IndiaRetailBiz

The US$ 24 billion Aditya Birla group, one of the top business conglomerates in the country, with major interests in metals, textiles, cement, and telecom, announced its roadmap for foraying into the fast growing retail segment on Friday, the 18th May, 2007.

Kumar Mangalam Birla had earlier in November, 2006 had announced his intentions of entering into this sunrise segment and had then went about acquiring Hyderabad-based, supermarket retail chain ‘Trinethra,’ which with about five lakh square feet of space is among the biggest retail chains in South India. ‘Trinethra’ together with its sibling ‘Fabmall’ has over 170 stores already operating in southern India.

“We believe that the Indian consumer is today under-served. Our mission is to change the way people shop. We will give the Indian consumers a fundamentally better shopping experience and intend to be among the leading players in India,” said Kumar Mangalam Birla, Chairman, AV Birla group, while addressing media persons.

As a corporate philosophy, AV Birla Group likes to operate only in those businesses where it either has the number one, or at least the number two, position.

The key take aways from the Aditya Birla Group’s retail plans include:

• The new venture to be known as ‘Aditya Birla Retail (ABR), will operate under the brandname of ‘More.’
• ABR, unlike Bharti, will go all alone without any local or foreign partner in the venture as the group posseses necessary competence in-house.
• The first ‘More’ store will make its debut in Pune this month.
• ABR will set up 1,000 supermarket outlets in the next three years.
• ABR will invest around US $ 2 billion (or, Rs. 9,000 crore), comprising a mix of debt and equity. Unlike telecom venture (IDEA), ABR will noseek any funding from any listed Birla Group company.
• Aditya Birla Retail (ABR) will be an unlisted company with no immediate plans to raise funds from the public.
• ABR will have two retail formats: Neighbourhood Supermarkets (less than 10,000 sq.ft.) that would stock the daily and weekly household shopping needs and Destination Hypermarkets (over 75,000 sq. ft.) that cater to monthly and event-based shopping needs.
• All stores would be company owned stores. No franchisee are partners are envisaged.
• At the operating level, the company will hire thousands of young men and women. In the first year, the company will hire between 5,000 and 10,000 people.
• The venture will build direct linkages to farmers with a view on the one hand to offer higher prices to the farmers and to ensure supply of ‘fresh’ products on the other to the consumers.
• ABR will also build linkages with the vendors at the back-end to eliminate costs at the supply chain level.
• The company has already invested around Rs. 200 crore to create the vendor base.
• Sumant Sinha, erstwhile CFO of the group, will head the new venture as its Chief Executive Officer.
• While, Andrew Denby will be the Head of the Supermarket stores, Russell Berman will be the Head of the Hypermarket stores.
• ABR at the outset will introduce private labels for products under food and grocery categories.
• The private labels will be known as `More for you’ and `More select’.