Rel Retail to enter cash-and-carry biz by opening 3 outlets

The company, had, in early 2009, jettisoned its plans to enter into wholesale trading, citing the then prevailing market conditions as its reason for doing so.

Besides, some top officials in the company had also quit then.

"The company is back with a bang. It is soon going to announce its revived cash-and-carry business plans and will open three outlets over the next six to eight months," the source told PTI here without divulging further details.

As per existing plans, Reliance would not enter into any foreign joint venture but go solo in the business, the source said.

The company has already identified locations and work was on for the construction of the outlets with an area spread over 1.5 lakh square feet each. This is, however, a scaling-down of the company's initial plan to open its stores at 15 locations, mostly Tier-II centres such as Jalandhar, Ludhiana, Rajkot and Salem.

Reliance's entry into wholesale assumes significance at this point as the market is abuzz with reports of global retailers such as Wal-Mart, Tesco, Metro and Carrefour expanding their presence in India and with the Government likely to ease FDI norms in both the wholesale and retail formats.

Early this year, Reliance hired 47-year-old expat Gwyn Sundhagul, Chief Marketing Officer and Director at Tesco Lotus, Thailand, to head its value formats and spearhead its wholesale plans.

Value formats sell goods such as soaps, biscuits and vegetables and contribute 70 per cent to the total sales of Reliance Retail.

In Reliance Industries' last annual general meeting, its Chairman, Mukesh Ambani, had told shareholders that the company targets a Rs 10,000 crore revenue from Reliance Retail by FY14.

Its current revenue is pegged at Rs 4,000 crore and it expects a 25-30 per cent growth in its top-line. However, the bottomline would be lower as the generic formats such as Reliance Fresh and Delight have yet to become EBITDA positive.

Reliance Retail currently operates 15 formats such as Reliance Fresh, Reliance TimeOut, Trendz and Digital and Jewels, among others.

Cash-and-carry would be the sixteenth format that would sell goods to those with a sale tax certificate such as modern retailers, fruits and vegetables re-sellers, restaurants and hotels and small mom and pop and kirana stores.