Indian Retail News
Reliance Retail in the Red
Thursday, 22 October 2009 11:37
All the retail subsidiaries of RIL incurred losses. The Reliance Retail Ltd (RRL) reported a loss of Rs20.24 crore on a revenue of Rs622.31 crore; Reliance Fresh Ltd which retail grocery items mentioned a net loss of Rs249.30 crore on revenue of Rs1,778.06 crore; the hypermarket format Reliance Hypermart Ltd reported a loss of Rs51.84 crore on a revenue of Rs372.32 crore. Besides smaller subsidiaries like Reliance Dairy Foods Ltd and Reliance Digital Retail Finance Ltd also reported losses.
But an anonymous analyst who tracks the company at a Mumbai brokerage believed “The (losses) are small change for a company of RIL’s size.” RIL's retail operations are under analysis of this firm.
The annual report of RIL mentions “Through this year, RRL increased its footprint to more than 900 stores in 80 cities across 14 states in India. Keeping in sync with its multi-format organised retail strategy, RRL added new formats to its spectrum in the last year. Significant reductions were achieved in supply chain cost and the operations were integrated into the RIL system."
Many operational figures in the consolidated annual report for 2008-09 have increased by two times after the Bombay and Gujarat high courts gave green signal to the merger of Reliance Petroleum Ltd with RIL. Its net fixed assets have increased by two times to Rs1.69 trillion from Rs84,889 crore in 2007-08. Its total assets have increased to Rs2.45 trillion from Rs1.49 trillion which increased its net worth creased 55.15% to Rs1.26 trillion. But however, the number of employees in the firm’s roster, slipped to 24,679 from 25,487 in 2007-08. Its share in the national exchequer also fell to Rs11,574 crore from Rs13,696 crore, although not all of it could be ascribed to tax planning as depreciation rose to Rs5,195 crore from Rs4,847 crore a year earlier.
RIL's urge for cash was visible, from the fact that it divested its entire mutual fund portfolio of Rs3,058.73 crore even as it received a cash infusion from the balance subscription of Rs15,142 crore.
At the end of 2009, RIL’s cash and cash equivalents stood at Rs25,050 crore, placed in instruments such as fixed deposits or government securities. A company spokesman said “The management anticipated the liquidity crisis.”
But according to the analysis mentioned earlier, even though as a bulk of its capital expenditure budgets are in place, RIL’s net gearing was still at a stable 27.8%. He mentioned that RIL has to de-bottleneck its refinery capacities a bit, which will not need much funds. More to this the analyst added that RIL is at its peak in terms of the debt burden as its investments in the new refinery at Jamnagar, Gujarat, and in the Krishna-Godavari basin will start paying off from now.
Besides there are some interesting entities related transactions taking place. The Reliance Gas Transportation Infrastructure Ltd is making intra-city and inter-city gas pipelines.
RIL has bought 500 million non-cumulative preference shares of Reliance Gas for Rs2,000 crore. As per regulatory norms, RIL is barred from making any investment in the equity of the gas transportation company. RIL had also invested in 85,000 shares in the National Stock Exchange for Rs28.48 crore during the year.
The firm will be charging Rs20.81 crore on RRL as “manpower deputation charges” for 2008-09, against zero in 2007-08. Under the same overhead Reliance Trends was charged Rs12 crore while Reliance Petroinvestments Limited had to Rs2.75 crore as charge.
In recent times the media speculations about RIL was that it is gearing up for a major acquisition. This was because a portion of RIL’s treasury shares, held by its own subsidiary Petroleum Trust Ltd, was sold in the current fiscal. In 2008-09 an investment of Rs314.53 crore was made by RIL in Delta Hydrocarbons SA Luxembourg. Besides the company is yet to get turnaround from its Gulf Africa Petroleum Corporation, which the company acquired in 2007.
Aditya Birla Retail Aims For 700 New "More" By FY2010
Thursday, 22 October 2009 10:46
According to the CEO of Aditya Birla Retail Ltd. Mr Thomas Varghese “ By the end of this financial year we expect to have approximately 700 supermarkets and eight hypermarkets across towns and cities." Our existing hypermarkets are located in Baroda, Mysore, Aurangabad, Bangalore and Indore. We are expecting to open three additional hypermarkets in Thane, Delhi and Hyderabad in the next few months.”
He gave a detailed account of the 700 retail supermarkets that are going to start by March 2010. The figures of mentioned by him are: 331 MORE outlets in metros, 102 retail outlets in tier I cities, 203 retail outlets in tier II cities and the rest 64 outlets will be launched in tier III cities.
On the question of profit making and efficiency of the big modern retail formats in tier II and tier III cities, Varghese replied “Any format which is supported by the right business model and the right rent to revenue ratio will prove attractive. Nowadays customers are brand conscious and extremely price sensitive, they also look for retailers who offer them consistently quality product. Tier II and III cities are within easy reach of the agricultural markets and have good local produce. So customers over here are more quality conscious, relatively while setting up our modern formats we make sure to consistently deliver quality with price to attract these customers, so its proves to be successful over here.”
