Final(Without Borders)

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ABOUT BIRLA SUN LIFE FINANCIAL SERVICES

Aditya Birla Group through Aditya Birla Financial Services Group (ABFSG), hasa strong presence across various financial services verticals that include life insurance,

fund management, distribution & wealth management, security based lending, insurancebroking, private equity and retail broking. The seven companies representing ABFSG areBirla Sun Life Insurance Company, Birla Sun Life Asset Management Company, AdityaBirla Money, Aditya Birla Finance, Birla Insurance Advisory & Broking Services, AdityaBirla Capital Advisors and Apollo Sindhoori Capital Investment. In FY 2010-11, theconsolidated revenues of ABFSG from these businesses crossed Rs. 5023 crores,registering a growth rate of 38%.

Sun Life Financial is a leading international financial services organisationproviding a diverse range of protection and wealth accumulation products and services toindividuals and corporate customers. Chartered in 1865, Sun Life Financial and its

partners today have operations in key markets worldwide, including Canada, the UnitedStates, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia,India, China and Bermuda. As of December 31, 2011, the Sun Life Financial group ofcompanies had total assets under management of $421 billion.

Birla Sun Life offers extensive and thoughtfully devised financial services to itslarge base of customers across the globe to help them manage their finance in the mosteffective way. You can benefit a lot from its wide array of financial services in the areasof wealth management, mutual funds and insurance plans.

The mutual fund products and services are provided by investment managers of

the Birla Sun Life Asset Management Company Ltd. (BSLAMC). The company has beenformed by the joint efforts of Aditya Birla Group and the Sun Life Financial Services Inc.of Canada. The wealth management services are exclusively handled by the Birla SunLife Distribution Company Limited (BSDL). This is a subsidiary company of the AdityaBirla Nuvo Ltd. The life insurance business is taken care of by the Birla Sun LifeInsurance Company Limited (BSLI). The tie-up between Aditya Birla Group andCanada-based Sun Life Financial Inc resulted in the existence of this one of the topnotchinsurance companies in India.


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Types of Birla Sun Life Financial Services

If you want to avail the financial services of Birla Sun Life in the area of mutual funds,you can look for following investment options:

1. Equity Schemes

o Diversified Fund

o Theme Based Fund

o Sectorial Fund

2. Debt Schemes

o Interval Income Funds

o Fixed Maturity Plan

o Fixed Term Funds

o Short Term Fund

o Long Term Fund

o Floating Fund

o Gilt Fund

o Cash Fund

3. Hybrid Schemes

o Capital Protection Fund

o Balanced Fund

o Fund of Funds

o MIP


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As per wealth management is concerned, you can again depend on the broadrange of products and services of the Birla Sun Life to derive optimum benefits.

Some of the favorable products and services that reflect well-knitted wealthconsolidation strategy of the company are as follows:

1. Products

o Direct Equity

o Mutual Funds

o Structured Products

o Portfolio Management System (PMS)

o Alternate Asset Products

o Loan Against Securities and Mutual Funds

o Real Estate

o Life Insurance

o Gold

2. Services

o Highly proactive services

o Online Portfolio Access

o Regular Portfolio Reviews

o Financial planning

o Research

Insurance plans are the other interesting types of financial services provided by BirlaSun Life. The variety is again impressive and benefits that can be derived from them aretruly large. Some of its popular insurance schemes are:

1. Birla Sun Life Insurance Premium Back Term Plan

2. BSLI Universal Health Plan

3. Children's Dream Plan

4. Birla Sun Life Insurance Secure 58 Plan

5. Birla Sun Life Insurance Money Back Plus Plan

6. Birla Sun Life Insurance Saral Jeevan Plan

7. Birla Sun Life Insurance Flexi Cash Flow

8. Birla Sun Life Insurance PrimeLife Premier

9. Birla Sun Life Insurance PrimeLife

10. Birla Sun Life Insurance Flexi Life Line

11. Credit GuardMortgage Plans


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Introduction

&Research

Methodology


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1.1 General Introduction of the Project:

First country analysis is done.Based on various factors investor comes to knowwhether they should park their funds or not.After that retail sector as a whole isanalyzed and than pantaloons retail is analyzed in that sector.

1.2Objective of the Study

The primary objective of this project is to study the Retail Sector in India and itsimpact on the economy as a whole. To analyze the earnings persistence of thecompany selected through the following aspects:

1.The general market trend influencing the sector.

2.The impact of qualitative and quantitative factors on the sector and thecompany.

3.The scope of the company in near future and the fundamental strength ofthe same.

4.To suggest as investment recommendation for the particular stock.

1.3Scope of the study

The scope of project is limited to Understanding the basics of Fundamentalanalysis and Technical analysis and apply it to take a decision of investing inbanking sector and F&O strategies for the same.

1.4Assumptions:

This project is prepared on the assumption that most of the investment in stockmarket is done by the brokers and not by the common man and on the other handthere are many people who want to invest in stock market but fears as they thinkthat it is luck game which is not totally true and this might change their way ofthinking.

1.5Limitations:

1.5.1 There was a limited time period to complete the project.1.5.2 Lots of data was available on the websites but was not updated.1.5.3 Bias opinion of the provider of the information.


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1.6Research Methodology

1.6.1 Research design

Analysis of retail sector.

1.6.2 Collection of Data (Secondary Data)

The major portion of data related to stats and figure is been derived from thePrevious year annual report of the company.

1.6.3 DataAnalysis Technique(s) Used

There are 2 technique used. They are as follows:

1. Fundamental Analysis.2. Technical Analysis.

1.6.4Sample Design

1. Sampling unit- It is focus on Indian banking equity market2. Sampling size5 years data3. Sampling procedureThe sample in the study was selected by

convenient sample technique.


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CountryAnalysis


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3.1GDP (Gross Domestic Product)

Confirming fears of a slowdown, India's economy grew by just 7.8 per cent in the fourthquarter ending March this year, mainly due to poor performance of the manufacturingsector, as against 9.4 per cent in the same three-month period of the previous fiscal.

However, economic growth, as measured by the Gross Domestic Product (GDP),improved to 8.5 per cent in 2010-11 from 8 per cent in 2009-10 due to better farm outputand construction activities and financial services performance.

Meanwhile, the GDP growth figures for the first and third quarters of FY'11 have beenrevised upward. While the GDP growth figure for Quarter 1 has been pegged at 9.3percent -- as against the earlier estimate of 8.9 percent -- the Q3 GDP growth has beenrevised upward to 8.3 percent from 8.2 percent.


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With regard to GDP growth in the year 2011-12, the initial guidance provided byMinistry of Finance of 9 percent growth is looking increasingly difficult to achieve. Withtime even the government has come around this view and growth projection for the year2011-12 has been lowered to 8 to 8.5 percent.

The key risks to growth in India in the current year are the negative impact of continuoustightening of monetary policy by RBI and a slowdown in global growth due to highinternational oil prices. Further, although the Indian Meteorological Department hasprojected a normal monsoon this year, we will have to wait for more updates to getclearer picture on the spatial distribution of the monsoon.

3.2 Inflation

Price movement in the country is reflected by the wholesale price index (WPI) andthe consumer price index (CPI). WPI is used to measure thechange in the averageprice level of goods traded in the wholesale market, while the Consumer Price Index

(CPI) captures the retail price movement for different sections of consumers.

The inflation rate in India was last reported at 8.62 percent in June of 2011. From1969 until 2010, the average inflation rate in India was 7.99 percent reaching anhistorical high of 34.68 percent in September of 1974 and a record low of -11.31percent in May of 1976. Inflation rate refers to a general rise in prices measured


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against a standard level of purchasing power. The most well known measures ofInflation are the CPI which measures consumer prices, and the GDP deflator, whichmeasures inflation in the whole of the domestic economy.

3.3Foreign Investments

In 2010-11, foreign investment flows into India saw a dip of about 17 percentover the previous year. Further, this dip is largely on account of a slowdown seenin case of FDI.

In 2009-10, FDI inflows into India totaled US$ 37.7 billion. In 2010-11, thisfigure came down to US$ 27 billion.

