Birla in Rs 9,000 crore retail play, to go solo
The group is planning around 1,000 retail supermarkets along with an unspecified number of hypermarkets with a pan-India presence over the next three years, Suman Layak.business Updated: May 19, 2007 02:15 IST
Kumar Mangalam Birla has decided to go it alone in the retail business. At a press conference in Mumbai on Friday Birla announced that the retail business would not have a joint venture partner nor would it have any investments from the other AV Birla Group companies. The retail chain has been named “More”.
“It is a privately held company right now and none of our listed group entities will be investing in this. We will be financing the venture through a mix of debt and equity,” Birla added. He indicated that the investment likely over the next three years was around Rs 9,000 crore.
The company will re-brand its Trinethra chain of stores to More over the next year. The AV Birla Group had acquired Trinethra, a chain of retail stores based in south India in January 2007. It already has around 500,000 square feet of retail space.
The group is planning around 1,000 retail supermarkets along with an unspecified number of hypermarkets with a pan-India presence over the next three years. The first set of More stores will open in Pune this month, said Sumant Sinha, chief executive officer, Aditya Birla Retail.
Birla joins Mukesh Ambani and Sunil Mittal in starting retail groups in India. Store chains may account for as much as 35 per cent of retail sales by 2015, up from about 4 per cent now, according to Wal-Mart, the world's biggest retailer.
Mittal's Bharti Group plans to invest Rs 10,000 crore in a retail network that includes a wholesaling venture with Wal-Mart. Reliance Industries Chairman Ambani is investing more than Rs 25,000 crore to set up stores. The retail unit of Reliance is targeting sales of Rs 1 lakh crore by 2011 of goods ranging from groceries to electronics.
Foreign retail giants like Wal-Mart, Carrefour and Tesco have big India plans but are not allowed to offer services apart from cash-and-carry and back-end logistics, for which Wal-Mart has tied up with Bharti.
“Financing the chain will not be a problem as retailing has easy access to capital and the business enjoys great valuations all over the world,” Birla pointed out.
“I think we are just scratching the surface and I believe even we are an early mover. The real action will start five years from now,” he said and added that the group was keen on acquisitions in the retail space in India.
Sinha added the group would be employing 10,000 people by the end of the financial year.
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