Ambani to bring cash and carry to Punjab

Mukesh Ambani-led Reliance Industries is set to enter the Punjab market with its cash and carry or wholesale business, taking on international majors such as Walmart and Metro, it is learnt.

The group's first cash and carry store, Reliance Market, was launched in September 2011 in Ahmedabad, and it has six others across Anand, Bangalore, Chennai, Guntur, Mumbai and Faridabad.

Reliance Retail refused to comment on the specifics of its cash and carry business.

But sources in the sector say that Reliance Market is likely to be set up in at least four locations in Punjab -- Ludhiana, Mohali, Jalandhar and Bathinda -- soon.

Reliance’s Punjab foray is significant because it has traditionally been a stronghold of Bharti-Walmart’s Best Price Modern Wholesale Store which began operations in 2009.

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Experts say that it was Bharti group chairman Sunil Mittal’s familiarity with the state that prompted the JV with Walmart to launch the first Best Price store in Amritsar (Punjab) and then expand aggressively in this region.

Even as Walmart and Bharti cash and carry JV broke up recently, leaving the business 100 per cent to the Bentonville-based chain, the Punjab domination continues.

Best Price operates five stores in Punjab -- Amritsar, Zirakpur, Jalandhar, Ludhiana and Bathinda.

German Metro’s market

Another multinational, Germany’s Metro Cash and Carry, too, has been tapping the lucrative Punjab market. It has four stores in the state -- Ludhiana, Jalandhar, Zirakpur and Amritsar.

French retailer Carrefour, which also operates cash and carry business in India, is yet to enter Punjab.

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While Walmart’s Best Price runs 20 cash and carry stores across India, Metro has 15, Carrefour four and Reliance Market seven.

Growth opportunity in the Punjab market and high purchasing power are among the reasons why the state is attractive to the cash and carry companies, according to Arvind Singhal, founder and chairman, Technopak Advisors.

Another analyst said the cash and carry format was a proven model in Punjab, and, therefore, Reliance may be entering the state as well.

Reliance Market, a division of Reliance Fresh, wants to add at least 20 large-format cash and carry stores by the end of this financial year and another 60 over the next three years.

The store size ranges from 50,000 sq ft to 120,000 sq ft each.

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“Reliance Market is committed to the needs of local traders and small businesses and offer regional, national and international bands to the traders and kirana shop owners,” according to a Reliance Retail spokesperson.

“We continue to increase our presence across all regions which will benefit a large number of kiranas, small shopowners and traders who will gain from the scale, supply chain efficiencies and infrastructure available to Reliance Retail.”

Group chairman Mukesh Ambani has set a revenue target of Rs 40,000 crore (Rs 400 billion) to Rs 50,000 crore (Rs 500 billion) for the retail business in the next three years.

In 2012-13, Reliance’s retail business reported turnover of Rs 10,800 crore (Rs 108 billion) and operational profit of Rs 78 crore (Rs 780 million).

The group’s successful cash and carry business is believed to be one of the reasons for the good numbers.