Furniture Opportunity in India

July 11

Agenda

Introduction Building on a heritage The Opportunity The Market Dynamic

o

The Business model Who is the Customer Making you feel at home Ambition

July 11

Key Take-aways
o

Ready made furniture market growth in India is exponential, aligned with new housing boom Heritage player entering the market Mass market target with fresh, relevant, affordable offer Strong emotional brand will develop 10% market share in 5 years (220 Rs Crs/$50 MM) Imported furniture will evolve into 100% own branded products in year three with a key manufacturing partner

July 11

Building on a Heritage of Excellence

o o o o o o

Worlds No. 1 Molded Furniture Company Indias No.1 Plastics Material Handling Systems co. Multinational Company with operations in S Asia Group Turnover in excess of $100 MM ( 2003-4) Listed on Indian National Stock Exchanges Top Rating from leading credit rating agencies

o o o o o

Implemented SAP (ERP Package) 400+ Distributors 15,000 Dealers 250 Sales and marketing personnel Unparelled marketing infrastructure o 27 branch offices o 23 Warehouses at strategic locations

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Building on a Heritage of Excellence

Head Office Mumbai

Unparalleled Marketing Infrastructure

In Major Cities and Towns

27 Branch Offices 23 Warehouses at strategic locations

However, this is not about Nilkamal

July 11

The Opportunity
Higher GDP growth rate coupled with lower rate of inflation leading to higher Disposable Incomes particularly in the metros

GDP growth estimate for 2005 at 8% Flat screen TV market demand increasing by 100% p.a. $35,000+ car market growing by 50% p.a.

Total furniture market size = 20,000 Crores ($4.5 BB)

July 11

The Opportunity
Organized Retail poised to grow at a rapid pace
o

Particularly in the top 20 cities in India, there is a perceptible change in the consumers shopping habits and patterns. Consumers have started laying more stress on convenience, quality, ambience, branding and service, when they go shopping.

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The Opportunity
Improving demographics leading to a structural shift in favor of organized retailing
o

Vast pool of sophisticated young discerning consumers, who are rapidly shifting from a thrift and save mindset to a value and consume one. Confident, aspirational and educated with interest rates on their side.

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The Opportunity

Type Wooden / Panel (Home) Wooden / Panel (Office) Metal Plastics Upholstered Sofas Seatings

Size (Rs Cr) 11500 ($2.5 bil) 3500 ($0.76 bil) 1500 ($0.3 bil) 1000 ($0.2 bil) 1000 ($0.2 bil) 1500 ($0.3 bil)

Manual Manufactured 11000 2800 1200 0 900 1100

Factory Manufactured 500 700 300 1000 100 400

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Strong Sector Dynamics

Product spend by category
o

Total furniture market combining manual and ready made is set to grow by 6-7% p.a. Ready made furniture is currently maintaining growth of 30% p.a., with high growth in the conversion to ready made from bespoke. Ready furniture market is predicted to grow from Rs. 600 crores in 2004/5 to Rs. 2,200 crores by 2009/10 The average consumer spend per annum on furniture is estimated at 3% Per capiita furniture spend in India is as low as $4.5 against developed countries at $350 The new home buyer will currently spend an average of 10% of the value of the purchase price on furniture

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Competition

July 11

Competitor Landscape
Company
Style Spa Durian Godrej Damro Furniturewalla Zuari Pinnacle Saporiti Nitraa Living Room Krome Tangent Usha Lexus Indroyal Furniture Concepts Huzaifa Stellar Pace Interiors Espania Sanjar Featherlite Star Corporation Sauder Indoors Ego July 11

Annual T/O
(Rs Cr.)
60 60 36 30 25 24 24 20 20 20 20 15 15 12 12 12 10 10 10 08 08

Network (Showroom + Dealers)

50 S 50 S 40 S + 200 D 9 S + 150 D 7S 400 D 20 S+D 4 S + 200 D 5S 3 S + 70 D 6S

Target Market
Premium Premium VFM VFM Premium VFM Premium VFM VFM Premium Premium Premium VFM Premium Premium VFM Premium Premium All Premium VFM Premium Premium Premium

2 S + 20 D
8 S + 25 D 2S 3S 150 D 4S + 20 D 3S 2S 14 D 1S 10 D 3S 2S

06
06 06

Competitor Landscape
WHAT I HAVE Infrastructure WHAT I DO Products & Services HOW I DO IT Skills & Approach WHO I AM Personality & Values WHY I DO IT Purpose/Mission/Cause

Kian Durian Ego Style Spa The Living Room Sanjar Tangent Local Craftsman Interior designer

