I am pleased to share with you the Annual Report of Future Market
Networks Limited for the Financial Year 2011- 2012. Future Market
Networks is inspired by the thought of creating a network of new
markets for the Indian consumption sector by integrating and organizing
modern retail, wholesale and logistics retail infrastructure. Retail
Infrastructure, Wholesale Trade Infrastructure and Logistics
Infrastructure form the three key business verticals of your company.
We are happy to state your company has made visible progress in each of
its business verticals and has aligned with best in class partners in
each of them.
It goes without saying that the potential and growth of India''s
domestic consumption sector has few parallels anywhere in the world. We
are in the midst of a social and economic change, the pace of which has
never been seen at any point in our history. Increase in life
expectancy, a younger demographic profile and economic growth are
fueling domestic consumption. A Boston Consulting Group report states
that the lifetime consumption of an average Indian born in 2009 will be
$ 184,556, which is 13 times that of someone born in 1960. The report
suggests that the average household income is set to rise nearly three
times between now and the end of the decade. India''s private domestic
consumption economy is now at around $400 billion and during this
decade will cross $1 trillion.
For a developing economy, India has a uniquely higher share of domestic
consumption driving the economy. While domestic consumption is only
39% of China''s GDP, in India its share is over 60%, comparable to the
70% share in the United States and other developed economies. This
characteristic feature of the Indian economy therefore acts as a strong
foundation for sustainable growth of the economy. However, the
infrastructure that supports this consumption economy in India is
woefully inadequate, disorganized and fragmented. Modern retail has
more than 40% share in China and over 90% share in the United States.
In India, the share of modern retail is variously estimated to be
between 6% and 8%. Even in the large metros, the share of modern retail
rarely crosses 20%. The Indian logistics space is extremely fragmented
- only 6% of the industry is organized, as opposed to 57% in USA and
80% in Japan.
Economic liberalization in the Nineties led to growth. Growth generated
demand. However, supply in India is perennially playing catch up with
demand. Most of the infrastructure that supports consumption in India
continues to be outdated and unable to benefit from or catalyze the
further growth of consumption. It is only obvious that we have to build
capacity to reach more consumers across more consumption centers, with
more products and services, more effectively and cost effectively.
Your company is designed to build capacity in the three most important
components of the value chain the connect the manufacturers to
consumers in India. These are the warehouse and logistics
infrastructure, wholesale trade infrastructure and modern retail
In order to develop these businesses, your company has forged
partnerships with leading organizations in India and abroad. Hong Kong
based, Fung Properties is part of a USD 15 billion organization that
specializes in supply chain management in sourcing and distribution of
consumer goods. It partners with some of the largest retailers across
the world and invests in fast growing companies that can benefit from
both capital and strategic assistance from the group. Your company has
formed a 70:30 joint venture with Fung Properties to develop the
Wholesale Markets in India.
Infrastructure Leasing & Financial Services Limited (IL&FS) is one of
India''s leading infrastructure development and finance companies. Your
company has partnered with IL&FS for the development of the logistics
infrastructure parks in the country and has committed to invest Rs 100
crore in the business.
Delhi-based Star Centers specializes in the planning, and management of
high-quality shopping malls and has domain expertise, credibility,
occupier relationships and an established track record of success with
experience spread across 50 shopping centers across Asia, including the
much acclaimed Select City Walk in Saket, Delhi. Your company has a
60% stake in this entity.
Drawing on the requisite expertise from these partnerships, your
company has already made progress on each of these businesses. A modern
wholesale market - similar to those seen in China and the Middle East -
is being set up in Bangalore. The first phase of this project will be
operational from December 2012. Branded as ''World Market'' this 11 acre
facility located on the Old Madras Road in the outskirts of Bangalore
will have over 400 wholesale traders operating from this complex. In
Mumbai, an existing mall close to Mumbai Central railway terminus has
also been converted into a World Market and will have 400 traders
operating from the complex by the first quarter of the FY 2012-13.
In April 2012, the company also opened its retail infrastructure
project, 1MG Road. 1MG ROAD is an iconic, downtown high street shopping
centre, located in the heart of Bangalore, on Trinity Circle, MG Road.
Located inside walking distance from some of the city''s best 5-star
hotels such as Taj Residency, The Oberoi, Park Hotel & Hotel Ista, the
mall is positioned as a premium, high energy, urban retail centre for
the affluent Bangalorean and visitors to the city. It sports foreign
and domestic labels like Marks & Spencer, Apple iStore, Hagen Daaz, The
Body Shop, Hidesign and Food Hall. Another marquee mall, DCN, will be
operational in the second quarter of the FY 2012-13 in Kolkata
In the logistic infrastructure space, the company has already begun the
process of acquiring land in Jhajjar in Haryana to set up a logistics
infrastructure facility to address consumption in Gurgaon and the
balance of the south and south east region of the Delhi NCR. It has
also identified land at Dankuni to the north west of Kolkata and
applied to the Government of West Bengal for the necessary permission
to acquire it. The company has chalked out a plan to develop 10 million
square feet of space for logistics infrastructure parks in eight top
cities and is in various stages of identifying and acquiring the land.
We believe that we are fortunate enough to have a board of directors
with rich and cross-functional expertise in infrastructure development,
project management, real estate and finance and are backed by a
committed team of professionals with experience in working with leading
organizations in the country. Future Group''s inherent knowledge and
experience in the consumption economy and its presence in retail and
supply chain and its relationships with partners across various
consumption categories in India provides a strong foundation for our
The slowdown in real estate development has come at a most opportune
time for us as we go out into the market to acquire site for our
business verticals. We are finally finding sanity in the pricing and
transaction terms that are being offered to us. Within a short period
of time, we have been able to achieve more than what we planned for.
Yet, this achievement is quite small compared to the aspiration and
ambition that is harbored within this organization. I would like to
thank everyone for your continued support, faith and encouragement in
our vision, ambition and execution.