After Reliance & Bharti: Rs 9,000 cr investment, 10,000 jobs in a year
Mumbai: Joining the Reliance Group and Wal-Mart/Bharti for a pie in country’s nascent and high potential retail business, the Aditya Vikram Birla Group has announced its entry into the domestic organised retail market with an investment of up to Rs 9,000 crore over three years.
It is targetting 1,000 supermarkets in three years and plans to employ 10,000 people in a year’s time. “The group has already invested Rs 200 crore in the retail venture. We intend to be among the leading players in India. We’ll give the Indian consumer a fundamentally better shopping experience,” Aditya Vikram Birla Group chief Kumar Mangalam Birla explained while outlining the details of the strategy.
The group, which has a widely diversified range of interests in telecom, cement, textile and aluminium, had in January acquired control Hyderabad-based supermarket chain Trinethra Super Retail and its fast-growing online shopping outfit Fabmall — in its run-up to the retail foray. Its retail stores would be christened
“More” and the first outlet would be opened in Pune this month. “The business will, however, not be funded by any of our listed companies,” Birla said, adding that a debt-equity mixture will be used to fund the venture. “We also have the option of tapping the vibrant capital market,” he said. While ruling out the franchisee model for the business, Birla said that the group would be setting up 1,000 supermarkets of about 10,000 sq ft each over the next three years.
The retail outlets will be in two formats, hypermarket and supermarket, Birla told reporters. “We will offer variety, cost-effectiveness and a comfortable and world-class shopping environment to our customers,” he said, adding that the Group would go it alone in the business. While telecom giant Bharti has tied up with Wal-Mart for its retail venture, Reliance Industries has stepped into the business on its own.
“We will be hiring thousands of youngsters to man our outlets,” Birla said, adding that “we will form direct linkages with farmers.” Investments in back-end functions will be done in a spirit of partnership with vendors and suppliers to eliminate costs in the supply-chain, he said.
The Birla’s entry into organised retailing has come at a time when plans to open retail stores of Bentonville, Wal-Mart and other foreign retailers including Carrefour SA and Tesco Plc have been delayed as the government has commissioned a study on the impact of large retailers on small stores.
Sunil Bharti Mittal’s Bharti Group plans to invest Rs 2,500 crore in a retail network that includes a wholesaling venture with Wal-Mart. Mukesh Ambani’s Reliance Group is investing more than Rs 5,500 crore to set up stores. Economists have estimated that the Indian organised retail market is worth $320 billion. Multinational companies from several countries have evinced keen interest in a share of the pie.