Kian Durian Ego Style Spa The Living Room Sanjar Tangent Local Craftsman Interior designer

Kian Durian Ego Style Spa

Tangent

Interior designer

Interior designer

July 11

Competitor Landscape
WHAT I HAVE Infrastructure WHAT I DO Products & Services HOW I DO IT Skills & Approach WHO I AM Personality & Values WHY I DO IT Purpose/Mission/Cause

Kian Durian Ego Style Spa The Living Room Sanjar Tangent Local Craftsman Interior designer

Kian Durian Ego Style Spa The Living Room

Kian Durian Ego

OPPORTUNITY
Style Spa

FOR FRESH POSITIONING

Sanjar Tangent Local Craftsman Interior designer Interior designer Interior designer Tangent

July 11

The Market Dynamic

Favourable Macroeconomics

4.5 Million homes built every year > translates into Rs 20,000 Cr ($4.5 BB) of new furniture requirements in addition to replacement demand. Latent demand for 33 million houses. The housing boom to continue. Interest rates have reduced by 7 basis points in the last 5 years. 70% of Indias population below 35 years of age > Changing aspirations with a lifestyle orientation. Average age of a First home purchaser has reduced to between 25-30 years now as against 35 - 40 years a decade back. Furniture category next to Grocery and Apparel in size in terms of total Retail sales worldwide.

45 - > 35 - 44

25 - 34 18 - 24 A G E CLASS C C+ BB B+ A-/A

July 11

The Market Dynamic

Favourable Macroeconomics

4.5 Million homes built every year > translates into Rs 20,000 Cr ($4.5 BB) of new furniture requirements in addition to replacement demand. Latent demand for 33 million houses. The housing boom to continue. Interest rates have reduced by 7 basis points in the last 5 years. 70% of Indias population below 35 years of age > Changing aspirations with a lifestyle orientation. Average age of a First home purchaser has reduced to between 25-30 years now as against 35 - 40 years a decade back. Furniture category next to Grocery and Apparel in size in terms of total Retail sales worldwide.

45 - > 35 - 44

25 - 34 18 - 24 A G E CLASS C C+ BB B+ A-/A

July 11

The Market Dynamic

Favourable Macroeconomics

4.5 Million homes built every year > translates into Rs 20,000 Cr ($4.5 BB) of new furniture requirements in addition to replacement demand. Latent demand for 33 million houses. The housing boom to continue. Interest rates have reduced by 7 basis points in the last 5 years. 70% of Indias population below 35 years of age > Changing aspirations with a lifestyle orientation. Average age of a First home purchaser has reduced to between 25-30 years now as against 35 - 40 years a decade back. Furniture category next to Grocery and Apparel in size in terms of total Retail sales worldwide.

45 - > 35 - 44

25 - 34 18 - 24 A G E CLASS C C+ B-

230 million

B+

A-/A

July 11

The Business Model

Positioning: Home Maker We will offer contemporary Furniture products, Home Accents and accessories as also value added services in the form of a home planning consultancy to convert a house into a home. Promotion: Brand promise to be popularized through PR, advertorials, advertising and hoardings. Network: In the first three years 25 Company owned Showrooms across metros and major cities and 44 Franchisee stores across the rest of the country. MF Revenue Growth Forecast Turnover Rs Cr Industry 2004 - 05 600 2005 - 06 780 2006 - 07 1014 2007 - 08 1320 2008 - 09 1710 2009 - 10 2220

@ Home

20

62

125

170

220

Conversions from Carpentry to Ready Furniture will continue at 30% p.a. as at present.

July 11

The Business Model

Sourcing products and furniture from all over the world Initially, sourcing pre-designed products from the suppliers. As the volumes build up, we will add our designs to the product portfolio. Strategic relationships with a limited number of suppliers to enable exchange volume commitments for product line exclusivity. Long term relationship with a key manufacturing supplier

July 11

Who Is The Customer

Price Affordable to the middle class. Target consumers annual household income between Rs. 2 to 18 lacs p.a. Products and prices will be attractive and affordable to all segments within this group. Target Segment The customer is young (25-40 years); This group will be willing to look at new trends and have an inspirational lifestyle.

25-40 years 2 -18 lacs pa ($5 - 40 K) 230 million people 600 - 2,200 Crs ($15 - 40 MM) 60% in metros 30% annual growth

The

Sector
Style conscious Discerning

Targeting our offer priced for the B-, B, B+ while pitching it with the cache of a B+, AJuly 11

The Opportunity

Making you feel at home

Qui kTime an a Y o e e ompre or e are nee CLICK to ee thi pi ture

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Our Ambition
Positioned as the home maker store
Vision o The home maker store is dedicated to making you proud of your home, making you feel at home Mission o By 2007 @home will be the dominant national player with 25 flagship stores and 44 franchised regional stores which will represent 10 % of the Indian ready made furniture market in five years

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We Are.

