Indiabulls uses real estate backup to push hard into retail, buys out Piramyd Retail

India’s third largest property developer after DLF and Unitech, Indiabulls is using its zooming market capitalisation in financial services and real estate to venture into retail via its arm Indiabulls Real Estate Ltd. which currently holds a land bank of 4,000 acres.

And pipping up Aditya Birla in the race for acquiring Piramyd Retail, Indiabulls has acquired 64% stake in the company from its promoter Ashok Piramal for Rs.133 crore. This would give Indiabulls Wholesale Services access to seven lifestyle ‘Piramyd Megastore’ and 35 neighbourhood ‘Trumart’ stores in prime locations across the country.

The acquisition would complement Indiabulls plans of opening 30 hypermarkets in Tier II cities with an investment of Rs.1500 crores. Now it also has lifestyle and convenience stores under its fold. The company’s wholesale stores are also taking shape and are modelled on a B2C concept rather than current B2B stores like Metro and Wal-Mart in India.

The deal also signals the end of India’s first modern retailer. Piramyd started in 1999 and opened the first retail mall ‘Crossroads’ which was later sold to Pantaloon. But it failed to take the first mover advantage and lost to other retailers in the race to expand. Thus it always wanted to pull away and had accumulated losses on its Balance sheet inspite of being among the oldest retailers.

For Indiabulls, the chief advantage stems from the fact that it has real estate advantage on its side thus hedging out land supply and rentals which has off late become a major cost to a retailers. But it needs to compete among large and established retailers, which won’t be an easy ask considering the deep pockets and network of players such as Reliance, Birla and Tata.