Indian Retailer

The transformation of retail in the post-liberalisation decade was dramatic. It not only forever changed our consumption habits and patterns, but also left indelible imprints on the landscape of our cities in the form of monstrous malls and superstores.

THE FIRE’S HERE

Organised retail grew at a blistering pace. In 2000, it was so small that formal estimates of the industry’s size are unavailable. But in 2002, it grew to a $2-billion industry. Today, according to consultant KPMG, the sector has an annual turnover of $37 billion, while the retail industry is at about $350 billion. This year, consultant AT Kearney ranked India as the most attractive emerging retail destination in the world

THE RISE OF ORGANISED RETAIL

In 2000, today’s marquee retail chains were fledgling operations, with one or two stores. Piramal Group’s Crossroads, considered India’s first mall, started operations in 1999. For retail chains such as Pantaloons, Big Bazaar, Shoppers’ Stop, Spencers and FoodWorld, it was a decade of scorching growth

Big profits spawned ambitious expansion plans, many of which ran into roadblocks when real estate prices zoomed ahead of the economy. Retailers started hurting further when consumer confidence levels took a hit following a nasty economic downturn in major Western economies in September 2008. Some retailers, who did not recast plans in time or weren’t nimble enough, went out of business, or are teetering on the verge of insolvency

The decade that created a major new industry is ending with many of the players in the sector in disarray

POLITICS AND FDI

The rise of organised retail and the thorny issue of foreign direct investment made headlines as small ‘kirana’ store owners’ concern that organised retail would put them out of business became a political issue. Violent protests erupted across the country; Uttar Pradesh even banned the operations of Reliance Retail

Global majors such as Wal-Mart and Carrefour, facing slowing growth in home markets, forged partnerships in India, where foreign capital is allowed only in cash and carry stores, or stores catering to other businesses and not the end consumer

ET Comment

FDI in retail a distant dream

Foreign Direct investment in multi brand outlets will continue to be a political hot potato even as domestic retailers shed their animosity towards their foreign counterparts and say they can benefit from the transfer of technology, superior supply chain management and logistics expertise, apart from capital, of foreign retail groups. The next two years will see consolidation in the Indian market. Chains with less than 100 stores will either merge with large players or shut shop. Furthermore, shoppers are unlikely to see the mindless expansion of the past two years.

Indian retailers may be rejoicing at better sales in the October-December festive season, but a full recovery of the retail real estate sector still hinges on availability of spaces at competitive rates and improvement in consumption, global consultant C B Richard Ellis has said.

“The retail sector will take some time to fully recover, depending on the economic growth or improvement in domestic consumption , consumer sentiment and availability of retail space at competitive costs,” CB Richard Ellis (South Asia) chairman and managing director Anshuman Magazine said in a statement here on Wednesday.

Improving consumer sentiment and competitive retail rentals had, however, resulted in the sector “ambling towards better activity levels, especially in Tier I cities” , he added.

The global real estate consultancy firm also expects an oversupply of new office spaces across the country, which will keep rentals flat in 2010 despite positive indicators that demand for commercial real estate was improving.

“On the office market front, demand is expected to improve although the rentals are expected to remain flat in the medium term due to the forecasted large supply of office space,” Magazine said.

The year 2010 may, however, see “some sustainability in the residential market as activity levels have improved,” he said.

Prices for residential, retail and commercial real estate across the country plummeted in 2009 as a global economic meltdown and tight liquidity froze demand.

Residential sales declined significantly and demand for office spaces saw a substantial drop, triggering a decline in rentals and postponement or cancellation of projects , while retail real estate was also significantly impacted.

However, each of these three segments have witnessed an improvement since the previous year as reduction in prices, softening of interest rates and an improvement in the economic sentiments led buyers back to the market, the consultancy firm said.

Kishore Biyani-led Pantaloon Retail India Ltd (PRIL) will hive-off its value segments — Big Bazaar and Food Bazaar — into a separate company called Future Value Retail from January 1.

The BSE-listed company has completed all formalities and gained shareholders approval through a postal ballot to hive-off this segment, the company Managing Director, Mr Kishore Biyani, said on Wednesday.

“The postal ballot and other processes are complete and we are looking at January 1 as the starting date for Future Value Retail,” Mr Biyani told reporters on the sidelines of a conference here.

The value retailing segment of the company consists of supermarket Food Bazaar and hypermarket Big Bazaar, which constitutes up to 55 per cent of PRIL’s total revenues.

“At the company level (PRIL), we are expecting growth to jump by 30-40 per cent,” Mr Biyani said, indicating that the Indian retail industry has finally crawled out of the woods.

The company has plans to open 140 Big Bazaars and Food Bazaars over the next 4-5 years in addition to the 120 stores it already operates across the country.

Mr Biyani said that Pantaloon Retail will spend close to Rs 400 crore in the rest of this fiscal (till June 2010) for expansion. — PTI

Vishal Retail, which is undergoing a Rs 730 crore debt restructuring exercise, is exploring all revenue channels, including renting out shop-in-shop space to regional food and beverages players in its hypermarket stores across the country. The retail chain, while is in no mood for expansion for obvious reasons, will be relocating a few stores in hinterland which failed to deliver according to expectations.

It is looking at Rs 50-100 crore working capital for the next one year, which it hopes to mop up through its corporate debt restructuring (CDR) proposal.

Vishal is also putting on hold all its small-format stores. It has closed all its around 12 Corner Marts set up within HPCL petrol pumps and kept plans for speciality stores in apparel, footwear and electronics on the backburner, according to group president Ambeek Khemka.

"Hypers are our focus area as of now. We are putting all our speciality store formats on hold," Khemka told DNA.

The company had started with a couple of speciality stores including Fashion Marts in Delhi but these have also been closed down, said a company insider.

Out of 204 stores across northern and western India, about two dozen have been closed. Only 171 are in operation, Khemka said.

Vishal started going through a rough patch July-August 2008 onwards when it planned to open 100 additional stores with bank funding.