Data also shows that of out of the top 25 sectors, 15 sectors have seen a dip inFDI flows during April Feb 2010-11 compared to the same period in 2009-10.Sectors like services, construction, housing and real estate, telecommunicationand agricultural services are the ones where investment flows have slowed downconsiderably.

In 2010-11, portfolio flows totaled US$ 31.5 billion and were only a tad belowUS$ 32.4 billion received in 2009-10.

The outlook for portfolio flows in the current year is not too encouraging. Globalfund managers are particularly concerned over the evolving macro-economicsituation with inflation showing limited signs of abatement and growth slowingdown at a fast clip.

The re-emergence and intensification of the sovereign debt crisis in Europe and theexpected halt of quantitative easing policy in the US by the end of June 2011 are alsodownside factors for portfolio flows for emerging markets including India

3.4Indias Business Confidence

In India, business confidence declined to 145.2 in July of 2011 from 145.3 in April of2011. In India, the NCAER (National Council of Applied Economic Research) -MasterCard Worldwide Index of Business Confidence measures the level of optimismthat people who run companies have about the performance of the economy and how theyfeel about their organizations prospects. Survey incorporates four indicators: overalleconomic conditions six months from now, financial position of firms six months fromnow, investment climate and capacity utilisation level. Data is collected through personalinterviews and questionnaires sent to a diverse range of businesses across various regionsin India.

The following is the chart of Business Confidence of India from Jan 2000 to August2011:


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3.5Unemployment

The unemployment rate in India was last reported at 10.8 percent in the year 2010. From1983 until 2000, India's Unemployment Rate averaged 7.20 percent reaching an historicalhigh of 8.30 percent in December of 1983 and a record low of 5.99 percent in Decemberof 1994. The labour force is defined as the number of people employed plus the numberunemployed but seeking work. The non labour force includes those who are not looking

for work, those who are institutionalized and those serving in the military.The following is the table of Unemployment in India in different years:

Note:This entry contains the percent of the labour force that is without jobs. Substantialunderemployment might be noted.

All such economic indicators not only measure/analyze the present performance of aneconomy but also help in predicting and forecasting its future growth prospects

Country 2002 2003 2004 2005 2006 2007 2008 2009 2010

India 8.8 9.5 9.2 8.9 7.8 7.2 6.8 10.7 10.8
http://www.indexmundi.com/india/unemployment_rate.htmlhttp://www.indexmundi.com/india/unemployment_rate.html


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Retail Sector

In India


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4.1Overview

The retail sector has been at the helm of Indias growth story. The sector has evolved

dramatically from traditional village fairs, street hawkers to resplendent malls and plush outlets,

growing from strength to strength. According to the Indian Council for Research on InternationalEconomic Relations (ICRIER), India is the seventh-largest retail market in the world, and isexpected to grow at a CAGR of over 13% till FY12 Retailing is one of the pillars of the economyinIndia and accounts for 13% of GDP

Retail is being considered as one of the biggest beneficiaries of the Indian consumptionstory. This is mainly due to rising aspirations and increasing income levels coupled withlow penetration levels.
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/India


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4.2 Size of the Industry

The total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12billion by 2015, according to the BMI India Retail report for the third quarter of 2011.

Robust economic growth, high disposable income with the end-consumer and the rapidconstruction of organised retail infrastructure are key factors behind the forecast growth.Along with the expansion in middle and upper class consumer base, the report identifiespotential in Indias tier-II and tier-III cities as well. The greater availability of personalcredit and a growing vehicle population providing improved mobility also contribute to atrend towards annual retail sales growth of 12.2 per cent.

Indian retail sector accounts for 22 per cent of the country's gross domestic product(GDP) and contributes to 8 per cent of the total employment.

Organised vs Unorganised Retailing

The retail industry is divided into organised and unorganised sectors. Over 12 millionoutlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) insize.

Organised retail:

It refers to trading activities undertaken by licensed retailers, that is, those who areregistered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retailbusinesses.

Unorganized Retail:

Unorganised retailing, on the other hand, refers to the traditional formats of low-costretailing, for example, the localkirana shops, owner manned general stores,paan/beedishops, convenience stores, hand cart and pavement vendors, etc.
http://en.wikipedia.org/wiki/Kiranahttp://en.wikipedia.org/wiki/Paanhttp://en.wikipedia.org/wiki/Paanhttp://en.wikipedia.org/wiki/Kirana


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The Indian retail sector is highly fragmented with more than 90 per cent of its businessbeing carried out by traditional family run small stores. This provides immenseopportunity for large scale retailers to set-up their operationsa slew of organized retailformats like departmental stores, hypermarkets, supermarkets and specialty stores areswiftly replacing the traditional formats dramatically altering the retailing landscape inIndia. The economic slowdown was a necessary evil for the industry and the retailershave been taking corrective actions for the mistakes made in the past. Adoption of costcontrol measures and sensible expansion of retail space has helped them in posting profitsover last few months.

However, going forward, the organised sectors growth potential will increase due toglobalisation, high economic growth, and changing lifestyle. Moreover, high consumerspending over the years by the young population (more than 31% of the country is below14 years) and sharp rise in disposable income are driving the Indian organised retailsectors growth.

Even small towns and cities are witnessing a major shift in consumer lifestyle andpreferences, and have thus emerged as attractive markets for retailers to expand theirpresence.

However the Indian retail market, over the last decade, has been increasingly leaningtowards organised retailing formats. The pattern in domestic retailing is altering in thefavour of organised modern retailing, a big change from the traditional plethora ofunorganised family-owned businesses.


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4.3 Major Drivers for the Growth of Retail Industry

Rapid urbanization,

Changes in shopping pattern, Demographic dividend

Rise in per capita income

Pro-active measures by the Government


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Organised retail in India is expected to increase from 5 per cent of the total market in2008 to 14 - 18 per cent of the total retail market and reach US$ 450 billion by 2015,

Driven by the growth of organised retail coupled with changing consumer habits, food

retail sector in India is set to be more than double to US$ 150 billion by 2025, accordingto a report by KPMG.

Although the growth potential in the sector is immense, it is not without challenges thatcould slow the pace of growth for new entrants. Rigid regulations, real estate costs, highpersonnel costs, lack of basic infrastructure, shrinkage, and highly competitive domesticretailer groups are some such challenges. Additionally, resource constraints at shopping

mall projects are also delaying completion and disrupting many retailers entry strategies.


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4.4Impact Of Recession On Retail Sector:

1. Disappointing Footfalls

A large number of retailers have experienced a drop in footfalls which is mirrored bySame Store Sales(SSS) growth figures.This also adversely effext the time taken to breakeven for new stores. Although retailer is trying to combat this slowdown through constantpromotional offers and deep discounts consumers are trying to spend down on theirdiscretionary spending.

2. Liquidity under pressure

The slowing sales are resulting in lower inventory turnover and increasing workingcapital requirements for retailers. This inturn has created liquidity pressure for manyretailers. To free the cash that has been locked a large number of companies have beentrying to reduce the inventories on their books and shorten working capital cycles.


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3. Margin contraction- Interest burden adversely impacts profits

Many retailers have been trying to compensate for falling sales by curtailing Expenses.This has countered the effect of the top line on operating margins leaving it largely

unaffected. However, with working capital requirements and expansion capital beingfinanced through sizeable debt, interest costs have significantly dented the bottom line.

Besides the weak economy and the feeble consumer sentiments, the disappointing retail

growth is also attributed to

1. Poor supply chain management and weak support infrastructure:

Poor infrastructure underdeveloped supply chains, lack of strong cold Chains, poorwarehousing facilities, bad roads, etc. have been contributing to increased logistic costs

for the retailers. Globally, the logistics cost component to the total retail price is around5 percent, while in India it is as high as 10 percent.

2. Absence of a mature Third Party Logistics (3PL) industry:

Poor Infrastructure (roads, communication and power) makes logistics andTransportation in India extremely difficult. Further, internal operations of Retailers,such as warehouse processes and distribution, are usually fairly ad hoc andinefficient.Retailers are keen to outsource their logistics to 3PL. But there is an absenceof a mature 3PL player providing high service levels at competitive prices.

