DSCL asks Rabobank to pen retail plan

The Ajay and Vikram Shriram-controlled DCM Shriram Consolidated (DSCL) is planning to source fresh produce from farmers to supply them the booming retail chains and mandis in the country. For this, the company has appointed Rabobank to prepare a business model.

The new business model would complement DSCL's rural retail venture, Hariyali Kisaan Bazaar.

"We will network with the farmers through our Hariyali outlets. Through contract farming we will place orders for produce and plan to set up distribution centres and storage facilities," said Ajay Shriram, chairman and senior managing director, DCSL.

Shriram did not disclose the investment and its projected size.

From the current 65 Hariyali outlets, DSCL wants to increase the number to 200 by 2008-end. "Through our pan-India presence in rural retail, we will be able to tap a large network of farmers. We will also procure wheat, rice, oilseeds etc," said Rajesh Gupta, business head, Hariyali Kisaan Bazaar.

The corporate house is currently running a pilot project for Pantaloon Retail's Big Bazaar and RPG Retail's Spencer's. Huge investment is needed to set up an extensive network of cold chain, refrigeration, transportation and distribution centres, added Gupta.

About retailers such as Reliance Retail sourcing directly from farmers to reduce operating margins, Gupta said many retailers were not in favour of making a hefty investment to set up a complete supply chain. DSCL is also looking at other avenues such as exports and selling to wholesalers, Gupta added.

The business house also ruled out corporate farming as practiced by Bharti Enterprise through its FieldFresh venture.