For this, the company had undertaken merchandise purchase from vendors when the slowdown set in.

"While there was an inventory pile-up in its warehouses because the new stores did not start rolling out, bank funding started drying up. They also wanted to recall their funds.

The markets looked gloomy and Vishal had to drop plans for a follow-on issue," said a source.

Khemka said that losses in the last two quarters amount to Rs 150 crore.

Other plans in the pipeline are stake sale to a strategic investor and, if a good deal comes then the promoter, R C Agarwal, is open to selling out his 64% stake, Khemka hinted.

"All options will be studied and the best one will be opted for," he said. But, under the corporate debt restructuring exercise, the company has time till mid-February to finalise its proposals. Khemka said that the company wants the average interest rates reduced to around 7% from the current 12%, the tenure of repayment at 9-10 years and a moratorium period of up to four years. The repayment was supposed to have happened this year. Lenders to Vishal include the State Bank of India, HDFC, ING Vysya, Bank of India and Uco Bank.

The Aditya Birla Group has forged an alliance with SBI Cards to rollout co-branded cards. The group plans to launch these cards in the next four to six weeks.

This tie-up would cover group companies and look at strengthening its financial services play through this partnership, said Ajay Srinivasan, Chief Executive, Financial Services, Aditya Birla Group. Co-branded cards are credit cards, which are associated with a particular firm such as an airlines or retail outlet. They offer benefits like frequent travel points and special discounts.

Srinivasan said the aim is to reach 60 million retail customers being served by group companies like idea cellular and other retail businesses. The $29-billion group has substantial retail customers in financial services – insurance and asset management, telecom.

SBI Cards official said its outstanding card base is 3 million. It would like to cover one million Birla group customers in the medium term, he added. Co-branded card constitute 20-30 per cent of its card business.

SBI Cards is a 60:40 joint venture between State Bank of India and GE Capital has a market share of over 12 per cent. It has similar partnership with organisations like Indian Railways and Spice Jet.

Retail chain Shopper's Stop plans to invest Rs 350 crore to set up 32 stores and augment its pan-India network, taking the total to 60 over the next five years, a top company official said.

"We have drawn up investment plans of Rs 200 crore for adding 18 new stores with about three million square feet in the next three-years period," President & CEO of Shopper's Stop Govind Shrikhande told PTI here.

The stores will be opened at Ahmedabad, Amritsar, Mysore, Mangalore, Aurangabad, Chandigarh and other Tier II cities, Shrikhande said.

A further Rs 150 crore has been earmarked to add 14 more stores but plans for this are still in the preliminary stage, he said.

At present, the retail chain has a network of 28 stores in 12 cities all across the country over an area of 1.88 million sq feet.

The Gitanjali Group is stepping up its focus in the organised retail segment. The company has acquired a 76 per cent stake in Salasar Retail, a chain of mid-size departmental stores across India and will soon re-brand the Salasar stores as Maya.

These outlets will offer jewellery and different lifestyle products including apparel. Gitanjali is expecting to clock a turnover of about Rs 1,000 crore from Maya stores over the next three years, with nearly 70 per cent coming from jewellery sales.

Mehul Choksi, CMD of Gitanjali Group, says that the acquisition would help Gitanjali to expand its retail footprint and grow its jewellery business.

Gitanjali, which owns jewellery brands like D'Damas, Asmi, Sangini, Nakshatra and Gili, has nearly 1,250 outlets. It also has more than 500,000 sq ft of retail space and is planning to increase it up to 1.5 million sq ft within the next three years. Gitanjali also operates 143 retail jewellery stores in the US through the acquisitions of Samuels Jewelers and Roger Jewelers.

With Salasar’s 10 stores, the groups adds about an estimated 200,000 sq ft operational area, in cities like Delhi, Cuttack, Kanpur, Gwalior, Guwahati and Indore. Devasish Dutta, CEO, Gitanjali Lifestyle, says “There will be a revenue sharing model for national and international brands that will be retailed through Maya stores.” Gitanjali has roped in various leading mall developers under the revenue sharing model.

The average ticket size in Maya stores in the tier 2 and 3 cities should be about Rs 25,000 per customer for diamond jewellery. The company expects jewellery to remain the major selling item in Maya stores.

Landmark Group's Lifestyle International has announced the appointment of Kabir Lumba as the Managing Director effective from December 2009.

As MD, Lifestyle International (P) Ltd, Lumba would be heading Indian businesses of Lifestyle, Home Centre, Bossini and Splash brands.

He has been associated with the group for over 5 years and was appointed as executive director - Lifestyle in April 2006. He joined the group as president - Buying and Merchandising in May 2004. Prior to that, he was working as chief operating officer with Proline India Limited and Pantaloon Fashions (India) Private Limited.

He started his career in retail industry with Little Woods International Private Limited in 1993.

While retailers are still working with the option of cutting costs and negotiating rentals to gear up for expansion, mall owners, who are vital for the organised retail sector, are experimenting with a new method - rent on a daily basis.

Atul Ruia-owned Phoenix Mills Market City mall has already implemented the system at a few of its locations, while others such as Inorbit and Nirmal Lifestyle, are actively considering it as an innovative option for their forthcoming malls.

Currently, the fixed rental or revenue share scheme is widely practiced with minimum gurantee money, depending on the brand, product and location of the space. Fixed rental was much preferred till the liquidity crisis spread and the global demand slump hit both retailers and mall owners.

“We are receiving quite positive response and have planned to implement it (the daily rental model) across the country,” says Phoenix Market City managing director Atul Ruia. “It is a viable option in an industry that is just recovering from a period of uncertainity.” India’s organised retail market, roughly estimated at Rs 20,000 crore, and which is closely connected with malls, was among the first sectors in India to be affected by the crisis as consumers postponed purchases. As a result, many retailers and mall owners started looking at various options including revenue sharing and a minimum guarantee amount.

Under the new process, the retailer will have a joint account with the mall owner and at the end of each day, the share of mall owner is debited to his account.

