Investor Presentation May 2018 1 FRL Overview 03
2 Our Large Stores 09
3 Loyalty 16
4 Small Stores Business 19
5 Financial Update 24
6 Consistent Customer Centricity 32
FRL | Investor Presentation | May 2018 2 FRL OVERVIEW
FRL | Investor Presentation | May 2018 3 India’ Consumption Opportunity is Well Distributed
Per Capita Income Below $1,300 $1,300 -$2,000 $2,000 – $2,500 More than $2,500
No of States / UT 8 7 8 8
Assam, Bihar, Arunachal Pradesh, Goa, Haryana, Kerala, AP, Chattisgarh, J&K, Jharkhand, MP, Gujarat, HP, Karnataka, Maharashtra, Sikkim, States Nagaland, Rajasthan, Manipur, Meghalaya, Mizoram, Punjab, TN, Uttarakhand, Delhi, Tripura, WB Odisha, UP Telangana Chandigarh
State GDP: FY17($bn) 500 460 752 674
Contribution to National GDP 21% 19% 32% 28%
Growth rate (5Y Historical) 12.0% 13.2% 12.7% 12.0%
India represents a well dispersed opportunity
No. of Districts 278 135 192 107
Urban Population (mn) 97 74 108 98
FRL points of connect 153 117 436 329
Deeper presence in high-income states with an incumbency advantage in rest of India
100+ new airports, 15 new metros and over 100 smart cities indicating better living
Source: Based on published government data States in orange represent FRL presence *GDP: Gross Domestic Product Exchange rate: $1=Rs 65
FRL | Investor Presentation | May 2018 4 FRL: A Quick Glance
1,035 14.5 mn sq.ft. >US$ 2.8 bn SCALE FY18 Revenue Retail stores Retail Space (* Exchange rate $1=₹65)
>67% 9.9% 25.6% EFFICIENCY Revenue from Same store Gross Margins non-food Sales Growth categories
>340 mn 26 DEPTH Customer 321 States footfalls in FY17 Cities
4.3% ₹ 12.5 20.3% VALUE CREATION EBIT% EPS (before one time ROCE exceptional item)
FRL | Investor Presentation | May 2018 5 Performance Benchmarking
What we set out for Addition of Big Bazaar Small Stores to About 800 small Strong case of “More out of the 20 - 25 large target SSG: achieve stores by margin Same” stores 12 - 15% breakeven Mar ‘18 improvement
50* new stores 13.4% Big On track to 756 small EBITDA margin Big Bazaar added during Bazaar SSG for deliver stores as on improved by sales per sqft What we the year FY18 breakeven at a 31 March 2018 100 basis points has increased delivered (*including much larger (including 90 WH on a y-o-y basis by 11.5% to Hypercity) scale in FY19 Smith stores ~₹14,500* w.e.f. 11 May 2018)
* For stores that were operational for the full year
FRL | Investor Presentation | May 2018 6 FRL’s Retail Network
As on 1 April 2017 As on 31 March 2018 Formats Store additions Area Area Stores Cities Stores Cities (mn sqft) (mn sqft) 235 124 10.2 50 2851 135 12.1 Large fbb 54 32 0.6 7 61 36 0.6 Stores 7 4 0.1 3 10 5 0.1 Small 538 11# 1.4 128* 6662 133 1.5 Stores Others 30 11 0.3 (17) 13 8 0.1
Cumulative 864 240 12.5 188 1,035 321 14.5
1. Including Hypercity stores 2. Excluding the acquisition of 90 stores of WH Smith. The transaction was closed on 11 May 2018 3. Clusters
Total Retail Area (mn sq.ft) 14.5
12.5 11.6 19 stores. Demerged. ‘Marquee 10.0 ‘Focus on core Locations‘ 9.1 large & small stores’
FY14* FY15* FY16* FY17* FY18 *Excluding HomeTown (Like for Like)
FRL | Investor Presentation | May 2018 7 Long-term Aspiration
(No. of Stores) (No. of Stores)
300 375
285
235 228 61 51 54
FY 16 FY 17 FY 18 2-4 years FY 16 FY 17 FY 18 Long term potential
Small Stores (No. of Stores)
10,000
538 666 320
FY 16 FY 17 FY 18 Long term potential
FRL | Investor Presentation | May 2018 8 OUR LARGE STORES
FRL | Investor Presentation | May 2018 9 Most Customer Centric & Operationally Efficient
Integrated Business Model Largest Consumption database
Strong technology framework
Truly Pan India Top Quality own brands
The Widest Assortment High Margin Model Customer
Leader in several Celebrating every Indian festival Categories
No loss making stores Industry leading loyalty base
FRL | Investor Presentation | May 2018 10 Big Bazaar: The National Retail Chain
One of the most loved brands North: 25%
Synonym of India’s Consumption
Well distributed East: 24% across ‘many Indias’ West: 26%
South: 25%
Note: % indicates FRL revenue share from the regions
FRL | Investor Presentation | May 2018 11 Structurally High Margin Model of Large Stores
Fashion Non-Food Food (General Merchandise + HPC)
Revenue share 34% - 36% 30% - 32% 32% - 35%
