Rel Retail to enter cash-and-carry biz by opening 3 outlets

Mukesh Ambani-led Reliance Industries Limited's (RIL) retail arm, Reliance Retail, plans to enter into the cash-and-carry business by opening at least three outlets in the next six to eight months, a source said.

In early 2009, the company had jettisoned plans to enter into the wholesale trading business, citing the adverse market conditions as its reason for doing so. Some top company officials had also quit at the time.

"The company is back with a bang. It is soon going to announce its revived cash-and-carry business plans and will open three outlets over the next six to eight months," the source told PTI here without divulging further details.

As per existing plans, Reliance will not enter into any foreign joint venture, but will go it alone on the business, the source said.

The company has already identified locations and work was on for the construction of the outlets, which are spread over an area of 1.5 lakh square feet each. This is, however, a scaling down of the company's initial plan to open its stores at 15 locations, mostly tier-II centres such as Jalandhar, Ludhiana, Rajkot and Salem.

Reliance's entry into the wholesale business assumes significance at this point, as the market is abuzz with reports of global retailers such as Wal-Mart, Tesco, Metro and Carrefour expanding their presence in India amid anticipation that the government is likely to ease FDI norms in both the wholesale and retail formats.

Early this year, Reliance hired 47-year-old expat Gwyn Sundhagul, Chief Marketing Officer and Director at Tesco Lotus, Thailand, to head its value format stores and spearhead its wholesale plans.

RIL's value format stores sell goods such as soaps, biscuits and vegetables and contribute 70 per cent to the total sales of Reliance Retail.

In Reliance Industries' last annual general meeting, Chairman Mukesh Ambani had told shareholders that the company is targetting a Rs 10,000 crore revenue from Reliance Retail by FY'14.

Its current revenue is pegged at Rs 4,000 crore and it expects a 25-30 per cent growth in its top-line. However, the bottomline would be lower, as the generic format stores such as Reliance Fresh and Delight are yet to become EBITDA positive.