In the previous method - the revenue sharing model - percentage rents were payable annually, quarterly, monthly, or upon achieving breakpoint sales.

“We believe any innovative method that could streamline the system and synergy between the owner and the retailer is welcome,” says Inorbit CEO Kishore Bhatija. “We are looking at implementing first at our Hyderabad mall.”

Like Phoenix, Inorbit too has been in favour of the new model for its malls at Hyderabad, Pune and Bangalore. Inorbit’s mall at Hyderabad, which opened in October this year, has seen 66% occupancy on the revenue sharing model, while the remaining would be on daily basis, Mr Bhatija added.

Phoenix was first off the blocks, implementing it at its new malls in cities such as Mumbai, Pune, Bangalore and Chennai. Phoenix has three malls operational and plans to open seven in next three years, where this method will be applicable. It is now implementing in Tier-I cities and latter will be in other cities too. Phoenix also plans to open malls in smaller cities like Lucknow, Agra and Indore.

Nirmal Lifestyle, which is all set to launch its second phase of expansion next year, has planned for 30% remaining space at its new mall at Mulund, a Mumbai suburb. Chairman Dharmesh Jain says this model will evolve as a realistic method of revenue collection. “It would be beneficial with much transparent transaction between the two,” Mr Jain added.

However, the industry sees this practice at a very nascent stage. Jones Lang Lasalle Meghraj managing director (retail) Shubhranshu Pani says, “Though this method would derisk the retailer from the pain of high rentals, it will take another two three years to be widely used. “Retailers are pressing for better options before signing revenue sharing agreements rather than going for pure rental arrangements with mall owners,” Mr Pani added.

British retail major Marks & Spencer is looking at scaling up its India operations and plans to open at least 50 more outlets in the country over the next few years.

The company, which is present in India through a joint venture (JV) with Reliance Retail, is also looking at increasing its product range in the country.

"We currently have 14 stores across seven cities in India and further plans to open at least 50 new stores in India over the next few years," Marks & Spencer Reliance India Pvt Ltd Head of Marketing Nandini Sethuraman said in an e-mailed response to PTI.

"Marks & Spencer believes India offers significant expansion opportunities and the potential is huge with a wider range of products, bigger M&S stores and a better brand experience overall," she added.

Sethuraman said the initial investment in the JV was of 29 million pound (around Rs 220 crore) and both the partners may put in more money in future.

"The total value of the initial investment into the JV will be up to 29 million pound sterling, wherein M&S invested up to 14.79 pound sterling and Reliance Retail invested up to 14.21 pound sterling. Both parties will provide further funding in the near future," she said, without giving more details.

Famed British toy retailer Hamleys will make its India debut with a 22,000-square-feet store at the popular Phoenix Mills in Mumbai, by February next year.

Reliance Retail, which has a 20-year-franchise agreement with the retailer, will set up 20 stores in the first seven years of the agreement.

Besides Mumbai, other cities on the retailer's list include Delhi, Bangalore and Chennai in the first phase of the launch. The second store, says Bijou Kurien, president & chief executive, lifestyle division, Reliance Retail, will be launched in Chennai by June next year. This will be a smaller store, roughly 12,000-square-feet in size. “Stores in Delhi and Bangalore will come up next, but we will first monitor the performance of the first two stores,” says Kurien.

Hamleys’ flagship store in Regent Street, London, is a five-storey-structure, over 54,000-square-feet in size. Other Hamleys stores in the UK and rest of the world are slightly smaller. The franchise agreement with the 248-year-old retailer will allow Reliance Retail to use the latter's branding, store design and best practices when setting up outlets in the country. “They will also provide training to staff in soft skills etc,” says Kurien.

Hamleys was acquired by Baugur, the Icelandic investor that also owns Oasis and House of Fraser, for £47 million in 2003 and has since set its sights on international expansion. However, so far, the group only has a small presence in Denmark but has opened a few stores in West Asia.

Brand experts said as a British institution that may possibly be as well known overseas as at home, Hamleys is likely to enjoy a head-start in many of its planned new markets. The Regent Street shop is in fact one of London's 10 most popular tourist destinations and is visited by four million people a year. Moreover, Hamleys prides itself on a history of breaking down cultural barriers. In 1909, for instance, it became the first store in Britain to sell a novelty from China called ping pong.

Reliance Retail will not only stock Hamleys merchandise, but also products that are exclusively available to the UK retailer.

Besides, allied national brands from manufacturers such as Mattel, Funschool etc will also be available at the outlets. “The overarching branding will be Hamleys. But there will be space available in the store for allied brands,” says Kurien.

Some of the 20 stores will be located in tier-two cities as well.

The toy retail market in India is roughly Rs 2,500-3,000-crore in size. Of this, about 25 per cent comprises the branded market. The balance 75 per cent is made up of imported toys and products manufactured locally. The total toy retail market, say experts, is growing at 10-12 per cent per annum in the country. But the branded portion has the potential to grow even faster at 25 per cent, they add.

According to a top official of Bharti Retail, post completion of its rollout in northern zone, Bharti Retail will look at expanding in the western and southern zones.

"From January 2011, we will expand in different regions and are considering options now," Bharti Enterprises vice-chairman and managing director Rajan Bharti Mittal said.

Although we have not finalized the regions yet, but it is a toss between south and west, he told reporters on the sidelines of a Federation of Indian Chambers of Commerce and Industry (FICCI) meeting here.

Bharti Retail currently operates 27 Easy Day stores and 2 Easy day mini hyper markets in Punjab and Haryana.

"We are targeting 200 stores, mostly Easy day by 2011 in the northern region with a 1000cr revenue target. By December the total store count is expected to be 70," Mr Mittal said.

Snacking comes naturally to Indian consumers. With the mind boggling variety in mid-meal snacks, the pakoras, batata wadas or chaats have always lived happily besides the chivdas, the potato wafers and the kachoris.

