Looking at leasing and outright sale of properties

Purvita Chatterjee

Reliance Industries is expected to open its first store near Hyderabad

Mumbai, Aug. 9

Reliance Industries has started scouting for retail space in Mumbai.

The Mukesh Ambani-led company, which expects to go for a public listing for its retail venture, is looking at leasing and outright purchase of properties in the city.

With intentions of `embarking on creating a retail revolution,' Reliance Industries is seeking space between 3,000 sq ft and 30,000 sq ft either for lease or outright purchase in Mumbai and is advertising for properties through the local media.

Other specifications made by the company state that the property must be located on the ground floor (preferably in one floor plate) and with good frontage and convenient location within the city. The company is inviting applications through its Web site (www.ril.com) .

Sourcing Contracts

Meanwhile, having created various verticals within its retailing business, it is now in the process of signing sourcing contracts with various players in the market.

For instance, for its consumer durables business it has appointed the ex-Electrolux Head, Mr Rajeev Karwal, who is expected to strike several sourcing deals in the consumer durables business.

Explaining the model for the business, a senior official says: "Presently we are simply following the Pantaloon model and are sourcing from every manufacturer for the consumer durable business. But with time we may look at having our private labels in this business."

Big names

In fact, according to industry sources, Reliance has appointed big names from the industry so that they can use their clout and contacts to get the best sourcing deals in its retailing business where getting the right margins will dictate the success of the venture.

"Reliance is a tough customer and they know how to seal deals," says an industry observer.

Reliance Industries is expected to open its first store near Hyderabad (in the cantonment town of Uppal) followed by stores in the city of Ahmedabad before it moves into the big cities. Besides, it has decided to adopt a buyout policy for its smaller formats while it may consider doing the bigger hypermarket formats all by itself. For instance, in Mumbai, it has already made a start by managing the supply chain for Sahakari Bhandar, a co-operative chain with 19 supermarkets in Mumbai.

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(This article was published in the Business Line print edition dated August 10, 2006)
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