Reliance plans to re-enter cash & carry

Posted By: Religare
Subscribe to GoodReturns

Reliance plans to re-enter cash & carry
At the Annual General Meeting, the Reliance chairman said that the company would soon re-launch the cash and carry business. After suffering protests in various parts of the country, the company had stopped that business. It suffered a loss of Rs 350 crore in this fiscal from this type of business.

However, the company is building a strong platform to make a come-back providing competition to giants like Walmart, Metro and Carrefour. The first store is likely to come up in Ahmedabad. The company with the largest market capitalization in India is believed to have deep pockets and could well influence the organized retail segment. Though, the experts believe that only deep pockets would not guarantee success.

Looking at the opportunity, this segment represents about $140 billion of the $350 billion annual retail business in the country. Earning a pie of this huge chuck will be difficult for Reliance as it has already lost its cash and carry team to other competitors.

“It is a volume play. When a cash-and-carry venture buys 5,000 pieces from a manufacturer, 1,000 can go to the Reliance Fresh, which was earlier ordering the same from the same manufacturer at higher costs. Now it can leverage on higher volumes and get better margins," the RIL executive said. He added that “having B2C (business to consumer) and B2B (business to business) makes sense". “The more we expand the more we will gain from cash and carry. We can also develop and sell brands in those stores," he said.

Though, from the above statement the plan to re-enter this segment looks a thoughtful one. Also, talks are doing rounds in the cabinet to allow multi retail chain a 100% FDI investment. If that happens, competing with global giants would not be easy.

Read more about: ril, mukesh ambani, agm
Story first published: Monday, June 6, 2011, 9:30 [IST]
Please Wait while comments are loading...
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'