3. Fragmented supply base:

The supply base is highly fragmented with a large number of intermediaries squeezing themargins of all involved, which also includes the retailer. This not only has an adverse affecton the margins but also results in cases of mishandling, theft and Increased instances ofshrinkage.

4. Rentalsskyrocketing to all time high:

As real estate prices skyrocketed, retail rentals also touched unsustainable levels eatingdirectly into profit margins of retailers.Untill a few months back, store rentals were 300to 400 basis points higher than even international markets. Retail rentals in linking roadin Mumbai, South extension in Delhi and brigade road in Bangalore have risen about50% in last 3 years.


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5. Funding constraints:

A large number of retailers are highly leveraged and rely on fresh equity funding forgrowth which is coming to come during recession phase.Banks are increasingly hesistantto finance retailers in the context of falling demand and low profitability.

6. Rollout delays to compound problems

The organized retail space was expected to receive investments to the tune of USD 25million over the next 4-5 years. However significant delay in real estate development andopposition to organized retail has resulted in delays in investment.A large number ofretailers have not been able to meet their stated expansion plans.


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7. Rentalsskyrocketing to all time high

As real estate prices skyrocketed, retail rentals also touched unsustainable levels eatingdirectly into profit margins of retailers.Untill a few months back, store rentals were 300

to 400 basis points higher than even international markets. Retail rentals in linking roadin Mumbai, South extension in Delhi and brigade road in Bangalore have risen about50% in last 3 years.


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4.5 RetailInvestment Trends

Foreign direct investment (FDI) inflows between April 2000 and December 2010,in single-brand retail trading, stood at US$ 66.69 million, according to the

Department of Industrial Policy and Promotion (DIPP).

Singapore-based CapitaMalls Asia, which develops, owns and manages mallsacross Asia, has pledged US$ 400 million to its growth in India up till 2014. MrKevin Chee, CEO and Country Head of CapitaMalls Asia, has said that apartfrom funding the two malls that are operational now, this money would be used todevelop seven more malls in India.

Reliance Retail will enter the cash and carry market with "Reliance Market" inAhmedabad; the first one to be opened by August 2011.

Ujala fabric whitener maker Jyothy Laboratories has bought Henkel AG's 50. 97per cent stake in its Indian subsidiary for US$ 137.02 million, including debt andpreference shares, the two companies revealed. The deal includes Henkel's entireportfolio that includes Henko and Chek detergents, Pril dish cleaners and Fadeodorant, and rights to the multinational's future launches.

With the launch of its first 'Arvind Experience Store' in Gujarat at Vadodara,denim major Arvind Ltd. is looking at 100 stores by the end of the financial year2011-12. The store in Vadodara is the company's eighth in the country after sevenstores in Andhra Pradesh.

Quick food service restaurant chain Subway will set up 45 outlets across thecountry by 2011-12 entailing an investment of around US$ 9 million. Thecompany has now 205 outlets in India and plans to take its count to 250 by theend of 2011-12.


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4.6 Retail - Government Initiatives

India currently allows 51 per cent FDI in single-brand retail and 100 per cent inwholesale cash-and-carry operations.

In a landmark decision, the government has eased norms for investments byforeign companies that are present in India through a joint venture (JV) or atechnical collaboration. Now, the foreign company will not have to seek a no-objection certificate (NOC) from the Indian partner for investing in the sectorwhere the joint venture operates.

4.7 Recent development in Retail Sector

India moved closer to a major economic reform, with a committee of secretaries (CoS)giving an approval in principle for allowing up to 51 per cent foreign direct investment inmulti-brand retail subject to a few conditions, including a minimum 50% investment inback-end infrastructure, minimum threshold amount of $100 million would not beconsidered.

It would also be mandatory for investors to spend 50% of the amount towards buildingand maintaining back-end infrastructure such as warehouses, cold-storage andtransportation to set up world-class facilities. Retailers will also not be allowed to set upshops in cities that have a population of less than one million The companies coming inwith FDI will have to self-declare the investments made in the back-end. There will be nomonitoring body for it. Since investing 50% of the investment in the back-end will belegal obligation, the companies will have to fulfill it and any violation could be dealt withseriously.

Investment in back-end infrastructure is the way the consumers and farmers wouldbenefit.

Since investing 50% of the investment in the back-end will be legal obligation,the companies will have to fulfill it and any violation could be dealt with seriously.

The move was keenly awaited by global retail companies such as WalMart andCarrefour.

The decision, when implemented, is expected to bring in huge foreign investments in the

retail sector and help the government counter the charge that it is suffering from a policy

paralysis.


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4.8 Advantages of FDI In Retail Sector:

1. Benefits for the farmers:

Presumably, with the onset of multi-brand retail, the food and packaging industry will

also get an impetus. Though India is the second largest producer of fruits and vegetables,

it has a very limited integrated cold-chain infrastructure. Lack of adequate storage

facilities causes heavy losses to farmers, in terms of wastage in quality and quantity of

produce in general, and of fruits and vegetables in particular. With liberalization, there

could be a complete overhaul of the currently fragmented supply chain infrastructure.

Extensive backward integration by multinational retailers, coupled with their technical

and operational expertise, can hopefully remedy such structural flaws. Also, farmers can

benefit with the farm-to fork ventures with retailers which helps (i) to cut down

intermediaries ; (ii) give better prices to farmers, and (iii) provide stability and economicsof scale which will benefit, in the ultimate analysis, both the farmers and consumers.

2. Improved technology and logistics:

Improved technology in the sphere of processing, grading, handling and packaging of

goods and further technical developments in areas like electronic weighing, billing,

barcode scanning etc. could be a direct consequence of foreign companies opening retail

shops in India,. Further, transportation facilities can get a boost, in the form of increased

number of refrigerated vans and precooling chambers which can help bring down

wastage of goods.

3. Real-estate development:

Retail is closely dependant on real estate as any retailer will require substantial spaces for

setting up business. Real estate in India has gone through a revamp due to the demand of

high-end retail malls and peoples changing perception towards an enjoyable shopping

experience. Thus real estate can get a further facelift in India and receive more

investment with the opening up of FDI in multi-brand retail.

4. Employment opportunity:

FDI in multibrand retail could open up large employment opportunity.Acoording to

National Sample Survey Organisation (NSSO) data of 2007-08, retail trade employed

7.2% of total workforce and provided job opportunity to 33.1 million.These numbers

would increase by multiple times with FDI in retail which would add value and hence

create jobs.


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4.9 Recommendations To Improve Retail Sector

1. Cost Cutting:

Cost cutting with a long term view should be the key focus while making costcontainment choices. In the past Many retailers have made the mistake of cutting thosecosts that are easiest and fastest. An effective strategy should be one that identifies thecosts least important to deliveringwhat customers value. This requires a deepunderstanding of customers needs and re-evaluating the business activities that actuallydeliver what customers value and the ones that do not. This ensures that the costs cut nowdo not harm the future potential of thebusiness.

Eg:In mid 2008, Kishore Biyani announced a new strategy for his group:Garv se bolo hum kanjoos hain

With this campaign, the company aimed to save USD 36.5 million in a period of oneyear.

The idea was to openly accept that cost-cutting needs to be implemented and thenaggressively eliminate inefficiencies. The move ensured that internal overlapping offunctions was avoided within various departments. At the back-end, human resources andinformation technology were integrated in an organized manner.

1.Resource optimization:

A retailer has to better manage its backend centers, supply chain and stores whileimproving its profitability. Since each customer amongst his millions is defined by adifferent buying history, a different buying propensity, and a distinct servicing cost. Thebest way to allocate resources depends on the nature of the resources and the constraintsat hand:

2.Improving labor productivity:

Retailers should turn their attention towards employee productivity to boost sales. Many

retailers should slow down the hiring in back-end operations with training staff high ontheir agenda

3.Manpower retention and training:

Inspite of a downturn, the requirement for skilled manpower still persists. Companiesneed to understand how to retain their most desirable staff while ensuring their future


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development. This becomes a bigger concern particularly when managementdevelopment costs are under pressure, as this is a leadership challenge.

