Triggering speculation of a mega initial public offer in 2008, Mukesh Ambani-led Reliance Industries has intensified restructuring of its retail venture to create up to 30 independent business activities, each targeted to be a profit centre. | |
| Reliance Retail would see nearly 32 verticals (independent business centres) during the first phase of roll-out at an investment of over $6 billion by 2010-11, sources said. |
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| According to sources, the company, which expects to touch a turnover of $25 billion by 2010, plans a public listing sometime next year. |
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| Although the group has spent close to Rs 15,000 crore for acquisition of properties, land and setting up other facilities for the business, sources said Reliance Retail is leasing the same from the group or the other investment companies and actual investment of retail venture is minimal. |
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| Asked if the entire restructuring exercise, which would see professional CEOs head each vertical, was being done for an initial public offer (IPO) during the year 2008, a Reliance Industries spokesperson from Mumbai declined to comment. |
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| Other related queries on the subject also elicited 'no comments' from the group spokesperson. |
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| About 30 verticals have been identified that will operate under separate management teams headed by independent chief executives although they would continue to be under the Reliance Retail board, specially for funding purposes, the sources added. |
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| Currently, the company has about eight verticals, including the hypermart, fresh vegetable and fruits, lifestyle, jewellery and consumer electronics. |
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| It will shortly open its books, dvds/vcds store in the National Capital Region. |
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| The fresh vegetable and fruits vertical has already been hived off under Ranger Farm. The company, however, will continue to own the Reliance Fresh brand. |
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| The restructuring exercise is also understood to have been taken as part of a strategy to insulate the overall retail business from threats and risk that it faced in states such as Uttar Pradesh and others. |
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| The company, which had finalised 1,024 properties for Reliance Fresh, of which 350 stores were proposed to be opened this year, faced opposition in UP, Orissa and Madya Pradesh. |
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| Following closure orders from the UP government, it had threatened to completely wind up operations in the state and started retrenching people who were indirectly employed, while its direct employees were shifted to other states. |
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| Reliance Retail, which has announced an investment of Rs 25,000 crore in its first phase of expansion till 2010 is looking at a revenue of $25 billion when it completes initial roll out, the sources said. |
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