In recent times, the happy co-existence has come under threat. India has already managed the dubious reputation of becoming the diabetes capital of the world.

The threat of heart diseases is also alarmingly high. These numbers are ringing alarm bells, among a section of educated urban elite, and of course, brand marketers. For this set, a well-rounded belly that was once 'a sign of prosperity', is now a call-for-action. Not that everyone jumps on to the treadmill overnight, but there's a huge intent among consumers to be on the right side of the weighing scale.

"The desire and obsession to stay fit and increase in awareness levels of health concerns have helped grow the category," agrees Anuradha Narasimhan, category director, health & wellness, Britannia. But as Deepika Warrier, executive director, marketing, Frito Lays warns, consumers need the best of both worlds. "Indian consumers are clearly looking for choices that enable them to snack smart with absolutely no compromise on great taste," she says. It's this sentiment that marketers are playing on as conscious consumers are attracted like magnets to the calorie contents on branded snack packs.

For the organised Rs 3,000 crore branded snacking segment, that's both a threat as well as an opportunity. Because, as consumers are trying to stop unhealthy eating habits, there's an overpowering urge to stray in between meals. It's that temptation that the health snacks segment that caters to your cravings for a quick snack is hoping to conquer.

According to industry estimates, the segment is currently Rs 450 crore (15% of the entire snacking category) and is among the fastest growing category segments.

Prashant Pandey, GM, marketing, Horlicks that extended the milk beverage brand into cereal bars says, "Packaged healthy snacking is a fairly new segment, still at a nascent stage." But his company has ambitious targets and expects cereal bars to be worth Rs 100 crore in three years.

That assumption is being made on the fact that with rising incomes, fast paced lifestyles and irregular food habits, the need for health snacks is getting stronger. Pandey adds that growth of modern retail formats will be another factor in growing this business.

Naturally, the latent potential is drawing the attention of the biggest names in the business and also newer players. Among those attracted to this space include Britannia, PepsiCo foods, Parle Products, Kellogg's and even beverages players like Parle Agro, GSK Consumer and consumer goods companies like Marico.

Even other established names like Nestle Maggi are offering healthier options like wheat and rice based noodles targeted sharply at the health conscious.

What's helping these entrants is the changing and erratic, eating patterns particularly of working and college going urban consumers. Marketers agree that in urban India the time devoted to a full meal is increasingly under pressure.

But if consumers are spending less time on each meal, they are eating less but more frequently. Narasimhan says, "There's an increase in the number of eating occasions for consumers from 3 main meals to 6 snacking occasions." Increasing the share on multiple occasions is what prompted players like Britannia to extend its NutriChoice range to variants like 5Grain, Arrowroot and Digestive biscuits and so on.

It's for a similar reason that Kellogg's, known otherwise as the "breakfast" cereal major decided to seek an opportunity as the afternoon snack — a space where Maggi was entrenched among school going kids. The company retails Kellogg's K-Pak, a low fat cereal at attractive price points. Anupam Dutta, MD, Kellogg India says, "K-Pak was launched to address the problem of affordable nutrition in India. The brand has grown well due to accessible pricing and widespread distribution."

While Britannia's success in digestive biscuits led to the launch of Parle Digestive biscuits about a year back, this year a clutch of companies came with interesting offerings to indulge and tempt the senses of healthy eaters.

While GSK entered the arena with Horlicks Nutri Bar, Parle Agro launched Hippo, PepsiCo with Aliva; Parle Products introduced Monaco Smart Chips and Marico extended Saffola into Zest baked snacks.

Horlicks Nutri Bar is targeting the young working adult segment for the cereal bar. Pandey claims that the early indications from the market are quite encouraging. For global foods and beverages major, Pepsico that started transforming its entire portfolio a couple of years back, the launch of Aliva in India is part of that transformation process.

Deepika Warrier, executive director, marketing, Frito-Lay says, "Aliva is the result of over 3 years of extensive consumer insight work & local product development in close sync with Frito-Lay's global product development expertise." Aliva joins Cheetos Whoosh — a wholegrain range and the 'snack-smart' Frito-Lay's range.

Parle Agro with Hippo and Parle Products with Monaco Smart Chips are the newest entrants in the health snack market. While Hippo was launched in June this year, Monaco Smart Chips came in this November.

Monaco Smart Chips is looking at expanding the consumption base of the mother brand Monaco, which "is a salted biscuit and snacks in India are predominantly salted," explains Shalin Desai, senior brand manager, Parle Products.

Parle has signed on Aamir Khan to endorse Smart Chips, as his health-conscious image lends well to the brand. Like Aliva, Smart Chips is also a cracker, baked and available in four flavours. Meanwhile, Hippo that marks Parle Agro's entry into the snack food category is shy of calling itself a health snack, to counter the danger of alienating a certain set of notso-conscious consumers. Nadia Chauhan, CMO, Parlo Agro says, "Health has different effects on different people's mind.

Many are scared by the preposition and most think it is expensive." She adds that Hippo's made a conscious attempt to steer away from health talk in its communication. "If someone finds out that it is healthy, they will be happy to know that they are eating healthy," she says. Apart from not harping on the health plank, Hippo is also looking at enhancing its distribution in hotels and to be stocked in mini-bars, so that it reaches the right audience.

Of course, many are picking up lessons and making changes. Saffola which had entered the health snack category with Zest early this year has taken the product back to the drawing board to make changes based on customer feedback. "To attract large segments of consumers to this market, the right range of product offerings at the right price will have to expand as well," explains Pandey.

That pricing is key, is a fact that everyone agrees. Most brands are in the price band of Rs 5 to 10, with Aliva being the exception at Rs 12. Right price, perfect taste and healthy too — for consumers, this is clearly a case of having one's snack and eating it too.

At a time most businessmen across industries were groping in the dark for ideas to survive the global meltdown, the face of 34-year-old Kaustuv Ray stayed all lit up, as if he was blissfully unaware of the turmoil. Hooked on to his laptop, the Kolkata-based businessman was watching his ‘Chirag’ shine bright and emerge India’s third largest domestic PC brand after HCL and Zenith.