One of the common problems with retail firms is that they hire fresh graduates withoutany experience in the retail sector. This has led to over-ambitious expansion plans which

has left the firms struggling.With scarcity of an experienced talent pool, talent development has tobe brought in-house. The need is to focus on selected senior managers, to develop their capabilities tocoach and mentor others.

4.Inventory Management:

In any retail operation, restraining inventory cost is of utmost importance. Improperinventory may result in stock outs for some of the categories whereas excess stock forothers.

Lower inventory turns are likely to have negative impact on ROI and more so forcategories where gross margin is quite In addition, higher inventory may result inobsolete stock, margin leakages, damages and high carrying cost (interest, space,handling costs, etc.).

5. Bringing down Real estate costs:

Real estate rentals constitute the biggest cost item for retailers at about 10-15 percentof sales. Quite frequently, it has been observed that one of the major costs for retailstores i.e. rental cost is ignored by retailers.

6. Entering into revenue sharing model as against fixed rental model:


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Although previously developers and landlords were unwilling toenter into revenuesharing model, they are now ready to lease outtheir empty spaces. The model, underwhich retailers share apercentage of their sales with real estate companies is seen as afair way of sharing risks between the two stakeholders. Revenue-sharing model increases

the responsibility of the developer to bring in footfalls in the mall by providing goodupkeep of the infrastructure. The model is sustainable during the downturn as the retailersdo not have to take the hit alone. Players can leverage this opportunity by collaboratingwith developers to work out a win-win model and a revenue sharing deal.

7.Leveraging Information Technology:

Organized retail in India faces many hurdles in the absence of proper supply-chaininfrastructure and development of effective electronic payment and delivery channels.The technologies that retailers have deployed over the years, to serve their distributednetworks, are without standards. Going forward, technology is likely to be a key

differentiator to bring about efficiencies, save on costs and offer better services tocustomers. The problem with old technology is that there are no standards and in manyinstances, one does not integrate with another.

All the elements within the retail industry right from data warehouses, logistics, supplychain, store management, point of sale, etc. are likely to get impacted positively with theusage of technology be it RFID, GPS, intelligent video analytics, point-of-sales terminalsor sensor-based shop carts, etc.Although Indian retail chains have started deploying these technologies, there still existschallenge to implement them simultaneously and make the process more efficient.The advantages of implementation of technology could be scaled manifold by carefullychoosing solutions in context of the said business and by use of technology in followingdomains:

Manpower training: Retailers need to gear up with good people managementprograms. One way this can be done is through certification programmes.

Real Estate Management: Information technology can be leveraged to provideproject management capabilities to monitor the progress of store launches. Timelylaunch of retail outlets can provide a good headstartor retailer and save significantfunds as well.

Supply chain visibility: IT can help retailers set up basic forecasting,replenishment and supplier management solutions to improve supply chainmanagement. IT can help in maintaining the optimally minimal Inventoryenabling reduced input costs.

Store operations: Innovative use of Intelligent Video Analytics, pointof-sales terminals and sensor-based shop carts can help retailersenhance customer experience and simultaneously reduce costs by


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controlling shrinkage.

Logistics management: Retailers can leverage IT for back-end support and 3PLcompanies for physical infrastructure such as warehouse space and atransportation fleet. GPS technology is extremely useful in real time tracking of

the goods moment.

8. Decode consumer behavior:

India is a diverse nation with multi-lingual, cross cultural population spread acrossdifferent geographical regions. Retailers have to recognize the fact that a strategy thatholds true for a particular region and set of people may not hold true for others.

While India has a great market potential, most retailers tend to ignore the basic fact aboutthe diversity of its customer base. Any retailer who does not do his ground work in termsof understanding his customer needs stands a great risk of failing even with one of the

best models at hand.A case in point is discount shopping in India. Indian discountshopping is still fragmented because of diverse culture while western retailers are able totreat the entire customer base as one. This helps them gain benefits of large scalepromotions and offers. The opportunity lies with the Indian retailers to customizediscount seasons based on festivals of different regions. However, annual planning ofsales based on geography and festivals is still at a nascent stage in India.

Retailers should recognize that consumer is the king and cannot be ignored. The truemetric of success may not be in terms of number of new stores added by a company,rather, increase in same store sales through a thorough understanding of consumerrequirements.


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9.Increasing use of Private Labeling:

Private labels enable retailers to offer quality products and earn higher margins. The

retailer also derives many advantages of using private labels. In-store labels are at least 5-20 percent cheaper across various categories. This is because they cut out middlemencosts and pass on the benefit to the consumer. Private labels enhance the bargainingpower of the retailer while negotiating with manufacturer (national/ international) brands.In the long run, the retailer can use the Private Labels to attract customers to his outlet.Thus, many retailers are considering increasing their private label offerings significantly.

Advantages of using private label:

1) Gives the opportunities to stand out from the crowd

2) Helps maintain consistency in stocks. Outside brands may or may not be available inthe future leading to a potential loss of customers.

3) Enables retailers to control margins by improving their bargaining power


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10.Venture into under penetrated markets: Rural Retailing

India has witnessed a rapid increase in incomes with per capita incomes soaring to USD1000 in 2008 from miniscule USD 418 in 1998. The growth has not been restricted to

urban India, as the per capita income in rural India has grown by 50 percent in past 10years.

The increasing availability of basic infrastructure, improving access to funding,employment guarantee schemes, better information systems and growing literacy aretogether helping bring prosperity to rural households. With additional fiscal incentivesprovided by the government, rural India is set to witness further boost in overall farmincomes.

Overall, there is a huge market which is waiting to be served, ready to splurge, willing toexplore new products and services. Retailers can tap on their wallets given they do their

homework well.

According to India Retail Report 2009 by Images, "India's rural markets offer a sea ofopportunity for the retail sector. The urban-retail split in consumer spending stands at9:11, with rural India accounting for 55 percent of private retail consumption.


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4.10 RetailRoad Ahead

There is a huge untapped opportunity in the retail sector, thus having immense scope fornew entrants, driving large investments into the country. A good talent pool, hugemarkets and availability of raw materials at comparatively cheaper costs are expected to

make India lead one of the worlds best retail economies by 2042. The industry is alsoslated to be a major employment generator in future.

Supply Players are now moving to Tier II and Tier III cities to increasepenetration and explore untapped markets as Tier I cities have beenexplored enough and have reached a saturation level.

Demand Healthy economic growth, changing demographic profile, increasingdisposable incomes, changing consumer tastes and preferences aresome of the key factors that are driving and will continue to drivegrowth in the organised retail market in India.

Barriers to

entry

Reforms by India in opening up its economy have greatly improvedtrade prospects, but major barriers still exist such as regulatory issues,supply chain complexities, inefficient infrastructure, automatic approvalnot being allowed for foreign investment in retail. But, some of theseare set to change with FDI in multi-brand retail set for approval.

Bargaining

power of

suppliers

The bargaining power of suppliers varies depending upon the targetsegment, the format followed, and products on offer. The unorganisedsector has a dominant position, still contributing 95% of the total retailmarket. There are few players who have a slight edge over others onaccount of being established players and enjoying brand distinction.Since it is a capital intensive industry, access to capital also plays animportant part for expansion in the space.

Bargaining

power ofcustomers

High due to wide availability of choice.

Competition High. Competition is characterised by many factors, includingassortment, products, price, quality, service, location, reputation, creditand availability of retail space etc


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An increasing number of people in India are turning to the services sector for

employment due to the relative low compensation offered by the traditional agriculture

and manufacturing sectors. The Retail Business in India is currently at the point of

inflection. Rapid change with investments to the tune of US $ 25 billion is being planned

by several Indian andmultinational companies in the next 5 years. It is a huge industry in

terms of size and according to India Brand Equity Foundation (IBEF), it is valued at

about US$ 395.96 billion. Organised retail is expected to garner about 16-18 percent of

the total retail market (US $ 65-75 billion) in the next 5 years.

