Reliance Retail to augment its apparel business venture is in talks with world’s largest retail chain, US-based Gap Inc. for bringing their mid-premium brands – ‘Gap’ and ‘Banana Republic’ to India.

Gap Inc has been talks with other retail Indian players but in Reliance Retail, they have a better synergy as Reliance plans in the apparel segment are on a grand scale with a pan-India presence.

Earlier, big international apparel retailers such as Diesel, Tommy Hilfiger, Esprit, Louis Vuitton, FCUK, Lee Cooper, Escada and Dunhill have entered the Indian market though franchise route and single-brand retail.

Globally, Gap’s business is mainly through direct retailing but off late it has adopted franchising in some Asian countries. For Gap, the entry won’t be new to them since it sources significant proportion of its apparel from Indian companies. via

This one would surely not call for any opposition, even though it is integrated with the retail business. If implemented, Reliance Industries could bring about a sea change in the basic healthcare infrastructure of the country.

It plans to invest Rs. 25,000 crore by 2015 to setup 1500 primary healthcare centres in B and C class towns, which will also have facilities required by the locals to sell their goods.

The healthcare model would be most likely to be based on the existing primary healthcare centres of the government, which is universally known for poor service standards in rural areas.

The venture raises certain questions as to whether it fits into the corporate responsibility or there is some business into it. Probably, owing to opposition in retail, Reliance wants to divert the attention to the social benefits through this venture.

Also, this might also not be in direct confultation with ADAG’s Reliance Health, since latter wants to set up big hospitals and pharmacy chain rather than catering to the basic strata of the society. source

Reliance Retail wants to have a slice of Indian consumer market right from the top to bottom. The latest product to join its list is the impending launch of a footwear chain under the brand ‘Reliance Footprint’.

Over 100 shoe stores would be opened in its supermarkets and hypermarkets with shoes in the price range from from Rs.299 to Rs.999. Through this venture, Reliance aims to beat bigger players like Bata, Reebok and Liberty by capturing 12% market share and Rs.3000 crore turnover by 2011.

Earlier, Reliance was reported to be in talks with Bata for its footwear venture.

The company would exploit the untapped potential of women and children footwear segment and reduce the contribution of unorganised sector in the industry.

But the key for the company would be to make its brand more approachable to the masses with competitive pricing as Reliance usually work in volumes, thereby increasing the consumption of footwear in the country.

It seems that the first round of battle against modern retailers and small traders seems to be won by the latter. And to bear the brunt is India’s largest company, Reliance Industries which is aspiring to become India’s largest retail company through its subsidiary Reliance Retail.

After being forced to close down it stores in UP, Reliance has delayed its plans to open 102 stores and 7 distribution centres in UP and it had also to close down its stores in NCR region of Noida and Ghaziabad.

Reliance Retail has also delayed opening stores West Bengal owing to large scale attacks from traders and political activists. This would deprive West Bengal of Rs.2000 crore investment in145 grocery stores, 6 processing centres, 9 distribution centres and 23 collection centres.

»

The diktat has worked yet again. Much after opposing entry of foreign retailers, the UP Government has now decided to shut down all organised retail outlets that operate outside malls. As a consequence all Reliance Fresh and Spencer retail stores are closed in the state with immediate effect.

It is simply incomprehensible, and goes beyond the principle of economics. Industrialists who have invested crores outlining their investments, have to shut down their stores overnight for reasons which are still not known but can only be attributed to political gimmicks.

After Left and DMK ruled states, Mayawati has done an unthinkable. In our opinion, it’s just a strategy to kill many birds with a stone. Since the attack on Reliance Fresh stores was carried on by an SP leader and not even in wildest of imagination would BSP support any move of SP.

It seems that Mayawati’s brush with Ambani’s continues as after Anil Ambani’s proposals, its turn of Mukesh Ambani to feel the brunt. The decision may be more prompted with the expectations of an early poll as no party would like to ignore the small traders and farmers.

»

With the launch of Reliance Mart in Ahmedabad, probably Reliance’s biggest bet in its retail venture, the company is all geared to shake up India’s organised retail plans with its slew of investments and strategies.

Reliance Mart in Ahmedabad is India’s largest hypermarket, spread over 1.65 lakh square feet offering 95,000 products in various product ranges consisting primarily of Reliance’s private labels. The most striking feature is the Rs.195 denim jeans something akin to Wal-Mart’s highly successful $10 jeans.

