Istanbul, October, 2006

Ashot Arutyunyan

“GROSMART” trade chainStrategy Marketing Director

a_arutyunyan@elexcor.ru

GROSSMART 2

I. Company Overview

II. Sales & Marketing

III. Dynamics of food retail market in Russia

IV. “Grossmart” strategy in 2007-2010

Contents

GROSSMART 3

I. Company Overview

GROSSMART 4

Company mission and aims

Company Mission Company Aims Key Success Points

Create a national chain of food superstores offering a wide range of products of day-to-day demands aimed at customers with average income level

Become a market leader in opening and managing superstores technologies

Provide high level of service, meeting leading standards

High standards of processes and technologies

Professional management team

Wide experience in retail business management

GROSSMART 5

2001

Development of supermarkets chain as top priority. 6 SPAR supermarkets opened

Sub franchising contract with Holland company SPAR signedThe first SPAR superstore opened

The number of SPAR superstores to be increased up to 18Acquisition of “Stolitsa Sever” chain. Regional expansion. The first Grossmart superstore in Kazan.

Contract on establishing a joint venture of BILLA Russia and REWE Group

Opening first BILLA supermarket, its assignation to the joint venture and re-branding of 18 supermarkets

8 Grossmart stores in Moscow and regions

Active expansion of the chain in the regional markets. Acquisition of working chains:

- 6 stores in Moscow ( “Prodmak” chain) - 4 stores in Kazan (“Riden” chain) - 4 stores in Kursk (“Apelsin” chain)”

40 shops in Moscow and the regions working under the Grossmart brand

Assignation of 15 shops to BILLA trading network and re-branding

Acquisition of ‘PI’ store chain in Vladimir city and Vladimir region (69 shops)

Target for the end of 2006 – 109 Grossmart stores in Moscow and the regions

2002

2005

2003

2004

2006

Company’s history

GROSSMART 6

The parties intend to invest $500 mln in BILLA Russia and increase turnover up to $3 billion during the next 3-5 years

Strategic alliance with REWE Group

On the 8th of June, 2004, during the Russian-German economic summit in Moscow in the presence of Mr. Putin, President of Russia, and G. Shchreder, Federal Chancellor of Germany, holding company “Marta” and REWE Group signed a contract on establishing joint venture - BILLA superstores chain in Russia

REWE Group is the second trade operator in Germany after Metro group. The company owns more than 11.5 thousand retail stores in 13 countries in Europe, its gross turnover is approximately 40 billion Euros

GROSSMART 7

Geographic presence

CityNumber

of objectsTotal

space, м2Sales

area, м2

Moscow (and Moscow region)

7 11 361 5 426

Vladimir 69 21 077 11 492

Voronezh 1 2 300 1 200

Yekaterinburg 1 6 325 4 000

Kazan (Joshkar Ola)

10 11 723 6 967

Kursk 4 6 141 3 607

Stavropol 1 2 500 1 200

Krasnodar 1 2 122 1 453

Ryazan 1 2 000 1 280

Saint Petersburg 1 1 160 750

Saratov 1 2 338 1 300

Tula 1 680 410

Engels 1 2 156 1 000

Total 99 71 883 40 085

At present “GROSSMART” is presented by approximately 100 stores of different formats in 14 regions of Russia

GROSSMART 8

Grossmart stores’ formats

Hypermarket (format D)Supermarket (formats A. B, C)

Grossmart manages four main sub formats

Format A B C D

Sales area, м2 400-600 750-1000 1200-1500 4000-7000

Assortment SKU 8500 12200 14700 29000-40000

Number of stores

(in 2005)25 8 11 1

Average space, м2

450 870 1 360 6 325

GROSSMART 9

Grossmart supermarkets

Convenient location

Wide assortment

High quality of goods with

particular focus on fresh

products

High level of service

Application of European

operators’ experience

Comfortable atmosphere

GROSSMART 10

II. Sales & Marketing

GROSSMART 11

Marketing Strategy

Format of “Grossmart” supermarkets is aimed at an average consumer

Creating a strong recognizable brand

Opening 90% of new stores by 2010 in the regions approximately

“4 P” Rule:

Product Price Place Promotion

Key consumers belong to

growing Russian middle class

GROSSMART 12

Price strategy

Competition on regularly bought products with such stores as “Sedmoy Continent” and “Perekrestok”

Regular price monitoring

“Best price” and “Product of the day” promotion. Promo price is supported in all the formats

Price strategy:

Competition on regularly bought products

GROSSMART 13

Loyalty Programmes

Lotteries, coupons, promo on discounts on goods of day-to-day demand, publishing information about discounts in monthly advertising booklets

Discounts system

Points collecting programme, congratulation on the birthdays, discount programme for pensioners

Events, presents to the clients, tastings and advertising/promo campaigns

Different programmes for the clients

Special events

GROSSMART 14

III. Dynamics of food retail market in Russia

GROSSMART 15

Retail turnover in Russia (billion US$)

105 120147

194

241

310

365

420

100

150

200

250

300

350

400

450

500

2001 2002 2003 2004 2005 2006F 2007F 2008F

USD bln

Source Goskomstat, evaluation of IRG*Source: according to Eurostat data, average growth in the first quarter of 2005 in 25 EC countries was 1.6%

Following incomes growth tendency, retail market is

rapidly developing

Retail turnover in Russia and foodstuff sales

38,948,6

55,9

68,2

88,7

110,9

25

50

75

100

125

2000 2001 2002 2003 2004 2005

Russian foodstuff market has grown three times more since

2000

Retail sales of foodstuff (billion US$), 2000-2005

GROSSMART 16

“Grossmart” in RBC report, 2005

RBC rating, 2005 GROSSMART

Rating of the most quickly growing companies, according to sales space

1 place

(195%)