According to the Icrier report, the retail business in India is estimated to grow at 13%

from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganized retail sector is

expected to grow at about 10% per annum with sales expected to rise from $ 309 billion

in 2006-07 to $ 496 billion in 2011-12.[8]
http://en.wikipedia.org/wiki/Multinational_companyhttp://en.wikipedia.org/wiki/Retailing_in_India#cite_note-7http://en.wikipedia.org/wiki/Retailing_in_India#cite_note-7http://en.wikipedia.org/wiki/Retailing_in_India#cite_note-7http://en.wikipedia.org/wiki/Retailing_in_India#cite_note-7http://en.wikipedia.org/wiki/Multinational_company


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Pantaloon Retail

5.1 Company profile:

Founded in 1987, by Mr. Kishore Biyani, Pantaloon Retail in Indias leading RetailCompany. It is the flagship company of the future group. Starting its 1st outlet in 1997,inKolkata .It currently has over 16 mn sq. ft. of area under business. The company operatesunder multiple formats hypermarket, apparel stores, specialty stores under variousbrands including Big Bazaar, Pantaloon, Food Bazaar, Collection, E Zone etc. Thecompany also operates an online portal, futurebazaar.com

Promoted by Mr. Kishore Biyani, Pantaloon has a strong management team withsignificant experience in the retail industry. From being a small retail player in the mid90s, the company has evolved to become the largest organised retailer in the country.

Pantaloon was amongst the early players to gauge the potential of the organised retailin the country and the company expanded aggressively to capture market.

Over the years, it has gained immense experience and has developed an in-depthunderstanding of the retail industry. Headquartered in Mumbai (Bombay), the companyoperates over 16 million square feet of retail space, has over 1000 stores across 73 citiesin India and employs over 30,000 people.

The retail space of the company has increased from 2.7 Mn sq ft in FY06 to over 16.3Mn sq ft in FY11; during the same period, space addition by players such as VishalRetail and Shoppers Stop was only 2.5 Mn sq ft and 0.9 Mn sq ft, respectively

The company has sped past its competitors in terms of size and scale on theback of this aggressive roll out of stores. We believe the management is fairlyaggressive and very quick in adapting to the changing needs to the consumer


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5.2 Major Milestones

1987 Company incorporated as Manz Wear Private Limited. Launch of Pantaloons trouser,Indias first formal trouser brand.

1991 Launch of BARE, the Indian jeans brand.

1992 Initial public offer (IPO) was made in the month of May.

1994 The Pantaloon Shoppe exclusive menswear store in franchisee format launched across thenation. The company starts the distribution of branded garments through multi-brand retailoutlets across the nation.

1995 John MillerFormal shirt brand launched.

1997 Company enters modern retail with the launch of the first 8000 square feet store, Pantaloonsin Kolkata.

2001 Three Big Bazaar stores launched within a span of 22 days in Kolkata, Bangalore andHyderabad.

2002 Food Bazaar, the supermarket chain is launched.

2004 Central - Indias first seamless mall is launched in Bangalore.

2005 Group moves beyond retail, acquires stakes in Galaxy Entertainment, Indus League Clothingand Planet Retail.Sets up Indias first real estate investment fund Kshitij to build a chain of shopping malls.

2006 Future Capital Holdings, the companys financial is formed to manage over $1.5 billion inreal estate, private equity and retail infrastructure funds. Plans forays into retailing ofconsumer finance products.

Home Town, a home building and improvement products retail chain is launched along withconsumer durables format, Ezone and furniture chain, Furniture Bazaar.

Future Group enters into joint venture agreements to launch insurance products with Italianinsurance major, Generali.Forms joint ventures with US office stationery retailer, Staples.

2007 Future Group crosses $1 billion turnover mark.Specialised companies in retail media, logistics, IPR and brand development and retail-ledtechnology services become operational.

Pantaloon Retail wins the International Retailer of the Year at US-based National RetailFederation convention in New York and Emerging Retailer of the Year award at the WorldRetail Congress held in Barcelona.

Futurebazaar.com becomes Indias most popular shopping portal.

2008 Future Capital Holdings becomes the second group company to make a successful InitialPublic Offering in the Indian capital markets.

Big Bazaar crosses the 100-store mark, marking one of the fastest ever expansion of ahypermarket format anywhere in the world.

Total operational retail space crosses 10 million square feet mark.

Future Group acquires rural retail chain, Aadhar present in 65 rural locations.


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5.3 BOARD OF DIRECTORS

Mr. Kishore Biyani, Managing Director

Kishore Biyani is the Managing Director of Pantaloon Retail (India) Limited and the Group ChiefExecutive Officer of Future Group.

Mr. Gopikishan Biyani, Director

Gopikishan Biyani is a commerce graduate and has more than twenty years of experience in the textilebusiness.

Mr. Rakesh Biyani, Wholetime Director

Rakesh Biyani is a commerce graduate and has been actively involved in category management; retailstores operations, IT and exports. He has been instrumental in the implementation of the various newretail formats.

Mr. Vijay Biyani, Wholetime Director

Vijay Biyani has more than twenty years of experience in manufacturing, textiles and retail industry andhas been actively involved in the financial, audit and corporate governance related issues within thecompany.

Mr. Kailash Bhatia, Wholetime Director

He has over 28 years of valuable experience in the fashion business and has worked with some of thewell known companies like Arvind Mills and Weekender.

Mr. Vijay Kumar Chopra, Independent Director

V.K.Chopra is a fellow member of The Institute of Chartered Accountants of India (ICAI) by professionand is a Certified Associate of Indian Institute of Bankers (CAIIB). His banking career spans over 31years and he has served senior management positions in Central Bank of India, Oriental Bank of

Commerce, SIDBI, Corporation Bank and SEBI.

Mr. Shailesh Haribhakti, Independent Director

Shri Shailesh Haribhakti, is a Chartered Accountant, Cost Accountant, and a Certified Internal Auditor.He is the Deputy Managing Partner of Haribhakti & Co., Chartered Accountants and past president ofIndian merchant Chambers

Mr. S Doreswamy, Independent Director

S. Doreswamy, is a former Chairman and Managing Director of Central Bank of India and serves on theboard of DSP Merrill Lynch Trustee Co and Ceat Limited among others.

Dr. D O Koshy, Independent Director

Dr. Darlie Koshy, a PhD from IIT Delhi and rank holder in MBA headed NID (Ministry of Commerce,GOI) as Director for 2 terms of office prior to which he was the founding Chairperson of FashionManagement at the National Institute of Fashion Technology (Ministry of Textiles, GOI). He iscurrently the Director General & CEO of ATDC Network of 58 Institutes / Centres and two premiercampuses of Institute of Apparel Management under the aegis of AEPC (Sponsored by Ministry ofTextiles, GOI).


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5.4 Business Structure


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5.5 Expansion Plans

In Q1-2011, Future Group added 0.68msf takes total area under operations to 14.8msf.

The addition was spread across formats - 2 Pantaloons, 1 Central, 5 Big Bazaar, 3 Food

Bazaar and 37 KB's Fair Price stores. In keeping with its limited expansion strategy in theElectronics vertical, only 1 electronics store was added during the quarter. Of its 5 newBig Bazaar stores, 1 store each was opened in Hassan and Gangtok for the first time.

The company has opened its 100th KB's Fair Price shop in Delhi and plans to open its100th in Mumbai in June.Store openings are getting skewed more and more towards tier-II and tier-III cities to gainfirst mover advantage.

To compete emerging players with deep pockets like Hypercity, More, Bharti and StarIndia Bazaar have aggressive store opening plans over the next 2-3 years.

The management has maintained its guidance of adding an area of 2-3msf every year.

Challenges

The key challenges facing the company are as follows:

Fund raising:

The Company acknowledges that expansion plans of the company cannot be met frominternal resources. This means that the company has to tap external sources to fundexpansion. The company has recently allotted shares to promoters at SEBI formula price.It plans to borrow heavily to fund its expansion plans. As a10th consequence of increasedinterest payment and depreciation expense, the net profit margins would remain flat.

Competition

Although there are a few stores operating in this segment such as Giant in Hyderabad, itis mostly international chains such as Wal-Mart and Carrefour that are the better knownnames as discount stores worldwide. Meanwhile, the general retailers in Mumbai are nottoo pleased about the concept of discount stores.

Company cant figure out from where such stores get their margins. It must have a

feasible revenue model to sustain the venture.