Other unique offerings of RelianceMart include tailoring, shoe repair, watch repair, a photo shop, gift services, laundry services, fresh bakery, ice-cream train for kids, ready-made batter, loose tea and pickles.

In the hypermarket space, Reliance faces competition from Pantaloon’s Big Bazaar, RPG’s Spencer’s Hyper and Tata’s Star India Bazaar. But considering the national reach and area occupied, Big Bazaar is the only real threat to Reliance Mart in the near future.

»

Finally, the much awaited deal between Bharti and Wal-Mart is done. They have announced a 50:50 joint venture for cash-and-carry and wholesale business called Bharti - Wal-Mart (P) Ltd.

The business will serve kirana stores, fruit and vegetable resellers, restaurants and other business owners. It will also manage backend logistics and provide technical support to Bharti Retail, which will set up multiple-format retail stores that are 100% owned and operated by Bharti.

The JV will also not need FIPB nod as cash and carry model falls completely under the 100% FDI route. Around 90% of the products would be sourced locally. Wal-Mart already sources products worth $600 million from India currently.

Bharti Wal-Mart would open 15 cash-and-carry or wholesale stores in Indian by 2014 with the first one to come up by end-2008.

But don’t think that you can go and buy stuff from a Wal-Mart store as this venture is purely for resellers and bulk buyers. Instead, Bharti Retail would be the front-end retail format.

Bharti Retail would spend $2.5 billion by 2015 to build hypermarkets, supermarkets and small stores. But the big question is won’t it be too late for Bharti as Pantaloon, Reliance, Birla, Tata, Spencers having already lined up huge expansion plans and in all likelihood would capture substanital market share of organised retail before Bharti’s entry.

After hypermarkets, department stores, supermarkets and malls, Pantaloon Retail is focussing on rolling out a chain of small discount stores. The small stores will be neighbourhood stores called KB’s Fair Price, with limited varieties and limited services. 

The margins on these would be low, but it would offset by economies of scale and lower costs. Initially, around 12 of these would open in Delhi.

Pantaloon is also exploring tie-ups with foreign partners for joint ventures. Earlier it has tied up with Staples, Axiom Telecom, Lee Cooper and reports indicate it is in talks with Burger King and Starbucks.

Pantaloon hopes to expand its retail space from current 7 million to 30 million square feet by 2010-2011. By early 2008, it will also open its cash-and-carry stores named KB’s Wholesale Club.

With this entry, Pantaloon could extract lot of business from small stores and retailers, and also take on the existing players such as Subhiksha and Reliance Fresh. These stores would target daily staple buyers unlike Big Bazaar/ Food Bazaar, which focus more on weekly/ monthly and bulk purchases.

The Indian dairy sector is poised for a giant leap forward with huge investment plans from domestic and multinational companies. The latest to join the list is world’s top retailer Wal-Mart, which plans to set up a dairy processing unit in India.

Walmart plans to source 15 lakh litres of milk per day directly from farmers in north Indian states at a premium to the prevailing prices. It would initial retail the dairy products in its international stores and later on in India when the Bharti retail stores start operations.

The regulations also favours entry of Wal-mart as in food processing sector, 100% FDI is allowed. Also, with the government expected to lift the ban on export of milk powder from September, it could mean better realisation for milk products.

Globally, the international milk prices have increased due to removal of subsidy in Europe and draught in Australia, so Wal-Mart needed to diversity its dairy products sourcing and India was natural option.

With international giants coming to Indian dairy sector, one could hope for a change in fortunes of Indian rural economy. Source

If you are thinking that there is very little left in terms of appreciation in Reliance Industries especially the stupendous returns it has given post demerger and split with Anil Ambani, then there is some food for thought. Leading brokerage and equity research company, Morgan Stanley has projected the share price of RIL to rise 35% from current levels in 1 year.

If such happens, then the market capitalisation of Reliance Industries will rise from current $64 billion to $100 billion, making it the first Indian company to achieve this feat.

The 30 companies of Sensex together have a market cap of around $500 billion while those of entire listed companies in India is around 41 trillion. In comparison the 30 constituents of Dow Jones Industrial Average have a m-cap of over $4 trillion with Exxon Mobil being the most valuable with a market value of $485 billion.

The report states that the prime drivers for increasing value of RIL would be the increase in reserves for exploration and production business, improved refinery performance, new gas contracts, higher global refining margins and setting up of pan-India retail network. On the flip side, the risk are cut in import tariffs, rupee appreciation and delays in execution of business plans.