Rating of the most quickly growing companies, according to stores number

2 place

(400%)

Leaders in regional presence (number of stores)

6 place

(11 regions)

The market is fragmented. 5 leading players own only 6.1% of the foodstuff market

Consolidation of the market will take place

Keeping such growth dynamics, Grossmart aims to enter top 10 operators group of Russian retail foodstuff market by 2010

GROSSMART 17

Our achievements

2004 – Nomination “Supermarkets”2005 – “Russian retail consolidation leader” 2006 - Nomination “Best of the best”, “Managing company in the retail market” category

“Golden Chains” prize-winner (3 awards)

National award “The Company of the year 2005”, nomination “Trade chain’

Social award ”Russian trade Olymp 2006”

GROSSMART 18

IV. “Grossmart” strategy for 2007-2010

GROSSMART 19

Our aims

To be present in the majority of Russian cities with the population more than 300 thousand people

Enter top ten federal food retailers in Russia

GROSSMART 20

Development strategy

Strategy

Market leader in the Russian supermarkets segment on a national levelBrand recognition in the regions – 83%Transparent and well organized business with an effective management system

Plan

Quick expansion in regional markets Opening of its own new stores Acquisition of existing operators

Stores and consumer groups’ segmentation, sub formats and consumer groups’ determinationEstablishing its own trade markStrengthening consumer’s loyalty to the brand (quality of service, value added services, promo campaigns and discount programs)

GROSSMART 21

Development strategy in the regions in 2006-2008

Cities

Moscow and Moscow region

48 cities with population of 100-300 thousand people in Moscow region

TatarstanKazan, Naberezhniye Chelny, Nizhnekamsk, Almetyevsk, Zelenodolsk, Elabuga,

Chistopol, Cheboksary, Novocheboksarsk, Yoshkar Ola

Saratov Saratov, Engels, Balakovo, Balashov, Volsk, Penza, Kuznetsk, Kamyshyn

Voronezh Voronezh, Borisoglebsk, Rossosh, Piski, Stary Oskol, Lipetsk, Elets, Tambov

Kursk Kursk, Zheleznogorsk, Orel, Gubkin, Belgorod

SouthKrasnodar, Novorossiysk, Armavir, Eysk, Geledzhik, Kropotkin, Tihoretsk, Tuapse, Slavyansk-on-Kuban, Labinsk, Anapa, Belorechensk, Krymsk, Timashevsk, Anapa,

Goryachy Klyuch, Maykop, Stavropol

[Rostov-Volgograd]; [Izhevsk-Perm-Ufa]; [Ekaterinburg]

[Yaroslavl-Ivanovo]; [Novgorod-Pskov]; [South Ural]

2007

2008

2006

GROSSMART 22

Acquisitions programme

Advantages of acquisition:Keeping/increasing profitability with the help of operational synergies at aggressive business growth

Strengthening interaction with suppliers

Optimization of logistic

Optimization of business management structure

Saving on scale

Applying the standards of corporate management and reporting, according to international standards

Choosing companies for acquisition:Reputation of the company

Similar format, geographical coverage

Developed technologies

GROSSMART 23

Objects

GROSSMART 24

Grossmart in the regions: Kazan, Tatarstan Republic

10 supermarkets in Kazan

Supermarkets in Kazan:

Total space – 13 900 sq. m.

Sales space – 7 000 sq.m.

First Grossmart supermarket was open in Kazan

in 2003.

At present there are 10 shops in the city.

GROSSMART 25

Grossmart in regions:Kursk

Three Grossmart supermarkets were open in Kursk in 2006

Supermarkets in Kursk.

Total space 6 141 sq.m.

Sales space – 3 607 sq.m.

4 supermarkets in Kursk

The fourth Grossmart supermarket was open in Kursk in 2006

ТC «TC Triumph

TC “Crystall”TC “Grand”

GROSSMART 26

Grossmart in regions:Vladimir

TC “Valentina”, Dvoryanskaya St., 10Belokonskaya St., 17 B

Supermarkets characteristics:

Total space – 2 026 sq.m.

Sales space – 1 145 sq.m.

The first Grossmart supermarket was open in Vladimir in 2006The second one was open in July 2006

2 supermarkets in Vladimir

GROSSMART 27

69 objects in Vladimir and Vladimir region

PI Trade chain stores

Total space – 22 012 sq.m.

Sales space – 10 347 sq.m.

As of June 2006, Grossmart owns 67 shops and logistic center of PI trade chain in Vladimir and Vladimir region

Vladimir – 32 shops + warehouse(total space 12 090 sq.m.)Gus-Chrustalny – 10 shops (total space: 1 536 sq.m.)Kovrov – 18 shops (total space: 7 436 sq.m.)Kolchugino – 7 shops (total space: 950 sq..m.)

Grossmart in the regions: “PI” chain in Vladimir region

GROSSMART 28

Grossmart in regions :HYPERMARKET in Yekaterinburg

HYPERMARKET in Yekaterinburg

2005: HYPERMARKET was open in entertainment center Park House

Hypermarkets' characteristics:

Total space – 6 325 sq.m.

Sales space – 4 000 sq.m.

GROSSMART 29

Grossmart in Moscow:stores “near the house”

Stores in Moscow

Total space – 11 361 sq.m.

Sales space – 5 426 sq.m.

7 shops in Moscow Concept – «next-door-to-home-store»

www.marta.ru/grossmart.php

Thank you very much for your attention!