“The recession came as a big blessing as it was during this time that we started bagging large-ticket PC contracts from government, corporates and the education sector. As most of the PC spenders were looking for cheaper options, it helped us to come up with extremely competitive pricing vis-à-vis the MNC brands,” says Ray, lead promoter and chairman of the Rs 520-crore Kolkata-based RP Group.

During the last nine months, Ray doubled the national market share for his Chirag brand to five per cent. Chirag computers are sold through 92 exclusive brand stores and more than 1,000 retail points across the nation. Today, Ray’s order book is full till February 2010. So much so, he is now running three shifts in his two factories at Howrah (near Kolkata) and Himachal Pradesh. He is not only setting up a second plant in Himachal, but also eyeing a turnover of Rs 880 crore by March 2010.

2009 has truly been a worthwhile year for the company. RP Group bagged large clients for the first time such as Reserve Bank of India, State Bank of India, Bank of Baroda, Central Bank of India, BSNL, Indian Railways, Coal India, Information and Broadcasting Ministry and Ministry of Defence.

There’s more. The group recently inked a deal with India’s largest retail chain, Future Group, to sell Chirag nettops at Big Bazaar and other group formats.

“This is an exclusive deal whereby Future Group outlets will only sell nettops priced at Rs 11,990. We are also in talks with others like Metro Cash & Carry and Croma,” says Ray.

A couple of months ago, RP Group also entered into an OEM deal with chip giant Intel. As a result, the company will now be privy to Intel’s upcoming products, technology roadmap, special price consideration, joint brand building and sales pitch for big deals. “With this, we are now in the same league with the MNCs like Hewlett-Packard, Dell, Acer and Lenovo,” says Ray.

No wonder, Chirag’s rise has caught the attention of industry watchers. As frontline IT research firm IDC India senior manager (computing products research) Sumanta Mukherjee says: “No doubt, Chirag lately has been quite visible in government deals, the nettop space and some billboards as well. It is a welcome move to see such regional PC brands gaining national ambitions.”

However, analysts warn the challenges for regional brands like Chirag may be quite a few. “While MNC brands always enjoy huge benefits of scale with multi-country manufacturing, it could be quite a task for a regional brand to match up to such scale in the marketplace. Plus, brands like Chirag would also need deep pocket as they have to build service infrastructure at par with MNCs. This could be a big challenge since margins in hardware are not just thin but eroding every year,” says Mukherjee.

Ray, however, is determined to make it big. “Today, whatever Chirag has achieved is due to long hours of work since 1999. Challenges has been all throughout, but proper strategising always pays,” he says.

With the likes of former ONGC chairman Subir Raha in the company’s board and providing strategic input, Ray’s confidence is today sky-high.

It all started when Ray, hailing from a Bengali middle-class family, dared to leave his secured job at Kolkata Port Trust, joined hands with an old friend, Shivaji Panja, and try the path of entreprenuership with a meagre capital of Rs 25,000. His business then was to supply paper rolls for telephone meters installed in STD booths. In fact, it was in one of such booth where Ray chanced to meet someone who wanted to buy a PC.

“I gave a lower quotation and bagged the deal. Still, I made a profit of Rs 13000,” gleams Ray. It was then the assembled PC market was at its peak. It took seconds for Ray to realise his gold pot. His strategy was simple: bulk purchase of computer components and sell the finished product at the lowest cost. However, there was a burning desire in Ray to develop his own brand.

“But I soon realised expenses involved in brand building were huge,” says Ray. It was then Ray thought of erecting billboards across Kolkata and also floated a TV production house.

“It helped me to reduce my costs of branding for Chirag. In fact, I still run the advertising and TV production business which too have emerged as additional revenue stream,” says Ray.

The group also floated its own soccer club, Chirag United Sports Club, in 2006 as a way to build the Chirag brand. Today, the club is in the third position of national football league, playing across India, and has become a good vehicle for brand building.

“Today, I own a cross-media platform for building the Chirag brand most cost-effectively. The return on investment through this approach has been much higher and has helped me reach to aam aadmi who constitutes my prime consumer segment,” says Ray.

RP Group also had roped in Sourav Ganguly as Chirag’s brand ambassador from 2006. However, the contract got over this September.

Ray has now drawn his future business plan. He plans to cross the Rs 1,000 crore revenue mark for the PC business by 2010-11; launch a laptop at Rs 12,990; acquire a software company to emerge as a complete system integrator and bag bigger commercial deals; and enter the big business of servers next year.

“My next big dream is to make Chirag an Indian MNC PC brand. And I have started working on it,” Ray signs off.

The Indian retail sector is expected to grow at a rate of 5.5 per cent to $410 billion (around Rs 19,03,844 crore) by 2010 from the present about $300 billion, Assocham said today.

The chamber said that organized retail, which at present accounts for nearly 5 per cent of the overall retail market, is likely to touch $13 billion (around Rs 60,375 crore) by 2010 from $9.23 billion (around Rs 42,000 crore) currently.

"The size of Indian retail sector is estimated to grow by a compound annual growth rate of 5.5 per cent, to become $410 billion market by 2010," it said.

India has one of the largest number of retail outlets in the world. The sector is witnessing exponential growth with retail developments taking place not only in major cities but even in tier-II and III cities, Assocham President Swati Piramal said.

Over 100 malls of over 30 million square feet are projected to open in India by 2010 end, it added.

DLF has cleared its intentions to come up in retail segment with 500 luxury lifestyle stores across India within five years, while Tata Sons are expanding their business activities with 100 new Croma stores under their retail head Infiniti retail within three years, it said.

It also said that the retail sector income may grow by 22.7 per cent and 30.25 per cent in the third and fourth quarter of 2009-10 respectively.

Indian fast moving consumer goods (FMCG) players are once again on the prowl to acquire companies, as the economy picks up.