Gross Margin 40% - 42% 22% - 24% 15% - 17%
Own Brands share 94% - 96% 8% - 10% 18% - 20%
Blended Gross Margin: ~26 - 27%
FRL | Investor Presentation | May 2018 12 Prominent Market Share across select Fast Growing Categories
Note: Illustrative categories Fashion General Merchandise
Men's Tableware Casualwear 19% 15% 26% 16%
Kidswear 11% 30% Luggage 18% 17%
Women Ethnic 10% 12% Cookware 11% 21%
Food & Beverages FMCG
1 Colour Beverages 12% 15% cosmetics 17% 19%
Packaged Personal food 8% 18% Care 14% 15%
Staples 7% 10% Homecare 13% 19%
Estimated FRL Market share in Organised Retail Expected Category Growth rates for next 3 years Source: Various Industry Reports & Internal Estimates
Note: 1. Beverages refer to non alcoholic beverages excluding milk
FRL | Investor Presentation | May 2018 13 Many of our Private Brands & Segments are Category Leaders…
Women’s Wear 950 1,100 Men’s Wear (₹ cr.) 900 (₹ cr.) 950
440 500 375 250 220 300
Brand 2 Brand 3 Shyla Brand 5 DJ&C Brand 2 Brand 3 Brand 5
Cookware 750 Kids’ Wear (₹ cr.) (₹ cr.) 270 600 500
121 100
Brand 1* Brand 2* WB FBB Retailer 2 Retailer 3 *Estimated Revenue through Modern Retail
Note: Estimated revenue of other brands and retailers from publicly available sources. Kidswear category is compared with other retailers’
FRL | Investor Presentation | May 2018 14 … While new are being created and many extended.
Illustrative new categories & extensions’
Illustrations Only
FRL | Investor Presentation | May 2018 15 FRL | Investor Presentation | May 2018 15 One of the largest database of India’s consumption
And we know their consumption choices in Our Customers Their evolving income levels (est) great depth Age Customers Customer base mix (2018) (Years) Share Women’s Apparel >6.5mn customers 12%
48% Under 25 11% Babycare ~5mn customers 40%
26 to 35 29% Health products ~4.5 mn customers
Customer base mix (2024)
36 to 45 30% Travel related products ~0.9mn customers 26%
46% 46 to 60 22% Instant Noodles ~3.5mn customers 28%
Above 60 8% Annual income (in ₹) : Soaps ~3mn customers 0.3 - 0.5 mn 0.5 - 1 mn >1 mn
*Estimates based on internal data FRL | Investor Presentation | May 2018 17 Future Pay: Creating a unique platform with strong ecosystem synergies
Future Pay Users (in mn) 5.0
~ 5 million users
1.2 ~ 3 million price match transactions
Average spend per user has doubled in the last 12 months
Average top-up amount has increased by >50%
FRL | Investor Presentation | May 2018 18 SMALL STORES BUSINESS
FRL | Investor Presentation | May 2018 19 Member-Centric Model with Robust Enablers
Platform Strategy
Data-led & O2O ready platform Low cost operations blended with own brands’ strategy o Data: Key enabler for our new stores and operations’ alike o Scale-up within clusters to bring o Capabilities in-place for last mile the costs down delivery o Own brands’ implicitly have superior terms & faster execution
Firm Demand Execution
Membership model that Focused clusters & assortment captures high wallet share (4,000 SKUs in defined clusters) o Est 40 - 60% wallet share of over o Regional & local teams driving the 0.5mn members at present execution o Assortment predictability bringing o Model with limited SKUs, clusters in higher efficiencies & targeted customers
FRL | Investor Presentation | May 2018 20 Margin Model of Small Stores
Food Non - Food
Revenue share 73% - 75% 25% - 27%
Gross Margin 15% - 17% 18% - 20%
Own Brands share 25% - 28% 6% - 8%
Blended Gross Margin: ~16 - 17%
FRL | Investor Presentation | May 2018 21 Gateway to Our Small Stores: EasyDay Savings Club
Average Members visit Total Members ~910 over members ~3 times 5,00,000 enrolled per a month active store
Membership Annualized active in spend per member ~544 ~₹ 35,000 stores
Easyday Club Members (in mn) 10
0.5
0.1
Jun '17 Mar '18 Mar'21 E
FRL | Investor Presentation | May 2018 22 Going Deeper in Chosen Clusters
175
149 143 Increasing prominence in 118 large clusters
74 68
53
37 34 34 31 32 31 30 30 24 27 23 20 20 15 9 7 6 0 0
Ludhiana NCR Hyderabad Lucknow Chennai Bangalore Ahmedabad Jaipur Haryana Mumbai Haridwar Jammu Kolkata
FY17 FY18
FRL | Investor Presentation | May 2018 23 FINANCIAL UPDATE
2 FRL | Investor Presentation | May 2018 24 4 FY18 Performance Overview
Big Bazaar Sales per sq ft# (₹) Gross Margin (%) Income from Operations (₹ cr.)