Company is facing limited competition from the organized retailers but strongCompetition exists from the downtown centers unorganized.


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5.6 Pantaloon Competitive Strengths

Strong understanding of the value retail segment

Pantaloon business plan involves implementation of the concept of the value retailing,

targeting the middle and lower middle income groups, which constitute majority of thepopulation in India. Group/Company intends to provide quality products at competitiveprices.

Group/Company sells a vast range of merchandise across apparels and accessories,FMCG products, food products and consumer durables. Pantaloon emphasis has been tomaximize the value that the customers derive in spending on goods bought in Pantaloonstores.

Group/Company endeavor to continuously reduce Pantaloon costs through a variety ofmeasures, such as, in-house production of apparels, procurement of goods directly from

the small and medium size vendors and manufacturers, efficient logistics and distributionsystems along with customized product mix at Pantaloon stores depending on theregional customer behavior and preferences. Central to Pantaloon value retail strategy isto pass on the benefits of cost reduction measures to Pantaloon customers.

Strong and efficient supply chain management

Pantaloon supply chain management involves planning, merchandizing sourcing,standardization, vendor management, production, logistics, quality control, pilferage

control replacement and replenishment.

It provide a flexibility to adapt to changing patterns in consumer behavior and Pantaloonability to add value at various steps/levels.

In particular, Pantaloon supply chain management gains strength from Pantaloon abilityto undertake in-house manufacture, design and development of apparels.

Strong and efficient logistics and distribution network:

Pantaloon distribution and logistics network comprises seven distribution centers. It ownsfleet of 41 trucks, which helps to transport and deliver Pantaloon products in a cost andtime efficient manner.

Pantaloon distribution and logistics set up is well networked and allows to fulfill the storerequisition within short time period of generation and receipt of order, which has helpedus to optimize in-store availability of merchandise and minimize transportation costs.


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Company is in a position to leverage Pantaloon geographical spread

Pantaloon stores and distribution centers are spread in various parts and regions of thecountry. This has not only enabled to build Pantaloon brand value but also facilitated to

explore cost-effective sourcing from different locations identify potential markets andefficiently establish new stores in different locations.

Most of the stores are located in Tier II and Tier III cities, which enable the company tocapture market share in locations where a majority of Pantaloon target customers arelocated.

Company makes effective use information technology systems

Company believes that efficient information technology systems, processes and businessapplications are essential to handle retail chain of Pantaloon magnitude.

Pantaloon office processes are computerized which support procurement, supply chainlogistics, distribution centers management and store operations including inventorymanagement and billing.

All Pantaloon stores and distribution centers are connected through a company-widevirtual network connection which helps to efficiently manage Pantaloon network ofoutlets throughout the country.

Concentrated in cities with high potential for organised retail

Pantaloon has expanded its presence across India and currently has stores in 71 cities.However, the companys strategy of focusing on the top eight cities (includes fourmetros and other cities such as Ahmadabad, Pune, Hyderabad and Bangalore) wouldhelp it garner larger revenues, and hence, higher market share.These top 8 cities account for around 75% of the total organised retail market in top 34cities in India, and therefore, provide tremendous opportunities. Around 70-75% ofPantaloons existingspace is in these cities; the company also plans to expand the sameover the next few years.


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Pantaloons presence across key cities has competitive edge over its peers, VishalRetail and Shoppers Stop. Vishal Retails strategy focuses on Tier II and Tier III cities,wherein the retail opportunity is only 24-25% within the top 34 cities in the country.

On the other hand, Shoppers Stop is focusing on top cities with only lifestyle retailingvertical.

Presence in all consumption space across categories

Pantaloon operates in different lines of businesses which cater to almost allconsumption points. It has entered into many JVs to increase its presence in almost allretail categories. Though the operations in most of these businesses are in the initialstages, the same is expected to boost the companys profitability in the long run.

Company have a highly experienced and competent managementteam:

Company has an experienced management team which is complemented by acommitted workforce. Pantaloon management team comprises of talentedprofessionals who are highly experience in the retail sector.

This has assisted us in effective management of Pantaloon stores. Company

have created the right balance of performance bonuses and other incentives forPantaloon employees.


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5.7Pantaloon strategy

Company intends to pursue the following strategies in order to consolidate Pantaloonposition as one of the leading operators in the value retail segment in India.

Pantaloon growth strategy is based on:

1. Increasing Pantaloon penetration in the country by leveraging Pantaloonsupply chain, distribution and logistics network.

2. Emphasis on backward integration.

3. Expansion of FMCG.

4. Procurement from low-cost production centers outside India.

5. Increasing customer satisfaction and Pantaloon base of loyal customers.

6. Continue to upgrade information technology systems and processes.

7. Continue to train employees and seek entrepreneurship from employees.


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5.8 Business Analysis of Pantaloon Model

India is not an integrated homogenous market like other western markets its ahierarchy of markets catering to people at many different income levels, tastes.

Hence its very important to understand the customer and its needs. Pantaloon has beenable to crack this by offering all what the consumers want at different price points.

Pantaloon has created a well niche brand for itself. The company through constant rollout of different formats is trying to capture the maximum of consumers wallet. It has

been able to target 75% of the consumer wallet.


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5.8 Snapshot of Subsidaries and JVs


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Snapshot of Business lines & Retail Formats


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5.10PROFIT AND LOSS-PANTALOONS RETAIL (IND) LTDJun'10 Jun'09 Jun'08

12 Months 12 Months 12 Months

INCOME:

Sales Turnover 6,316.66 6,661.42 5,295.88

Excise Duty 0 0 0

NET SALES 6,316.66 6,661.42 5,295.88

Other Income 0 0 0

TOTAL INCOME 6,338.99 6,673.50 5,326.81

EXPENDITURE:

Manufacturing Expenses 99.14 115.91 100.66

Material Consumed 4,089.51 4,481.95 3,556.21

Personal Expenses 280.18 275.94 275.78

Selling Expenses 543.13 443.36 372.54

Administrative Expenses 704.26 672.01 527.28

Expenses Capitalised 0 0 0

Provisions Made 0 0 0

TOTAL EXPENDITURE 5,716.22 5,989.17 4,832.47

Operating Profit 600.44 672.25 463.41

EBITDA 622.77 684.33 494.34

Depreciation 161.88 140.05 83.39

Other Write-offs 0 0 0

EBIT 460.89 544.28 410.95

Interest 299.79 317.76 201.45

EBT 161.1 226.52 209.5

Taxes 37.25 75.38 69.68

Profit and Loss for the Year 123.85 151.14 139.82

Non Recurring Items 51.41 -10.29 -13.88

Other Non Cash Adjustments 3.17 -0.2 0.03

Other Adjustments 1.13 0 0

REPORTED PAT 179.56 140.58 125.97

KEY ITEMS

Preference Dividend 0 0 0

Equity Dividend 17.13 11.57 10.67

Equity Dividend (%) 41.54 30.39 33.49

Shares in Issue (Lakhs) 2,061.43 1,903.21 1,592.92

EPS - Annualised (Rs) 8.71 7.39 7.91
http://economictimes.indiatimes.com/profitandlose.cms?companyid=11339&year=&noofyears=&currencyformat=&prtpage=1http://economictimes.indiatimes.com/profitandlose.cms?companyid=11339&year=&noofyears=&currencyformat=&prtpage=1http://economictimes.indiatimes.com/profitandlose.cms?companyid=11339&year=&noofyears=&currencyformat=&prtpage=1


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Comments:

1.Net Sales:

Net Sales of the company has increased in the year 2009 as compared to 2008 but it hasdecreased in 2010 as compared to 2009.

The reason for the decline isrise in raw material prices, inflation and additional exciseduty. In apparels, raw material costs have been the biggest concern said companyinvestor update. Though the prices of raw materials such as cotton have reduced, it is stillhigh when compared to last year.

Moreover apparel prices-increased due to the mandatory 10% excise duty on brandedgarments introduced in the Union budget and soaring cotton prices-for the fall in demand.

2.Total expenditure

Total Expenditure of company has increased for both the years .this has happenedbecause of because the rise in cost of production-raw material, labour and borrowingcosts-have outweighed increase in prices.

