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Reliance kicks off $5.6 bn retail foray

RIL enters retail trade business by opening 11 stores in H'bad to sell fruits, vegetables, staples and dairy products.

india Updated: Nov 03, 2006 16:18 IST
Indo-Asian News Service
Indo-Asian News Service

Reliance Industries Ltd, India's largest private sector company, launched its $5.6 billion foray into retail trade business by opening 11 stores here Friday to sell fruits, vegetables, staples and dairy products.

The new enterprise - being powered by group company Reliance Retail Ltd - will eventually have its footprint across the country with future plans for discount stores, malls, supermarkets, hypermarkets, speciality stores and convenios.

Reliance Fresh is the $20 billion Reliance Industries' brand for its grocery outlets, which will also stock kitchen appliances. The trademark for its foray into branded staples has been christened Reliance Select, officials said.

The stores that has a world-class ambience have been designed by Nita Ambani, the wife of chairman Mukesh Ambani - the richest Indian today going by his stake in the group with interests in oil and gas, textiles, life sciences and retail.

"We plan to have a pan-India presence and open outlets in 784 urban towns and 6,000 retail mandi towns in rural areas by 2011," Raghu Pillai, president and chief executive of Reliance Retail, told a news conference here.

Each store will target some 3,000 households in over an area of two kilometres and the target is to register a turnover of Rs.1,000 billion by 2011, he said, after the first store was opened at the upmarket Banjara Hills area here.

Company officials said each Reliance Fresh store will be spread over an area of 2,000 sq. ft. to 5,000 sq. ft., while its Fresh Plus stores, which will retail grocery and consumer goods as well, will cover 4,000 sq. ft. to 10,000 sq. ft.

Under the project, the company will set up world-class infrastructure for supply chain under a farm-to-fork strategy. "This idea is to make farmers our partners and ensure fresh fruits and vegetables at affordable prices," Pillai said.

"It is a small step in our initiative, which will create a virtuous circle of prosperity by bringing the farmers and consumers in a win-win partnership," said Mukesh Ambani, who was here Thursday night, but not at the official opening.

"This retail offering will deliver unmatched affordability, quality and choice of products and services to the consumers, and help us fine-tune our offering by listening to the consumers and learning from them," Ambani added.

Sanjeev Asthana, chief executive for Reliance's agri-business, said the world-class supply chain that would be set up under the project would prevent wastage of agricultural and horticultural products.

Since over 40 percent of the fruits and vegetables produced in India is said to go waste due to lack of efficient supply chains, Reliance will set up collection centres across the country to source the produce directly from farmers.

"This will eliminate middlemen and add value to farmers," Asthana said, adding farmers will be provided insurance, healthcare, best technologies and training on how to increase productivity.

The size of India's retail industry that was opened up for single-brand foreign players recently has been estimated at $202 billion by global consultants A.T. Kearney with a potential for 30 percent annual growth for the next five years.

American retail giant Wal-Mart, France's Carrefour group and Britain's Tesco are among some major players waiting to enter India since the government policy only permits single brands such as Nokia, Nike and Adidas.

First Published: Nov 03, 2006 16:18 IST