25.6% 18,478 14,514
24.8% 17,075 13,018 4,737
4,241
FY17 FY18 FY17 FY18 FY17 FY18 #Sales per sqft for stores that were operational for the full year Same Store Sales Growth (%) EBIT (₹ cr.)
791 14.0% 13.4% 12.0% 9.9%
573 4.4%
3.4%
FY17 FY18 FY17 FY18
*Underlying Y-o-Y growth adjusting for eZone rationalization, HomeTown demerger and GST impact
FRL | Investor Presentation | May 2018 25 Returns and Working Capital
ROCE ROE 21.2% 20.9% 21.2% 20.3%
17.5% 15.5% 14.5% 13.7% 13.4%
9.1%
Mar '16 Sep '16 Mar '17 Sep '17 Mar '18 Mar '16 Sep '16 Mar '17 Sep '17 Mar '18
Debt/EBIT Inventory Days (Revenue)
3.3 85
81 2.3 80 80 * 79 1.6 1.2 1.3
Mar '16 Sep '16 Mar '17 Sep '17 Mar '18 Mar '16 Sep '16 Mar '17 Sep '17 Mar '18 * Based on annualized revenue from Hypercity stores Note: The ratios pertaining to FY16 have been derived on a comparable basis • Net Debt / EBIT = (Borrowings – Cash & Bank Balances) / EBIT • ROCE = EBIT / Average (Equity + Optionally convertible debentures + Borrowings – Cash & Bank Balances) • ROE = PAT before exceptional items / Average (Equity + Optionally convertible debentures) • Inventory days = (Inventory / Income from Operations) * 365
FRL | Investor Presentation | May 2018 26 Full Year Like to Like Margins
EBITDA (FY18) (₹ cr.) EBITDA (Q4 FY18) (₹ cr.) 4.9%* 5.5%* (42) 4.6% 4.5% (38)
886 243 844 205
FRL Hypercity Rest of FRL FRL Hypercity Rest of FRL
PAT (FY18) (₹ cr.) o Hypercity stores were under upgradation and 3.3% renovation in FY18
o EBITDA at 5.5% on a like-to-like basis
o Hypercity business included for 4 months in FY18 604 615 o We believe Hypercity stores to be EBITDA accretive in first 12 - 18 months of operations 0.1% 11 o PAT (adjusted) for FY18 at 3.3% as compared to 2.2% PAT Non-cash PAT in FY17 (After exceptional item) Exceptional item (Adjusted)
Note: *Adjusting for Hypercity revenue of 188cr & 283 cr for 3 months and 4 months in the quarterly and annual revenues respectively
FRL | Investor Presentation | May 2018 27 Hypercity Retail: Transaction Structure (Closed w.e.f 1st Dec’ 2017)
Transaction Consideration Advantages of this 100% stake purchase by FRL in Hypercity structure Retail India (Pvt) Ltd (“HRIL”)
o Hypercity stores residing in FRL directly
o Significant cost synergies Equity Cash Debt on sourcing & operations ₹ 500cr ₹ 112cr ₹ 285cr Demerger of Retail Business o Historical losses of HRIL from HRIL to FRL amounting to ₹520cr to Write-off of the book value carry forward in FRL as per the Ind-AS
Retail Business o Non-cash & one-time Book Value of 100% ₹604cr adjustment to P&L holding in HRIL
o Realization of ₹8cr from ₹ 612cr Non-Retail the non-core business ₹8cr
Sale of Non-Retail operations for ₹8cr Consideration received at FRL
FRL | Investor Presentation | May 2018 28 Quarterly Performance Overview
Same Store Sales Growth (%)
15.9% 15.1% 15.3% 15.3% 13.1% 12.5% 13.3% 13.8% 13.1% 11.8% 10.2% 10.4% 11.0% 9.9% 8.8% 6.0%
Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18
Income from Operations (₹ cr.) Gross Margin (%) EBIT (₹ cr.) 187 27.0% 4,575
174
4,484 24.9% 4.1% 1,234
1,117 3.9%
Q4 FY17 Q4 FY18 Q4 FY17 Q4 FY18 Q4 FY17 Q4 FY18 *Underlying Y-o-Y growth adjusting for eZone rationalization, HomeTown demerger and GST impact FRL SSSGs are on like-to-like basis FRL | Investor Presentation | May 2018 29 P&L Statement