Deal activity in the recession-proof FMCG sector was a bit subdued this calendar year, as well as last year. The number of reported transactions, according to research company Grant Thornton which tracks mergers and acquisitions, were 10 last year and nine this year, till November. In 2007, however, it was as high as 32.

Unlike their counterparts in the international arena who have gone for multi-billion dollar deals (for instance, Kraft’s and Nestle’s reported bid for Cadbury is over $16 billion), Indian FMCG companies appear to be targeting smaller transactions to fill gaps in their product portfolios or get a needed foothold in a new segment or a new market.

Consider Emami, reportedly in talks with Godrej Hershey’s for the latter’s beverage brands, Jumpin and XS. If it fructifies, the deal will give the Rs 755-crore skincare and healthcare major an entry into the beverage market, a new segment. Emami, among players such as Marico, Godrej Consumer Products Ltd (GCPL) and Wipro Consumer Care and Lighting, is also eyeing the Simple skincare brand in the UK. If that works out, it will give the company the much-needed foothold it is seeking in the UK market.

Other players, too, are seeking growth outside their traditional markets. So, most of them are keenly looking for brands on the block. “Typically, these brands may not be doing too well, or the promoter may be wanting to exit the business altogether,” explains Srividya C G, partner, specialist advisory services, at Grant Thornton.

In Simple’s case, the latter appears to be true, with its promoter, private equity player Duke Street Capital, wanting to offload the brand, valued at over Rs 1,900 crore, from its product portfolio. Simple is one of the largest skincare brands in the UK.

A meaningful presence overseas is something most FMCG players, especially the homegrown companies, have been eyeing keenly. Which is why offshore M&A is a more active area than onshore M&A, say analysts. “There is a fair bit of seriousness in that space,” says Jaibir Singh Sethi, analyst, consumer & retail, Noble Group.

Most homegrown FMCG companies have done some key acquisitions abroad in recent years. GCPL, for instance, wrapped up the acquisition of Keyline Brands in the UK a few years before for Rs 130 crore. Then, it went on to acquire Rapidol and Kinky in South Africa for Rs 50 crore and Rs 152 crore, respectively.

Marico, another aggressive acquirer, did a few buyouts in Egypt and Bangladesh. This included HairCode and Fiancee in Egypt, which together cost the company over Rs 100 crore to acquire. The Bangladesh acquisitions included two soap brands, Aromatic and Camellia, which together cost the company approximately Rs 50 crore.

“The company,” says Saugata Ghosh, chief executive officer, Marico, “has the Middle East, Africa and South Asian markets on its radar.”

The diamond industry has been hammered by the recession, with prices down by as much a third over the past year. No company has felt the pain more deeply than South Africa-based De Beers. Analysts estimate that its production will fall by around 50% after a collapse in sales in 2009, amid a slump more severe than most people can remember.

At the height of the slowdown earlier this year, De Beers closed all four of its mines in Botswana because the "sightholders" – independent diamond-factory businesses that buy rough diamonds and cut, polish and sell them on to the retail trade – that it dealt with were being starved of credit by the banks. Its workforce has been reduced by 23%, with payroll numbers down from about 20,500 to just under 16,000 in 12 months, with thousands of miners made redundant.

Profits fell 99% to $3m (£1.8m) in the first half, while borrowings stand at $3.5bn. De Beers needs to refinance $1.5bn of debt by 10 March 2010, but lenders are understood to be demanding punishing interest rates as the price of a restructuring deal.

But an agreement with its three main shareholders should give the company increased bargaining power with the banks. Its biggest investors – mining group Anglo American, the diamond-entrepeneur Oppenheimer family and the government of Botswana, have agreed in principle to subscribe to a $1bn rights issue, raising much-needed cash to cut the group's indebtedness.

For years, De Beers was the diamond industry, speaking for 90% of world production. But new players from Russia, Canada and Australia have entered the market, reducing its dominance. Competition authorities in the EU and the US have also clamped down on the company's ability to control prices and supply by restricting its rights to sell on behalf of other diamond producers.

In South Africa itself, the company has cut investment, while diversifying abroad to hedge against the political uncertainties unleashed by the ending of apartheid 15 years ago. Nicky Oppenheimer, the Harrow-educated chairman of De Beers, was obliged to sell 26% of the company to a black empowerment group under legislation passed by the African National Congress.

Like others, De Beers has taken account of the changing reality by ring-fencing its South African operations inside a company called De Beers Consolidated Mines and moving its capital abroad.

But it is still the world's single biggest diamond producer, at 40%, and remains a force to be reckoned with. It owns shops in world capitals such as London and New York and is behind a huge worldwide marketing operation designed to prop up demand for diamonds. The language on its website is both compelling and gushing. "For thousands of years diamonds have been valued for their beauty and rarity, entrancing us with their fire and brilliance. Symbols of power and inspiration, diamonds are also a token of love and personal expression of our hopes for the future."

But consumers have lost their appetite for the gems, which has serious implications. About 90% of rough diamonds end up being bought by ordinary punters in their polished form; industrial consumption of diamonds is relatively small.

De Beers drastically cut production to support a price recovery, with output of 1.1m carats in the first quarter down 91% year-on-year. Many mines have now reopened as the worst of the slump appears to be over, but De Beers cannot escape the chill winds of recession. In the US, which accounts for about half of world consumption, retailers are taking a big hit. Tiffany has seen profits drop by 75%, while 1,000 jewellers across America have gone out of business. Neither are the macroeconomic signs encouraging: US unemployment may not peak until 2011 and home foreclosures are not expected to peak until late 2010.

The slump in US demand reverberates to places such as India, where thousands of workers in diamond polishing factories have been laid off. About 60% of diamonds cut and polished in the Indian state of Gujarat are sold to the US, with the region accounting for more than two-thirds of the international processed-diamond industry.

De Beers has been forced to seek fresh streams of revenue. Recently, it launched a global campaign to convince investors that diamonds are an alternative to gold as a safe investment. But analysts and investors say that the closed nature of the diamond market made them a much less attractive option than gold.

