Reliance Industries looks at retail sector buyouts

Reliance Industries is looking at acquisitions in the retail space, having held preliminary talks with several retail chains with strong regional presence.

Though Reliance executives declined to comment on the issue, sources close to the development said Chairman Mukesh Ambani was expected to make "major announcements" regarding the company's retail operations at its annual general meeting on June 27.

Reliance is looking at some convenience stores in Chandigarh, Delhi and Mumbai. The retail business of a Tamil Nadu-based company is also on its radar.

The sources pointed out that an acquisition at this stage would be a logical step forward for the company as it wanted to reach sizeable scale within its first year of operations.

Reliance will look at acquiring or picking up a substantial stake in some smaller regional players that have a well-established presence in the areas of their operation.

"However, valuation plays a crucial role in these acquisitions. Some of the smaller retailers are looking at strategic partners. The actual acquisition depends on the kind of valuation they are expecting," they said.

Acquiring an existing chain will provide basic infrastructure as well as real estate for Reliance to build its plans upon. It will also mean a ready customer base for the company.

The latest move of the country's largest private company comes within a month of the soft launch of its retail operations through a supply chain arrangement with the Maharashtra government-owned Sahakari Bhandar.

The company is looking at similar management agreements with other co-operatives in Mumbai and Delhi.

One chain that it is likely to tie up with could be the Central Government Employees Consumer Cooperative Society, which operates under the name of Kendriya Bhandar.

It operates a total of 112 stores and 42 fair price shops in cities like Chennai, Kolkata and Bangalore, besides Mumbai and Delhi.

However, nothing has been finalised on this front.

Reliance is likely to launch its own stores in either Gujarat or Hyderabad by October this year.

The company plans to have a presence across different formats in the retailing space, including hypermarkets, supermarkets and convenience and speciality stores. It has been actively hiring people from both within and outside the industry to head its different operations.

In his letter to shareholders, Mukesh Ambani had said: "Reliance is planning a pan-India footprint of multi-format retail outlets to provide the customer with choice in products and services. All the outlets will be connected seamlessly through a state-of-the-art supply chain infrastructure. This initiative has been assiduously planned to connect the Indian farmer and producer with the consumer directly."