| Aditya Birla Preparing Its Own Road to Retail
Retail Sector Will Become US$280bn Proposition by 2010-11: Assocham
Reliance Retail Eyes 10m Litres a Day Over Four Years
India Indicates Shift in Gears on Retail FDI, Backs Domestic Players
Austrade, Ubifrance and FIAB Confirm Presence in IFE-India
India’s Top Fuel Retailer Plans to Tap Retail Market Boom
FDI in Food Sector Overtakes Hotels and Tourism
India is Tricky, We Won’t Be There in Months: Tesco Exec
Study Shows Indian Companies OK With 49% FDI in Retail
Packaged Flour, Cereals Market Worth Rs 250bn: Economic Times Aditya Birla Preparing Its Own Road to Retail
The Aditya Birla group is believed to be preparing a blueprint for claiming a share of the Indian retail sector. According to senior group sources, the metals-to-BPO conglomerate is exploring options of entering the retail space to leverage on the growth in its branded garments division and is also talking to mall developers to block space, reports Business Standard.
The Rs 380-billion group is India 's largest branded apparel company in revenue terms. Details are yet to be worked out, but the group has started hiring people for the retail venture.
“About 100 to 150 people have already been recruited,” the sources said. Talent is being tapped from major consumer goods companies such as Godrej Industries and ITC. When contacted by the newspaper, the group's spokesperson declined to comment.
The options that the group is currently exploring include a joint venture with participation from a global retail chain for a B2B (business-to-business) partnership, the sources said. With the government reluctant to lift the restrictions on FDI in retail, global retail chains are getting into B2B tie-ups with Indian companies: the local company will look after the distribution and be the public face of the venture, but the back-end operations will be the foreign partner's responsibility. The Tatas have a similar arrangement with Woolworth, the international retail chain based in Australia .
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Retail Sector Will Become US$280bn Proposition by 2010-11: Assocham
The Indian retail sector is expected to grow at 7% by 2010-11, according to projections made by the Associated Chambers of Commerce and Industry of India (Assocham) and reported by www.myiris.com. This growth will enable the retail sector to enlarge its market share to US$280 billion from its present estimated level of US$ 200 billion.
Assocham President Anil K. Agarwal has revealed that organised sector retailing is set to grow at a much faster clip than the unorganised sector and that the higher growth rate will alone be responsible for its higher market share, which has been projected at US$17 billion by 2010-11.
Mentioning Mumbai, Delhi , Chennai, Kolkata, Bangalore and Kanpur as cities that will experience the retail boom, Agarwal noted that the popular model adopted for building shopping malls in these cities is build-operate-lease or sell.
This system, according to Assocham, will lead to closer linkages between real estate developers, state governments, financial institutions and retail industry. Assocham estimates that the investment opportunities the retail sector will create in the next 4-5 years will result in continued urbanisation and in the steady growth of the per capita income of Indians.
The growth of the retail sector will lead to a stronger shift towards a service economy in which the need for real estate will be paramount, Agarwal said. The Assocham study also indicated that franchising will emerge as the popular mode of retailing because there will be a proliferation of brands.
Pointing to the stumbling blocks restricting the growth of the retail sector, the study lists high stamp duty on property transfers, which varies from state to state. On the domestic taxation front, sales tax rates differ across the states and they have made supply chain management a challenging task for organised retailers.
In addition to state taxes, local authorities levy octroi. All these things put together cause irritation and therefore restrict economic growth. If retailing has to grow, the government will have to initiate corrective measures to correct these anomalies and lure investment, the Assocham study says. It urges the government to encourage People of Indian Origin (PIO) to invest in real estate and township building. It also makes a strong case for the opening up of foreign investment in real estate and retailing.
For this and more stories, go to http://www.myiris.com/
Reliance Retail Eyes 10m Litres a Day Over Four Years
Reliance Industries boss Mukesh Ambani's dairy business may be five times the size of Amul, India's largest milk and milk products cooperative. Reliance Retail has set a milk procurement target of 10 million litres a day over the next four years, when its stores are fully rolled out across the country, reports Business Standard .