As of now More has an impressive retail presence in supermarket formats, of almost 642 outlets in 101 cities where the smallest store is of 2,200 sq ft.. Besides, ABRL runs five hypermarkets under the brand name More Megastore which are located in Mysore, Vadodra, Indore, Aurangabad and Bangalore. The average size of these stores is over 60,000 sq ft and each store contains over 60,000 products which include fruits and vegetables, groceries, FMCG products.
Rosebys Aiming 500-700 Retail Stores over 5 years
Wednesday, 21 October 2009 11:46
Rosebys was formerly based in UK and in 2006 Sanjay Dalmia-led Gujarat Heavy Chemicals acquired it. As of now, Rosebys have 70 stores in the country.
According to Nikhil Sen, Director, and Rosebys Interiors India "We will have a total of 125-stores by March-2010. On a broader horizon, we plan to open between 500-700-stores over the next 3-5-years. By the end of December we are setting up at least 30 franchise stores, on 700 to 2,000 sq ft of area
Rosebys already has outlets in Mumbai, Delhi and NCR (National Capital Region), Kolkata, Hyderabad, Hubli, Vizag, Jamshedpur and some towns in Punjab, Haryana and Tamil Nadu.
Mr Sen releasing his company statement told the reporters "We are predominantly a franchise chain. At best, we will have 5 per cent stores as company-owned. We are talking with some potential partners. Nothing is decided and we will take it as it comes."
In the financial year 09 the turnover of Rosebys reached 81crore and this year it is aiming at a turnover of Rs 85-90 crore. Rosebys announced earlier as an initiative of its brand-building exercise, it is going to put Rs 150-crore over the next few years. Earlier, Rosebys had 77 outlets in UK and sold it to a subsidiary of Edinburgh Wollen Mill along the stocks. Rosebys has made its mark as an one-stop solution for both soft and hard home furnishings
Apollo Pharmacy Licensed To Sell H1N1 Medicines
Wednesday, 21 October 2009 10:12
Besides to provide life-saving medicines round-the-clock at the door-steps of the needy, the pharmacy retail chain has launched a nationwide 24 hour help line.
According to Apollo Pharmacy Director Shobana Kamineni "To ensure easy availability of the medicine, Apollo Pharmacy has also introduced 24X7 helpline numbers to assist in home delivery as well as to provide relevant information on drug procurement and disease management."
UK Retailers End Talks With Reliance Retail, Trent
Wednesday, 21 October 2009 10:03
As market challenges abound on their home turf, British retail majors HMV and Arcadia Group are pulling back from debuting on Indian high streets. A fortnight back, entertainment retail behemoth HMV Group bailed out of talks with Mukesh Ambani-led Reliance Retail for an equal joint venture in the Indian market, sources with direct knowledge of the development said. UK-based billionaire Philip Green’s fashion empire, Arcadia, has postponed bringing in high-fashion women’s clothing chain Topshop through Trent Ltd, a Tata Group entity.
HMV and Topshop are backing-off following similar moves by UK-based healthcare retailer Boots Plc, which was also in discussions with Reliance Retail till early this year. HMV and Reliance TimeOut, a lifestyle and leisure division of Reliance Retail have been in talks to launch book store chain Waterstone’s and music retail stores under the HMV brand separately.
The folding up of competitor and one of UK’s largest music-to-games retailers Zavvi—on the back of the collapse of its supplier Entertainment UK—may have been music to HMV’s ears but its subsequent purchase of 14 Zavvi stores across UK and Ireland seems to biting into HMV’s overseas strategy.
“HMV felt the time was not right to invest significant management time and resources in developing an India strategy. But Reliance will be the first option as and when HMV renews India plans,” a source, who did not wish to be identified, said.
Reliance Retail was unwilling to comment, while HMV Group’s director of corporate communications Paul Barker declined to respond to market rumors.
Sluggish sentiments in established markets are cramping several international retailers’ plans of tapping into one of the fastest-growing retail markets in the world, just yet. Premium retailer Arcadia Group—which has fashion brands Topshop, Burton, Dorothy Perkins and Ms Selfridges in its portfolio—was expected to bring Topshop into India through Trent.
Tata Group’s retail arm had blocked three store locations in Mumbai and Delhi for Topshop, which was released in recent weeks stating that plans to launch the international fashion clothing chain, has been postponed.
Topshop, which saw popularity surge over style icon Kate Moss’s design collaboration, operates in over 20 countries, but India was seen as next big destination when discussions firmed up with Trent last year. While ET was unable to elicit a response from the Arcadia Group, Trent which operates lifestyle department chain Westside declined to comment.
While India’s robust consumption story continues to attract global retailers, there are concerns over the still high real estate cost, lower sales density and a rather small market for organized womenswear retail. Bulk of the domestic womenswear market remains in the traditional realm of retail with organized retail players making slow progress.
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