To capitalise on its tremendous brand equity and offset the margin pressure on the dairy business, Amul is planning to foray into the bottled water segment starting with its home state, Gujarat.

The brand name of the water shall be ‘Narmada Neer’ to capitalise on the sacred status of Narmada river in Gujarat. It would be available in 200ml pouches, 1 litre, 5 litre and 20 litre PET bottles.

If the product get accepted in Gujarat, the venture would be extended to other states in Indian and then Amul could piggy back on its extensive retail network of five lakh outlets across the country.

Bottled water could otherwise provide good margins and the profits from the venture would be primarily used for welfare of families in the Amul’s dairy trade.

10 years back, Amul did take a shot at bottled water through ‘Jaldhara’ which was produced by NDDB. However the venture failed owing to less demand for packaged water in market.

But with this market growing bigger and expected to grow at 40% every year, Amul is surely going to benefit. Another positive for the company is that 40% of total national market for packaged bottled drinking water is in western India, which Amul is exploring initially.

But going by scale and investments of Amul, it would seem that the venture would be albeit on a shorter scale and done only to fulfill corporate social responsibility.

13 year old, apparel manufacturer and retailer, Koutons Retail India is coming out with an IPO from September 18-21 in a price band of Rs. 370-415 to raise Rs.146 crore at the upper band.

Koutons Retail operates 999 outlets under ‘Koutons’ & ‘Charlie Outlaw’ brands, making it the biggest retailer in number of stores in India. But major contribution of its sales is from Koutons brand which is around 92% of total sales. It also has 18 manufacturing facilities situated around Gurgaon. 

After the IPO, Koutons would join other retailers like Pantaloon, Provogue, Vishal Retail and Zodiac to get listed. In terms of valuation, the issue is attractively priced as compared to other listed players as it has a lower P/E of 36 at upper band.

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After being the leader in Indian apparel industry, Raymond has ventured into the women western wear market by launching a collection under its flagship ColorPlus brand.

With the proportion of working women increasing, especially in metros, the Indian western womenwear market is growing at 20% and is worth Rs. 800 crore. 

Raymond expects to open 175 Colorplus stores in next 3 years and expect Rs.150 crore revenue from womenwear segment. It will also launch a kids wear segment under ColorPlus Kids soon.

The share of apparel in overall business of Raymond is still just 6% and as such the company is diversifying into new categories and revamping existing ones.

Meanwhile, its joint ventures with foreign companies are not doing that well. Three of the total five are loss making putting strain on company’s bottomline. Also, it has to deal with reducing margins and high rental costs which may affect the growth of its retail stores.

Future Group would be coming out with an IPO of its asset management and consumer credit business, Future Capital Holdings to raise money for its expansion plans. It would be Future Group’s only other listed unit after Pantaloon.
 
Pantaloon Retail has a 74% stake in Future Capital, US Hedge Fund, Och-Ziff Capital has a 10% stake while rest 16% is among top employees and co-promoter. Post IPO, Pantaloon’s stake may fall by 10%.

Future Capital’s asset management business has around $1billion assets and have domestic and international real estate funds named Kshitij and Horizon respectively, a PE fund, Indivision and a hospitality fund. The consumer credit business called Future Money includes the personal lending business.

Through the public offer, Pantaloon could raise around Rs.2700 crore, which could be used in conjunction with its retail plans by building malls, providing loans on consumer goods and picking stakes in companies through PE Fund.

Pantaloon is also investing Rs.3250 crore in Pantaloon Future Ventures Ltd. which invests in new and innovative ventures. Pantaloon is raising Rs200 crore by issuing shares to private investors and another Rs.106 crore though warrants to promoters and employees.
 
Besides, another Future Group company, Future Brands is launching new brands in consumer durables, FMCG, appliances, apparel and personal care, and target them to convert into conventional brands.

Being the pioneer in Indian retail space, Kishore Biyani’s Future Group is tapping an unconventional and unexplored but highly potential target market of urban slums.

The group recently launched KB’s Fair Price Shops in Delhi and would expand the concept initially in top 8 metros. In most likelihood, the stores in urban slums would be based on the same concept offering daily staple items at prices lower than MRP.