Brock Salier, mining analyst at Ambrian, a London-based resources investment bank, admits the uncertainty that has gripped equity and currency markets had sparked demand for "hundreds of millions of dollars of something they can stick in a vault" – such as diamonds. But he warns they represent a much riskier investment than bullion. Traded through auctions and private tenders, the stones have no public market price and there is no instrument investors can use to hedge against fluctuations.

Despite a rebound in rough diamond prices in the past two months, Des Kilalea, a diamond analyst at RBC Capital Markets, reckons that 2010 "will be challenging, although, like most things, the industry's fortunes turn largely on what happens to the global economy".

But the green shoots of recovery are coming through: Rio Tinto is saying it will shortly restart expansion work at its Argyle diamond mine in Western Australia. De Beers reported recently that rough diamond prices were heading up, but were still well down on the highs of 2008, while sale trends at its marketing arm were improving. A spokesman said: "We've seen strong demand for rough diamonds since the half year which has meant we've cancelled planned Christmas shutdowns at our operations in Canada and reopened one of the mines in Botswana earlier than planned."

Now that prices are picking up again, there are hopes that Christmas, the most important time of the year for jewellery retailers, won't be as bad as last year.

A spokesman for the Antwerp World Diamond Centre says: "A diamond is a luxury product, and that's what people tend to skip from their list. With the recession easing, we're hopeful the festive season could prove a turning point."

But in hard times, no one is displaying unbridled optimism.

Top N Town, is not growing in size, but also in its reputation & recognition. Such success and scorching growth cannot go unnoticed for long! And true to the Indian spirit of Ice Cream Industry, Arun Ramani of Top N Town (Ramani Group) scooped two gold awards and special award of Best of its kind "for its Product Innovation" and "Premium Ice Cream" at Great Indian Ice Cream contest held at Delhi under the aegis of Indian Dairy association (IDA), the apex body of the dairy industry in India.

The leading Ice Cream brand of India got exalted response when it fetched one more award under the title of "Best in Category" for Moments, the Ice Cream cake product category.

Delighted and proud Arun Ramani, Managing Director, Top N Town (Ramani Group) says Great Indian Ice Cream Contest is one of the most important events as it recognizes the achievement of the Ice cream industry in every sphere.

"This award is really special, for it comes from the industry and our customers" he added.

Around 48 Industries from all over India took part in this grand event.

Top ’N Town has strong presence in seven States, Chhattisgarh Maharashtra, Rajasthan Punjab, Orissa, Uttar Pradesh and Madhya Pradesh. Top N town ice cream is available in many delightful flavours through its retail chain of more than 7500 outlets and 100 plus parlours.

Last but not the least Top ’N Town has determined to become a brand that becomes synonym for Happiness & Sweetness.

Ratan Tata’s recent revelation that his successor could be a foreigner may have been too much for other Indian businessmen to swallow. Few, after all, are ready to turn their business over to a professional to run, let apart a foreigner. Yet, many of them have begun to appoint foreigners in key leadership positions.

Religare Enterprises, the financial services venture of ex-Ranbaxy promoters Malvinder and Shivinder Singh, has hired old Dresdner, Deutsche Bank and CSFB hand Martin Newson as the head of investment banking. He is based in London and apparently draws a salary higher than CEO & Managing Director Sunil Godhwani. Even the general legal counsel selected by the company is an American gent. The company has global ambitions and therefore wants on board people who have the relevant exposure and domain knowledge. “My job is to get the best person for each job,” said Godhwani.

Domain expertise seems to have played a role in Mukesh Ambani hiring Gwyn Sundhagul from Tesco Thailand to run Reliance Retail . Sundhagul will come with four more expats in key positions. Organised retail is still new in India and sufficient expertise is not available locally in key areas like supply chain management, display etc.

Max Bupa, the health insurance venture of Analjit Singh, has Damien Marmion in the corner office. This, mind you, is not the first time that Singh has hired a foreigner to run his company. In the past, Gary Bennett has led his life insurance venture, Max New York Life. The Aditya Birla Group has hired Italian Lucas Fontana to head the Aditya Birla Science & Technology Corporation. Nikos Kardassis is at the helm of affairs at Jet Airways, having after Wolfgang Prock-Schauer, another expat, left the Naresh Goyal-owned airline.

Headhunters said the demand for foreigner CEOs is coming from companies that have developed a global footprint and sectors which do not have enough talent in the country — hospitality, insurance, retail and power, for instance. They are meant to fill a need gap and are not just trophies on display.

For example, Raymond Bickson has run the Tata-owned Indian Hotels Company for a while. Ranbaxy, when it was Indian-owned, had hired Brian Tempest of England as the CEO because he brought with him several years of global experience. He, of course, had to soon make way for Malvinder Singh.

At least one company has hired a foreigner for his expertise in India! Videocon brought ex-LG India boss Kwang Ro Kim to run its consumer electronics business.

Kim had built LG in India from scratch. When it started in the late-1990s, LG’s brand recall in the country was zilch and Korean products were considered poor cousins of Japanese brands like Sony, Hitachi and Sanyo. In a few short years, Kim had made LG the largest consumer electronics company in India.

Expats can be hired at reasonable prices. Human resource experts said that a foreigner CEO may cost only slightly more than an Indian with similar credentials. Most Indian businessmen want expat Indians first, said K Sudarshan of EMA Partners, a headhunting company. Knowledge of global markets then comes with cultural affinity. “But it is more difficult to convince Indians to come back, unless there is a compelling reason like to stay with old parents,” he said.

Also in demand are expats who have spent time in emerging markets like China and East Europe and not just in the US or England.

But it is still early days. Most Indian-owned companies are still run by Indians, though they might have sizeable business abroad. This, experts said, is partly because of better availability of managerial talent in the country than other countries. Dubai, for instance, has become a total expat market for CEOs. Even Indonesia and Malaysia have more expats at leadership positions than India. Ratan Tata could perhaps blaze a new trail.

