampoos and household products stagnated compared to last year, while F&B space saw a healthy growth. Sources said the F&B market witnessed hectic action in rural India with players like ITC and Hindustan Unilever (HUL) leveraging their distribution muscle to push products in this category. ITC's Sunfeast noodles and HUL's Knorr brand of soups have been able to penetrate the hinterland leading to increase in the category reach. 
The FMCG biggie saw its personal, oral care and health supplements report strong growth in the rural markets. While the low-penetrated products in the F&B space witnessed good growth, detergents, washing soaps stagnated volume wise. In the urban market emerging categories, noodles, macaroni, vermicelli grew 20% in terms of volume, while ready-to-cook mix products saw a whopping 64% growth and soups grew by 20%. In the personal care category, which largely remained stagnant in the urban market, deodorants saw a 31% growth. 
There have been some concerns  over consumer spending with price hikes being taken across the board by FMCG companies to offset the impact of rising input costs. Because of healthy disposable income growth and lower absolute spends on FMCG products it hasn't impacted the consumption yet, however if there is uncertainty around income growth risks of down trading exist. 

Source :  Times of India (Electronic Edition): January 12, 2012