The targeted amount is more than the combined procurement of all players in India , both in the co-operative and private sectors. Amul , India 's largest milk co-operative, procures around 6.4 million litres of milk per day. Amul Federation had notched up a sales figure of Rs 37.73 billion in the 2005-06 financial year.
Unlike co-operatives, Reliance is planning to set up a national manufacturing base of dairy products to feed its retail network.
The company is also examining the possibility of acquiring existing private players in the segment. The rollout of dairy products will initially take place in Andhra Pradesh and Punjab , and then be extended to other states.
For the complete story, go to http://www.business-standard.com
India Indicates Shift in Gears on Retail FDI, Backs Domestic Players
Wal-Mart's India dream may lie in tatters with the government intending to put Foreign Direct Investment (FDI) on the backburner. The government may now rely on domestic entrepreneurs such as Reliance, Bharti and Pantaloon for modernising the retail sector in the country, instead of seeking foreign investments, reports The Economic Times .
The government's shift in thinking, reflected in the Approach Paper to the Eleventh Five Year Plan (2007-12), is believed to have been spurred by a section of the ruling Congress party joining their allies, the Left, in opposing FDI in retail.
The Approach Paper is silent on the issue of FDI in retail, which is significant, because the Planning Commission had made a strong case for it in its mid-term appraisal of the Tenth Five Year Plan.
The government is prepared to allow international retail major only into the cash and carry wholesale trading route, where 100% FDI is allowed.
Austrade, Ubifrance and FIAB Confirm Presence in IFE-India
IFE-India, India's leading food, drink and hospitality show, is entering its fourth year in India with a heavy-duty presence from Australia, France, Spain and Malaysia, says Project Director Mel Shah of Montgomery International, London. The show is being organised at Pragati Maidan, Delhi 's main exhibition ground, on December 7-9, 2006 .
Austrade, which has confirmed the presence of nine major Australian food companies, will participate in the show for the first time. Another first will be the substantial presence from France , in the form of Ubifrance, which will bring with it 30 top food companies. Sopexa will continue its association with the show by organising B2B meetings for the French exhibitors.
FIAB, the Spanish food and wine marketing organisation, has doubled its presence with 16 companies. The Federation of Malaysian Manufacturers will participate with six companies.
From the wine world, India 's presence will be significant this year, with Champagne Indage, Sovereign Impex, Sonarys and Raj Dhir announcing their participation – it promises to be a big first for them. Maureen Kerleau returns with her lesser-known treasures for thirsty souls. Other IFE-India old-timers who are returning to the show include the Ministry of Food Processing Industry, APEDA and Spices Board.
Another significant addition this year will be State Bank of India , the country's largest nationalised bank, which will unveil its lucrative packages for the retail sector at the show. ( Source: delWine , Indian Wine Academy 's daily e-newsletter)
India’s Top Fuel Retailer Plans to Tap Retail Market Boom
Indian Oil Corp, the state-owned Fortune 500 oil company, plans to tap the mall rush. Lured by the footfalls at retail hubs, it plans to set up petrol pumps at multiplexes and hypermarkets to improve its auto fuel sales, says the Indian Express . “Modalities for the operation of these retail outlets would be decided jointly with the mall developers and Board's approval will be sought separately for specific cases,” says the proposal approved in principle by the IOC board.
India 's largest auto fuel retailer is banking on the evident shopping spree in the country.
An IOC official said talks have been initiated with Big Bazaar and Pantaloon for setting up the pumps in their precincts.
IOC's strategy is to provide people visiting malls a more “holistic experience”. Its outlets at the retail hubs would provide customers the convenience of tanking up or getting their cars washed or repaired while shopping in an air-conditioned environment.