3.EBIT:

EBIT increased by 38.60% in 2009 as compared to 2008 but it decreased in the year 2010by 38.41% as compared to 2009. This is because of reduction in net sales and increase intotal expenditure.

4. Profit and loss:

Profit for the year has increased in the year 2009 compared to 2008 but decreased furtherin 2010 because of reduction in net sales and increase in total expenditure.


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SHAREHOLDING PATTERN PANTALOONS RETAIL

LTD

Holder's Name No of Shares % Share Holding

Promoters 90363248 44.92%

ForeignInstitutions 49046511 24.38%

NBanksMutualFunds 15497481 7.70%

FinancialInstitutions 13987235 6.95%

OtherCompanies 13829376 6.88%

GeneralPublic 12900660 6.41%

Others 5369766 2.67%

ForeignNRI 110662 0.06%

Directors 37600 0.02%


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BALANCESHEET-PANTALOONS RETAIL (IND) LTD

Particulars Jun'10 Jun'09 Jun'08

Liabilities12

Months

12

Months

12

Months

Share Capital 228.77 60.94 95.12

Reserves & Surplus 2,527.48 2,211.48 1,751.50

Net Worth 2,756.25 2,272.42 1,846.62

Secured Loans 1,236.03 2,525.53 1,991.77

Unsecured Loans 150.19 324.86 200.01

TOTAL LIABILITIES 4,142.47 5,122.81 4,038.40

AssetsGross Block 1,417.04 1,876.45 1,368.76

(-) Acc. Depreciation 294.89 307.69 170.59

Net Block 1,122.15 1,568.76 1,198.17

Capital Work in Progress. 59.68 345.23 330.64

Investments. 2,002.91 954.03 586.52

Inventories 1,270.67 1,787.84 1,429.84

Sundry Debtors 123.57 177.25 113.16

Cash And Bank 100.54 109.34 121.1

Loans And Advances 452.89 1,211.08 991.66Total Current Assets 1,947.67 3,285.51 2,655.76

Current Liabilities 965.72 1,010.26 715.11

Provisions 24.22 20.46 17.58

Total Current Liabilities 989.94 1,030.72 732.69

NET CURRENT ASSETS 957.73 2,254.79 1,923.07

Misc. Expenses 0 0 0

TOTAL ASSETS

(A+B+C+D+E)4,142.47 5,122.81 4,038.40


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Comments:

Reserves and Surplus has increased by 26.26% in2009 as compared to 2008 but

has increased only by 14.28% in 2010 as compared to 2009.

Secured Loans increased during 2009 by 26.79% as compared to 2008 but itdecreased in the year 2010 by 51.05% as compared to the year 2009.

Unsecured Loans also increased in 2009 by 38.43% as compared to 2008 and

decreased in 2010 by 53.76% as compared to previous year

Fixed Assets has increased by 30.93% in the year 2009 as compared to the year

2008 and decreasedeby 28.46% in the year 2010 as compared to 2009.

Capital work in progress increasedby 4.4% in the year 2009 as compared to

previous year and decreased by 82.71% in 2010 compared to 2009.

Investments increased by 62.65% in 2009 as compared to 2008. It further

increased to a great extent in 2010 by 109.9% as compared to 2009.

Inventories increased in 2009 by 25.08% but decreased in the year 2010 by

28.92% as compared to previous year.

Sundry Debtors increased by 56.63% in 2009 as compared to 2008 and it further

decreased to 30.28% in the year 2010 as compared to the year 2009 .

Loans and Advances increased in 2009 by 22.12% as compared to 2008 but has

decreased in 2010 by 62.6%% as compared to 2010.

Current Liabilities increased by 41.27% in 2009 as compared to 2008 but has

decreased in 2010 by 4.40% as compared to previous year.

Provisions has increased by 16.38% in 2009 when compared to 2008 butincreased further to 18.37% in the year 2010 as compared to2009.


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CONTENTS3Q

FY113Q

FY10

Total Revenue 2812 2391

Total RM 2006 1714

RM as % of sales 71 72

Gross Profit 805 677

Gross Margin( %) 28.6 28.3

Staff Cost(SC) 121 102

SC as % of Sales 4.3 4.3

Other Expenses(OE) 436 358

OE as % of sales 15.5 15

Total Expenses(TE) 2564 2173

TE as % of sales 91.2 90.9

EBITDA 248 217

EBITDA % 8.8 9.1Other Income 3 2

Interest 110 101

Depreciation 66 52

EBIT 182 166

EBIT % 6.5 6.9

PBT 76 66

Extra Ord Items 0 0

Total Tax 25 29

Comments:

1.Pantaloon Retail (PRIL) reported poor performance for 3QFY2011.

The company same-store-sales of 10.3% during the quarter, while lifestyle retailingstood at 10.2%.During the quarter, EBITDA margin declined by 30bp to 8.8% (9.1%). PRIL'spresence across price points and categories places it in a better position than itspeers

2. Retail space expansion on track: In 3QFY2011, PRIL added ~0.68mn sq. ft. of retailspace, taking the total space to ~14.8mn sq. ft.

We believe the companys retail space expansion is on track, considering thecompanys plan to add 1.2mn1.5mn sq. ft. in 2HFY2011. Retail space expansionwas skewed towards the value-retailing format, which accounted for ~55% of theretail space addition.


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3.PRILs core retail segment reported 17.6% yoy growth in net sales to `2,812cr. Same-store-sales came in at 10.3% and 10.2% for value and lifestyle retailingrespectively, during 3QFY2011 (20.9% and 11.5% during 2QFY2011).

Lifestyle retailing witnessed lower growth on account of supply disruption duringthe quarter due to hike in excise duty and a sharp increase in key raw-material(cotton) prices


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Financial Ratios

Ratios Year 2010 Year2009

Debt-equity 0.50 1.3

Inventory turnover 1.30 1.40

Dividend payout ratio 11.16 9.63

Dividend yield ratio(%) 0.23 0.43

ROE 7.00 6.2

ROCE 13.40 11.30

Working capital ratio 0.10 0.20

Net profit margin(%) 3.00 2.20

P/E ratio 41.5 20.24

EPS 9.4 8.0

Comments :

1.Debt-equity ratio:

The ratio is less than 1, which means equity provides majority of financing for the year2010.But for the year 2009 the ratio is more than 1 which means assets were mainlyfinanced by debt. But it was well within the limit. As compared to previous year the ratiohas decreased which means company is repaying its debt and concentrating more onequity for financing.


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2. Inventory turnover:

The inventory turnover ratio is very low for both the years. The low value implies thatcompany is inefficient in managing the inventory level. The ratio has decreasedcompared to previous year implying sales has declined and therefore excess inventory.

3. Dividend payout ratio:-

The ratio is low for both the years which mean that most of the earnings of the companyis ploughed back into business. This is a good sign as lower payout ratio means higherretained earnings which in turn implies company is in a stronger financial position.

4. Dividend yield ratio:

The ratio has decreased as compared to previous year which is not a good sign frominvestorspoint of view as it indicates that the intending investor is not going to geteffective returns on the proposed investment.

5. Return on equity (ROE):

This ratio has increased compared to previous year. This ratio is of great importance tothe present and prospective shareholders as well as the management of the company. Asthe ratio has increased from previous year it reveals how well the resources of the firmare being used. As the primary objective of business is to maximize its earnings, theabove ratio indicates that the primary objective of business is achieved to greater extent.

6. Return on capital employed:

Looking at this ratio it is clear that the ROCE has increased as compared to previous yearwhich is clear indication and supports the previous findings that the company is makingprofits. It indicates how well the management has used the investment made by ownersand creditors into the business.

7. Net profit margin ratio:

Looking at this ratio it is cleared that net profit margin has decreased previous to last yearas sales was less.

8. Earning per share (EPS):

Comparatively the EPS of the company has increased as compared to previous y earwhich means earning power of the company has increased .this is a good sign revealingthat company is into profits.


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9.P/E ratio:

P/E ratio of the company has increased by almost 100 % which indicates good demandfor shares and high share price and high expectation of future profits.


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5.11 Technical Analysis:

From the above chart, we have analysed that there is a Bump & Runchart.Let us explainchart in brief with regards to this chart.