3 months ended Growth Year ended Growth Particulars (₹ cr.) 31-Mar-18 31-Mar-17 Y-o-Y 31-Mar-18 31-Mar-17 Y-o-Y Total income from Operations 4,575 4,484 18.1%* 18,478 17,075 21.7%* Gross Profit 1,234 1,117 10% 4,737 4,241 12% Gross Margin % 27.0% 24.9% 25.6% 24.8% Employee benefits expense 245 211 16% 930 803 16% Rent including lease rentals 360 350 3% 1,405 1,360 3% Other Expenditures 429 376 14% 1,570 1,496 5% Total expenditure 1,033 937 10% 3,905 3,659 7% Other Income 3 3 23% 12 24 (51%) EBITDA 205 183 12% 844 605 39% Depreciation and amortisation 18 9 102% 53 33 64% EBIT 187 174 7% 791 573 38% EBIT % 4.1% 3.9% 4.3% 3.4% Finance Costs 46 51 (9%) 175 204 (14%) PBT 140 123 14% 615 368 67% PBT% 3.1% 2.7% 3.3% 2.2% Exceptional non-cash item (604) - (604) - PBT (after exceptional item) (464) - 11 368 Tax Expenses - - - - PAT (464) 123 11 368 *Underlying Y-o-Y growth adjusting for eZone rationalization, HomeTown demerger and GST impact FRL | Investor Presentation | May 2018 30 Balance Sheet
As at As at PARTICULARS (₹ cr.) 31 Mar 2018 31 Mar 2017 A) ASSETS Non-Current Assets 1,459 916 Inventories 4,417 3,735 Trade Receivables 270 228 Other Current Assets 1,865 1,902 TOTAL ASSETS 8,011 6,781
B) EQUITY AND LIABILIIES Equity 3,096 2,554 Non-Current Liabilities 171 190 Net Debt 1,042 922 Trade Payables 3,424 2,780 Other Current Liabilities 278 336 TOTAL EQUITY AND LIABILITIES 8,011 6,781
FRL | Investor Presentation | May 2018 31 CONSISTENT CUSTOMER CENTRICITY
3 FRL | Investor Presentation | May 2018 32 2 Big Bazaar: Evolving for Better Customer Service & Centricity
Differentiated Faster checkouts recall in the minds of customers
Sit-down lounges for checkouts Assortment upgradations driving the Productivity Endless aisles
Commenced deployment of latest Digital shelf talkers technologies for the Online2Offline convergence
Experience zones with multi- sensorial food products
Wider merchandise and assortments
Large digital screens
FRL | Investor Presentation | May 2018 33 FBB: Leading Fast Fashion Value Retailer
“Making India thoda aur Stylish”
In-house design teams ensure fastest design- to-store time
Provides style and quality at pocket friendly prices
FRL | Investor Presentation | May 2018 34 Neighbourhood Stores with a Unique Model
Re-imagined neighbourhood food and grocery stores Driven by local communities and consumption patters
Modern and personalized shopping experience
Unique Membership program with a strong and loyal customer base
FRL | Investor Presentation | May 2018 35 Foodhall: Bringing globally best to India’s best
Understanding Best of global and evolving food and local foods and consumption customer delight patterns
Offers unique Stores at the most experiences like premium locations in gourmet kitchens, Mumbai, Bangalore, world foods, spice Delhi and Gurgaon station etc.
FRL | Investor Presentation | May 2018 36 Innovative Digital Campaigns
FRL | Investor Presentation | May 2018 37 Creating the right wave with our Marketing Campaigns
FRL | Investor Presentation | May 2018 38 Celebrating every Festival with India
FRL | Investor Presentation | May 2018 39 FUTURE RETAIL: RIGHT NEXT TO YOU
This report contains forward-looking statements, which may be identified by their use of words like ‘plans’, ‘expects’, ‘will’, ‘anticipates’, ‘believes’, ‘intends’, ‘projects’, ‘estimates’, or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the Company’s strategy for growth, product development, market position, expenditures, and financial results are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company’s actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. Corporate Office: Future Retail Office, 9th Floor, Tower C, 247 Park, LBS Marg, Vikhroli (West) Mumbai: 400083 , +91 22 30842336 | www.futureretail.in