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The Brand Target

HOW DO WE DO IT Through brandPre-determined, monitored and consistent WHAT BUSINESS ARE WE IN HOW DO WE BEHAVE Collaborative and consultative. Fresh and informed. We are on your side.

We make your home, your home

PROMISE

WHAT DO WE STAND FOR / WHAT DO WE BELIEVE IN Creative and practical solutions that enable you to take pride of your home

Home Maker

HOW DO WE DELIVER IT In collaboration. we are a part of your team

EMOTIONAL HOOK

HOW DO WE TALK, SPEAK We are an enthusiastic and informed partner on your team
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at home

WHAT IS OUR ST LE, LOOK, FEEL, SMELL, SOUND While we are very modern and egalitarian we recognize you have your own style.

PERSONALIT ATTRIBUTES Reliable / Equal / Aesthetics Consultative / outhful

@ HOME Is not a furniture shop Is not about furnishing houses Is not about customers Is not about telling Is not about success Is not proud

@ HOME Is a home maker business Is about making homes Is about partnerships Is being consultative Is about achievement Is about taking pride

July 11

The Values
Reliable
Our reliability is part of the bedrock of our personality, it reinforces our stakeholders trust in us and helps them see us as a genuine company credible dependable and faithful. We are the people who will make you feel you can be AT HOME.

Sherpa
We are the home sherpa, we guide you as an experienced helpful advisor who has walked this road many times. We know the short cuts and the pitfalls on the journey to getting you to be AT HOME.

Aesthetic
Design and practicality are our business for which we are admired and respected. We will make you proud to be AT HOME

Equal
We have strong principles that every one is entitled to be viewed as equal, to be free and be their own individual. Our outlook is non discriminatory, un biased and impartial. We are the people who will make you feel AT HOME.

outhful
We are fresh and enthusiastic. We see every thing as achievable. We are modern at heart and practical in approach. We are the face of New India AT HOME.

July 11

Web Strategy

Home Intro to @home Seasonal promotion Design a home facility Newsletter E-mail us Make @home your home page Via Navigation to Product Living Sleeping Dinning Cooking Bathing Accessories Home planning Decorating Tips Dos & donts Trend reports Colour guides Approved listings of local Plumbers Electricians Plasters Painters Window cleaners Craftsmen Architects Interior designers CRM manager Links Insurance Home loans Store locators - maps, tel nos., Job opportunities

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Dinning sets

Dinning sets

Back Toilets office

Lounge Room sets

Show flat

Payment point Bedrooms Room sets

Bedrooms Room sets

Display point Lounge Room sets

Home planning

Refreshment studio Accessories Accessories Display point Accessories Lounge Room sets Show flat Accessories

Bedrooms Room sets

Lounge Room sets

20,000 sq ft built-up
Bedrooms Room sets

36 basic room sets Opportunity for a Further 10 Accessories 2,000 sq ft Coffee studio 300 sq ft

Show flat

Promotion point Cash desk Concierge Window display July 11 Entrance Window display Window display

Key Store Differentiators

o

Consultative Service approach (Sherpa) Complete Home Planning Solution via a dedicated 3-D imaging software Trained Interior Decorator for guidance A refreshment area which will double up as an events area. Regular events as part of CRM Stores Layout in terms of Rooms rather than products A complete Sample Home in the store! Minimum of 2000 Sq.ft. dedicated to Home Accessories
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Key Take-aways
o

Ready made furniture market growth in India is exponential, aligned with new housing boom Heritage player entering the market Mass market target with fresh, relevant, affordable offer Strong emotional brand will develop 10% market share in 5 years (220 Rs Crs/$40 MM)) Imported furniture will evolve into domestic own branded products in year three @ home seeks a strategic manufacturing partner for a long term relationship

July 11

Strategic Partnership Issues

o

@ home will launch in India in April 2005 and will open 8 showrooms by March 2006 @ home will develop and its own design targeted at the Indian demographic @ home designed products will be introduced as soon as scale allows Manufacturing quality and service will be critical to the success of the business Trusted exclusive long term relationships will be the key to the partnership The Nilkamal parent has a successful strong heritage in such partnerships in India and South Asia

July 11

OUR REQUIREMENTS

Product Designer Furniture Product Designer Accessories Visual Merchandiser (Having knowledge of Textiles and Furnishings) Stylist Exhibition & New Media

Thank You

July 11