Italian designer goods maker Gucci can now go ahead with its plans to enter the Indian retail market through single brand stores with the government allowing it to pick up a majority stake in its Indian franchisee Luxury Goods Retail.

The government has cleared a proposal by Luxury Goods Retail for foreign equity participation of 51% by Gucci Group NV, Netherlands with an investment of Rs 1.04 crore for retailing Gucci brands in the country.

Luxury Goods Retail currently sells products under the Gucci brand in India under a franchise agreement. Gucci India had in 2006 entered into a franchise agreement with Murjani Retail for selling its products in the country. The pact was terminated in July 2009 and replaced with a new franchise.

In India, the company has two stores located in Delhi and Mumbai. It had last year announced plans to expand to other metros, including Bangalore, and expand its product range in the country to house its men's and women's collections of ready-to-wear, handbags, shoes, watches and other accessories. Gucci product are sold in over 50 countries through stores owned by Gucci Group and also through franchisee agreements.

Walmart has selected three IT vendors in India — Infosys Technologies, Cognizant Technology Solutions and UST Global — for multi-year contracts worth over $600 million (around Rs 2,750 crore).

The amount is roughly equivalent to the value of goods — textiles, handicrafts and other products — that the world's largest retailer sources from India every year.

This development is expected to boost the IT outsourcing landscape in India, given that Walmart typically prefers to develop its retail applications in-house. Walmart gradually started buying packaged retail applications from leading software vendors such as Oracle, HP and SAP only towards the end of 2007. It had, however, given Infosys and Cognizant pilot projects about five months ago.

Initially, the three vendors are expected to earn Rs 250 crore to Rs 300 crore, each, annually. The figure is set to grow as Walmart increases outsourcing of work from its main merchandising division. Infosys and Cognizant are expected to garner a larger share of the pie between them.

“What is more important is that these three vendors have now got a ticket to be in the club of Walmart's list of preferred vendors which will help them in growing this account in the long-run,” said a source close to the development.

According to the contract, Infosys and Cognizant will be responsible for application development and support, while UST Global will be responsible for specific testing of these applications.

Asked about the deal, Infosys and Cognizant declined to comment. “As a policy, we do not comment on speculation in the marketplace,” spokespeople from both companies said. A UST Global spokesperson in India said the company does not comment on any client specific information as “we have non-disclosure agreements with most of our clients”.

UST Global is part of the $6 billion US-based business conglomerate Comcraft Group, with a major presence in India.

Walmart's media relations director John Simley replying to an e-mailed query said: “We have a large and growing business and productive relationship with many Indian companies. We do not comment on speculations about the nature of any business relationship.”

Walmart, the largest private employer and grocery retailer in the US with revenues of $404 billion (2009), selected the vendors after a competitive bidding process in which most Indian IT services companies participated, except TCS, India’s largest IT services firm.

TCS failed to qualify for the bid because it has an exclusive partnership with Target, another American retailer, who is into direct competition with Walmart. Among the bidding companies, Walmart shortlisted six contenders of which three were finalised based on their level of competency in various processes.

Unlike other retailers, Walmart does not want to open its own captive centre in India, even though the company has established a huge sourcing office in Bangalore sometime back.

Some of the world’s leading retailers like Tesco, Target and Supervalu have their own software development centres in India. Tesco’s Hindustan Service Centre which went live in May 2004, employs close to 3,000 people. In 2006, Supervalu which is the third-largest grocery retail chain in the US, also set up a captive development centre in India for new applications development, technical operations and testing of applications.

The Timberland Company, a leading outdoor footwear and apparel company, on Monday announced an exclusive partnership with Reliance Brands Ltd, a part of Reliance Industries, to distribute Timberland footwear and apparel in the Indian market.

Through the collaboration, Timberland products will be available through Timberland retail stores and premium department stores in major cities throughout India, a press release issued here stated.

The Timberland brand represents four decades of product engineering and innovation, and a deep commitment to preserving the outdoors for which their products are designed, it said.

“With rapidly-growing fashion and retail sectors, we believe India will become a key market for us. Reliance Brands has a wealth of experience in launching and successfully distributing international brands in India, Timberland President and CEO, Jeff Sw artz, said.

“They have a clear understanding of the Timberland brand and consumer, and are as committed as we are to our ideology and passion for the outdoors,” he added.

Spencer’s Retail, a leading Indian retail company, will soon launch private label processed food products like potato chips, biscuits, pasta and is currently testing standalone stores of fish and meat.

“In fast moving consumer goods (FMCG), we want to quadrapule contribution from private labels in the next 18 months. We enjoy 40% share in the nectar category in juices. We are launching potato chips, biscuits, pasta and so on. We are testing standalone stores of fish and meat,” Mr. Vineet Kapila, President,Spencer's Retail, said.

Mr. Kapila said that the growth primarily depends on how much more space you have added and what is your same-store sales growth. While the latter is going up, the amount of sales has not gone up significantly; we have not added much, as we were addressing challenges before us. But we will add space now. In food and grocery, we are seeing same-store growth ranging from single digits to double digits. But we are struggling in discretionary verticals such as durables. There are challenges on margins, too — we are not getting the kind of margins we would want to have.

“We are focusing more on category margins, category assortments and so on to build top line and margins. We are building partnership, strengthening our private labels portfolio, choosing geographies carefully, building back-end in certain categories to improve our margins,” Mr. Kapila said.

He said, “We neither want be nor do we aspire to be the biggest retail player in the country. We want to be among top three in whichever market we enter in. Based on this criteria, we expand or vacate. We will open larger stores. Currently, we have an equal number of large and small stores. Going forward, it will be more skewed towards large stores, which will be 70-80% of our store count”.

“In the past 12-18 months, we had thought hard on these, such as what cities to enter, size of stores to be opened, cost structures, including rentals, and so on and rectified these. We also built a strong technology platform to link all of this. Till the challenges were understood and corrected, there was no point in going ahead with expansion,” Mr. Kapila added.