Bump & Run Chart Pattern:

Bump Phase: The bump forms with a sharp advance, and prices move furtheraway from the lead-in trendline. Ideally, the angle of the trendline from thebump's advance should be about 50% greater than the angle of the trendlineextending up from the lead-in phase. Roughly speaking, this would call for anangle between 45 and 60 degrees. If it is not possible to measure the angles,then a visualassessment will suffice.

In the above chart, the Bump phase is analysed at around Rs. 520 in October 2010.

Run Phase: The run phase begins when the pattern breaks supportfrom the leadingtrendline. Prices will sometimes hesitate or bounce off the trendline before

breaking through. Once the break occurs, the run phase takes over and thedecline continues.

In the above chart, the Run phase is analysed at around Rs. 430 in last week of November2010.


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Head & Shoulders chart pattern:

Left Shoulder: While in an uptrend, the left shoulder forms a peak that marksthe high point of the current trend. After making this peak, a decline ensues tocomplete the formation of the shoulder (1). The low of the decline usually remainsabove the trend line, keeping the uptrend intact.

In the above chart, left shoulder position is analysed at around Rs. 468.

Head: From the low of the left shoulder, an advance begins that exceeds the

previous high and marks the top of the head. After peaking, the low of thesubsequent decline marks the second point of the neckline (2). The low of thedecline usually breaks the uptrend line, putting the uptrend in jeopardy.

In the above chart, head position is analysed at around Rs. 845

Right Shoulder: The advance from the low of the head forms the right shoulder.This peak is lower than the head (a lower high) and usually in line with the high ofthe left shoulder. While symmetry is preferred, sometimes the shoulders can beout of whack. The decline from the peak of the right shoulder should break theneckline.

In the above chart, right shoulder position is analysed at around Rs. 468

Neckline: The neckline forms by connecting low points 1 and 2. Low point 1marks the end of the left shoulder and the beginning of the head. Low point 2marks the end of the head and the beginning of the right shoulder. Depending onthe relationship between the two low points, the neckline can slope up, slopedown or be horizontal. The slope of the neckline will affect the pattern's degree of


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bearishness: a downward slope is more bearish than an upward slope. Sometimesmore than one low point can be used to form the neckline.

In the above chart, the neck line has been analysed and drawn on the chart.


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5.12Findings:

1. Higher share of value segment partially shields the company from economicDownturn:

The current economic slowdown has impacted the sales growth of all major retailPlayers, including Pantaloon. However, we believe that the company is better placedThan most of its competitors to manage the slowdown due to the favorable mix ofValue retailing and presence in major cities.

Pantaloon earns a higher share of revenues from value retailing as compared to itsPeers. As spending in this category is highly non discretionary in nature, the companyis assured of stability in revenues. Value retailing implies a good mix of nonDiscretionary (food and other general merchandise) and discretionary (low to mediumPriced apparels and other accessories) spending. The company derives significantRevenues of around 30% from FMCG segment as against and almost negligible share for

Shoppers Stop.

The curtailment in spending in value retailing segments is expected to be lower than inthe life style segment, which is completely discretionary in nature. This gives Pantaloonan edge over players such as Shoppers Stop and Trent, who primarily operate in the lifestyle segment.

2. Aggressive rollout of retail space:

The management of Pantaloon has indicated retail space target of 25 Mn sq ft by FY13.However, we expect the addition to be lower and retail space would reach around 21.1

Mn sq ft due to the economic slowdown and delay in retail space completion High debtlevels also likely to dent the companys ambitious expansion plans.

While Shoppers Stop plans to add 0.65 Mn sq ft of retail space over the next 3 years,

3. Improvement in supply chain management to aid efficiency:

After aggressive rollouts of stores, Pantaloon is focussing on its supply chainmanagement and backend operations to improve efficiency and reduce cost.

The logistics operations have been handed over to its newly formed 100% subsidiary,

Future Logistics. Large distribution centres are being consolidated for better inventorycontrol and cost rationalisation. All the stores have been linked with designatedwarehouse through SAP to control inventory levels at individual stock-keeping units(SKUs) level.

The above measures are likely to help bring down logistics costs as well as overallinventory levels. We expect the inventory level as a percentage of sales to reduce from116 days in FY08 at present to around 84 days by FY13.


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4. New ventures to continue to impact the overall profitability in the medium

Term:

Pantaloon has aggressively diversified its business portfolio over the past couple ofyears. The company has forayed into areas such as home solutions (electronics and

furniture business) and insurance (life and non life). In addition, it has ventured into thefinancial space through Future Capital Holding. The company has also diversified intodifferent retail verticals such as mobile phone, kids wear, sportswear etc. It hasentered into a JV with Axiom Telecom for mobile handset retailing.

5. Insurance venture to have long gestation period

Pantaloon has entered into joint ventures for insurance with Generali for both life andnon life insurance. The company has a 25.5% stake in both the JVs. Generalispecializes in distribution of mall assurance products and uses store location for

promoting general and life insurance policies.

Also JV would tap group's employee and vendor base to distribute both life and generalinsurance products. However, such businesses typically have long gestation periods of 3-7 years and have huge fund requirements in the medium term. We believe that venturingin such long gestation ventures would adversely affect the financials of the company inthe medium term.

We believe that Pantaloons foray into these businesses when its core retail business isin fast expansion mode would put significant financial stress. The insurance business,in particular, requires significant financial investments, and this coupled with the longgestation period, will continue to have an adverse impact on its financial performance.Further, while some of the new retail verticals have huge potential, they would requireconsiderable funds for expansion. Therefore, the companys entry into new verticals isexpected to stress its financials in the short to medium term.

Fundamentally stock is good and currently in its expansion phase.

Technically presently stock is at its uptrend. So stock is good from long term point ofview and we recommend a buy on pantaloons.


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Recommendations:

We were asked to sell insurance policies and the company had not provided withthe database of clients. This made it difficult as we had to approach someone from

our contacts. This made the no of proceeds very less. If company had providedwith some kind of database it would be easy to sell policies.

So it would be better if company can provide their interns with database so thatmuch time is not wasted in finding the prospect and same time we could haveutilized in converting that prospect into a client. This affected our performanceand many interns were not able to achieve their target on time.

Working hours were less that is from morning 9 to 1.Because of constraint oftiming we were just given class room training and never got a single opportunityto apply this theory knowledge practically.

So company should make some arrangements so that interns can apply theirknowledge practically so they can get better ideas about how things actually workin real life.

We were given just one plan to sell.ie Birla Sunlife Endowment plan. The tenurefor this plan was 35 years. Due to this tenure many people were not ready toinvest in this plan. They were ready to invest in some other plan of Birla Sunlifebut not in this plan.

So company should provide their interns with more plans so even customer canget the choice as in where they want to park their funds so that they can get betterreturns.


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CONCLUSION

After reading this report, one can learn the basics of FUNDAMENTAL andTECHNICAL ANALYSIS, and get complete knowledge of the factors he should

consider before investing in the STOCK MARKET.

To summarize, neither fundamental analysis nor technical analysis is moresuperior than each other. Both have their merits and should be used at the righttime.

If you are investing for the long-term, the fundamentals analysis plays a moreimportant role in determining the type of industry and company you choose. The

technical side analysis plays a more important role when deciding the entry andexit points of your investments.

If you are a speculator, then all you are concerned with is the short-term, hencethe technical charts.

From this report we can conclude that by doing proper analysis of the stock and

then investing in it would minimize the risk involved in losing money in stocks.

After all this analysis, an investor can lose money because at last the marketbehavior i.e. whether it is bullish or bearish depends on the buying and selling ofthe stocks.

At the end I want to conclude this project again by saying that by doing thisanalysis we would reduce risk in stock market but it does not guarantee us that wewill not lose.


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BIBLIOGRAPHY

www.nseindia.com

www.pantaloonsretail.co.in

www.moneycontrol.com

www.ibef.com

www.wikipedia.com
http://www.nseindia.com/http://www.moneycontrol.com/http://www.ibef.com/http://www.ibef.com/http://www.moneycontrol.com/http://www.nseindia.com/


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