We look ahead with optimism and high hopes, grounded in solid strategies

As India’s largest retail asset developer and operator, what is it that gives Phoenix Mills the pole position within the malls landscape?

Today, we have 8 malls in 6 gateway cities, spread over 6 million square feet. In building this retail infrastructure, our focus has always been to create ascendant assets, and nothing less. We decided to not only excel in mall design and development, but also in their day-to-day management. After all, there’s no point just having the most advanced F1 car, if your driver isn’t skilled enough to get the most out of it on the race track.

A key aspect singling us out is the sheer scale at which we operate. This has many nuances. For instance, all our Phoenix MarketCity projects are of a certain size, being at least 1 million square feet and above, and housing over 250 stores of premium domestic and international brands at each location. All our malls have significantly large open spaces and courtyards, where shoppers can move about freely and feel a sense of community. These uncluttered areas contribute to a very positive customer experience. The scale of our operations also captures many efficiencies. Our in-house Mall Management Team can control costs most optimally, and replicate successful ideas across multiple sites to provide a uniform customer experience that is quintessentially “Phoenix”.

Everything that we do is with a singular moto – To provide our customers with the best possible experience at our malls. Our intent is to ensure that our malls appeal to all age-groups. We carefully watch consumer behavior to gain continuous insights into people’s consumption preferences, which are continuously moving targets. This also enables us to repeatedly sharpen our pencil for providing a delightful and fresh experience to customers, each time they visit us. For example, our in-house F&B brands, such as the highly successful “212 All Good” and “Shizusan”, are some of our recent initiatives born out of consumer insights.

We maintain and increase the value of our malls through vital understanding of what turns consumers on. So, it is not uncommon to see the courtyards in our malls transform into performance venues for leading Bollywood singers or international artists, hosting corporate events and flea markets. As a result, our malls are no longer mere shopping destinations for consumers. They have evolved into modern-day urban sanctuaries of joy and entertaining neighborhoods which consumers keep re-visiting and inventing fond memories.

What makes our malls the “destination of choice” for retailers?

Retailing is a dynamic business that requires continuous reinvention. We are constantly evaluating how we can extract the best returns from our mall assets. Our greatest strength helping us win in this market is our business know-how and our ingrained philosophy on having strong partnerships with our retail partners. Being a pioneer in retail assets business gives us tremendous insights to innovate and explore new opportunities and remain relevant to our brands and customers. Our business equity often helps us rotate and upgrade to fresh and desirable trending brands and categories.

Another factor setting us apart is the magnetic allure we exude towards new entrants aspiring to penetrate into the Indian marketplace. Being a large pan-India mall operator makes us the “preferred” destination of choice for any premium domestic or global brands looking for a multi-city entry strategy. An association with just one single entity, such as us, enables them to enter multiple key consumption centres of Mumbai, Pune, Bengaluru and Chennai - in a single stroke. We give them the opportunity to capture discerning customers at a scale impossible for other retail centres to match. It’s not surprising, therefore, that today we have emerged as the first choice for domestic and global retailers trying to tap India’s rising consumption power.

In addition to this, our occupiers are very discerning about accessibility, visibility, functional design and excellent facilities. Being on top of each of these parameters makes us India’s most desirable place for retailers to be. As a result, our malls offer an enormous variety of premium merchandise; an eclectic mix of domestic and international brands catering to discerning fashion-conscious customers; and a loyal customer base

What are the key growth drivers for your existing malls?

At PML, we have four business verticals – Retail, Residential, Commercial and Hospitality. Each of these businesses are interlinked, but have a different growth cycle. Besides higher consumption-led growth in each of these verticals, a key growth driver is the upcoming renewals at our malls. Almost 54% of the leasable area at High Street Phoenix and Palladium in Mumbai; and 53% of the leasable area at Phoenix MarketCity, Chennai is projected to come up for renewal over the next three years. In addition to this, there is a balance development potential across our existing malls that we shall leverage upon at the appropriate time.

In the Hospitality portfolio, The St. Regis at Mumbai and Courtyard by Marriott, Agra continue to witness an improvement in occupancy and Average Room Rates. We are very proud to see The St. Regis becoming one of the best performing hotels in South Mumbai on several operational parameters.

We are developing top-notch and sizeable commercial and residential spaces, both alongside our malls as part of the mixed-use development and independently. We apply our high standards towards ensuring wellplanned products, quality of construction and timely delivery of our city-centric, prime and upmarket luxury projects. These portfolios are enabling us create competitive advantages and deliver future growth.

What is your master plan for adding new assets? Can you share with us your business strategy behind the recent deal with the Canada Pension Plan Investment Board (CPPIB)?

In what can be termed as a landmark event in India’s retail real estate sector, we partnered with the Canada Pension Plan Investment Board (CPPIB) to own and operate retail led mixed-use developments across India. Our subsidiary, Island Star Mall Developers Private Limited (ISMDPL), that owns Phoenix MarketCity, Bengaluru has become the investment platform wherein CPPIB will invest over ₹ 16 billion in multiple tranches to own up to 49%.

I’m pleased to share with you that we have acquired our first land parcel under the strategic platform with CPPIB. We acquired the land parcel, admeasuring approx. 13 acres located in Wakad Pune, for ₹ 161 cr. The new site is close to the dense and growing catchment of Hinjewadi, Aundh, Balewadi, Baner and Wakad which lack a Grade A retail destination.

We estimate that the total developable area on the new site to be approximately 1.6 million square feet of which at least 1 million square feet would be a retail mall development.

Together with the existing Phoenix MarketCity in East Pune, PML’s malls will become the preferred shopping and entertainment destinations for residents of Pune.

We have learnt a lot in FY2017 – we carefully studied our performance, looked at the changes in the consumer market, and gained many insights. Many of our existing strategies are already focusing on changing consumer preferences and buying behaviours, and we are placing a greater level of urgency on evolving them. Our commitment to our customer continues to drive what we do and how we evolve. Over the past year, we have taken steps to operate more effectively and efficiently with an organisation that is flatter and faster. We are laying the foundation for renewed growth in 2017 and beyond. We look ahead with optimism and high hopes grounded in solid strategies and an intensified focus on agility within our organisation.

Moving ahead, we will remain focused on sharpening our execution and growing our underlying recurring income, while continuing to deepen our presence in key cities and ride on India’s consumption growth. With a strong balance sheet and a wide portfolio of assets, we will continue to perform on a sustainable growth trajectory. In the coming year, we begin a new phase in our journey and aim to double our retail portfolio of 6.0 million square feet in the next five years.

Sincerely,

ATUL RUIA

JT. MANAGING DIRECTOR