Pantaloon is toying with this idea based on a study conducted in Mumbai where two-third of the population lives in slums and 60% of them are migrants. The study analysed the lifestyle, earnings, spending behaviour, consumption pattern and attitude toward shopping destinations and brands.

The study found that the slum dewellers don’t visit the modern shopping stores as it’s time and money consuming, perceived expensive. Also, they don’t feel comfortable among educated and middle-class people and are apprehensive about kid’s reactive demands. Source

As Wal-Mart and Bharti gives touches to their deal and bring in modern global business practices to India, one can hope to get “everyday lower prices” as has been the motto of the American giant.

The retailers would undoubtedly be benefited by Wal-Mart’s lower cost model but even the Indian consumers may see some indirect benefit owing to Wal-Mart’s legendary supply-chain management and lower margin strategy.

The biggest problem plaguing the Indian retail business is the unorganised supply chain. There are over 30 lakhs kiranas along with countless market vendors and small sellers who contributes 96% of the retail marketplace. The costs are higher as there is lack of economies of scale with involvement of middlemen in the consumption cycle.

In India, a consumer pays five times for his food than what the farmer actually gets, while in USA, this ratio is just 2:1. Also, 60% of agricultural output gets due to processing delays, storage problem and other bottlenecks.

This is where Wal-Mart’s expertise could come in handy as they could extract better prices from suppliers, run efficient supply chain and customize offerings according to Indian consumer preferences.

But the Government also needs to flex its laws for the overall betterment of producers and consumers. There are far too many restrictions, legal procedures and taxes to be dealt with. Also the infrastructure needs to be spruced up for quicker transport and storage of goods by retailers. Source

A SEBI committee has come out with proposals for launch of Dedicated Infrastructure Funds (DIFs) by mutual funds. It has proposed additional tax exemption of Rs.1 lakh for investing in DIF but with a 7 year lock in period. Also, capital gains arising on account of the transfer of long-term capital assets may be exempted from tax if the capital gains are invested in DIF units.

DIFs largely invest in unlisted companies in the infrastructure sector, with longer gestation periods. Till now, only venture capital funds invested in such projects leaving out retail investors due to inability to meet minimum investment requirements thus missing out on company’s growth phase prior to it being listed.

It is also recommended that DIFs should operate as closed-ended schemes with a maturity of seven years, with the possible extension of the duration to a further seven years. They shall be allowed to invest up to 100% of its funds into unlisted securities while limiting its exposure to unlisted companies to 10% of NAV.

The committee has also recommended that DIFs should be listed on stock exchanges to provide liquidity to retail investors within 2 years of launch of scheme. The exit options suggested are initial public offerings, strategic sales or buybacks.

Once the recommendations are approved, it is expected that all SEBI registered AMC would launch these funds. Apart from retail investors, companies and FIs can also invest in them.

As regards tax incentives, it is recommended to given only to original investors and not subsequent buyers of the scheme. Though to make DIF a success, it is necessary to provide tax sops as without it no retail investor would be motivated to invest in them.

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 erstwhile UTI Bank has changed its name to Axis Bank effective July 30, 2007. This is the first time that a bank has gone in for a brand-change voluntarily; earlier names of banks have been changed either due to a merger or an acquisition.

UTI brand was given in 1994 by its promoters and UTI Bank could use the brand only till January 2008 as per Govt directives. Many unrelated shareholder entities like UTI Technological Services, UTI Investor Services and UTI Securities were carrying the UTI brand.

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ITC Ltd., the diversified Kolkata based conglomerate bucked the trend on stock exchanges by closing in the green on day when the market witnessed the steepest fall in four months. The reason primarily was the better than expected quarterly results.

ITC has major expansion plans in almost all the segments it operates in but faces problems owing to rising real estate prices, problems of land acquisition and a delay in regulatory clearances which is hampering its growth plans.

ITC is investing Rs.8000 crore in building five luxury hotels in Chennai, Bangalore, Hyderabad and Ahmedabad, and a golf resort at Gurgaon through its subsidiary company.  It is also investing Rs.1500 crore in West Bengal for food processing and logistic hub and an IT Park.

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