For the complete story, go to http://www.indianexpress.com
FDI in Food Sector Overtakes Hotels and Tourism
Foreign direct investment (FDI) in India 's food sector is about to touch the US$3bn level, with another US$55m invested in sugar and cooking oil companies. FDI in food already outdoes the FDI in the hotels and tourism industry, reports www.kamcity.com , quoting The Economic Times .
Latest industry data show that the cumulative FDI in food processing reached US$2.8bn in March, and this segment now has an almost 4% share of the total FDI approved by the government. The Indian government has approved 105 proposals between January 2002 and May 2005 from foreign companies to set up food processing units in India . The cumulative FDI in hotels and tourism by March was $1.37bn.
The report says industry estimates claim the sector needs investment of about $28-35bn to meet the changing food demands in India . The Indian Credit Rating Agency (ICRA) says the country's processed food market accounts for 32% of the entire food market.
For the complete story and more updates, go to www.kamcity.com/namnews
India is Tricky, We Won’t Be There in Months: Tesco Exec
Tesco Plc, Britain 's largest retailer, said on Wednesday it was in talks with many Indian firms for a joint venture, but that it was a long way from entering Asia 's third-biggest economy, reports Reuters.
“We've spoken to a lot of people, (but) we are at a stage where we haven't even done a feasibility stage. We're a hell of a long way off,” Finance Director Andrew Higginson said at the Reuters Consumer and Retail Summit.
“We won't be there in a few months. It will be more than a year. I wouldn't want to put a date on it,” he said. India 's Bharti Enterprises – which partly owns Bharti Airtel – has said it was in talks with Tesco and other major retailers including Wal-Mart Stores and Carrefour for its retail venture. It is expected to finalise a partner in a few months.
Higginson said fast-expanding economies like China and India posed challenges such as high property prices. “ India is tricky because things have gotten ahead of themselves there,” he said.
Tesco has a support centre and a sourcing office in India , and has invested about US$40 million in its operations there. It plans to step up headcount at its back office in Bangalore to 2,000 from nearly 1,500 now, Higginson said.
For the complete, go to http://in.today.reuters.com/news
Study Shows Indian Companies OK With 49% FDI in Retail
An Associated Chamber of Commerce and Industry (Assocham) survey shows that the majority of domestic companies are keen on allowing 49% FDI in a calibrated manner in the retail sector, instead of 100% foreign equity.
In a note submitted to the Commerce and Industry Ministry, Assocham has urged the government to first consult the domestic industry before finalising and announcing the entry of international retail giants.
In response to an Assocham questionnaire circulated to domestic players, one of the leading retailing firms, which runs value-buying chains throughout the country and is expanding fast, sought two to three years for the domestic industry to consolidate.
According to Assocham, domestic players suffer from infrastructure shortage, the biggest bottleneck being the prohibitive prices of large retail spaces in central locations in major Indian cities.
For the complete story, go to http://www.financialexpress.com
Packaged Flour, Cereals Market Worth Rs 250bn: Economic Times
It's back to basics for the Indian food mart. The fancy meal might fetch a premium, but packaged rice, wheat flour and pulses are going to provide growth and volumes to the burgeoning Indian food retail market, says a report by Yamini Dhall and Deepshikha Monga in The Economic Times .
“If you want to give your topline a boost, you have to look at volumes, which will come from supplying the basics in food retail,” says Piruz Khambatta, Chairman and Managing Director, Rasna. The fruit pulp-based drinks company is looking at backward integration into branded flour, pulses and rice.
Also testing the waters is Pepsi, which is considering supplying its surplus vegetables to organised retail chains on an experimental basis. Existing players like ITC, Cargill and Satnam, who are already into the premium packaged rice-wheat flour market as well as local emerging players like Shaktibhog and Rajdhani have collectively not yet covered 25% of the market demand for packaged food basics.
Experts estimate that the total market demand for flour alone is about Rs 150 billion and that of other cereals is pegged at Rs 100 billion.
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