| Tales
in Retailing- India calling the big guys!! |
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According to industry estimates,
even without any FDI inflow, a cumulative investment
of Rs 3,000-4,000 crore ($ 690- 930 mn) is expected
over the next 12 months into India’s retail
sector from corporates within the country. The
industry itself is expected to hit $300bn mark
in the next five years.
A major part of the domestic
sector investments would constitute- fresh investments
by Indian business houses; expansions by existing
retail chains like the RPG group, Raheja-promoted
Shopper’s Stop and Pantaloon; food services
providers like McDonald’s and Pizza Hut;
and apparel firms such as Madura Garments and
Arvind Mills. Also in the fray are industrial
houses such as Reliance, Hero, Godrej, Wipro and
the KK Modi group, all of whom are aiming for
a slice of the country’s current $180 bn
retail trade pie.
The recent report by Fitch
Ratings, estimates ‘Organized Retailing’
in India to reach 8% to 10% during the same period,
up from the estimated current 3%.
It is not just Walmart which
is in active mode for entering India (‘Refer
'Wal-Mart regrets having missed India bus earlier').
Aerens Gold Souk International Ltd. (AGIL), is
expected to invest Rs. 2,500 crore (US$ 555 mn)
in the next four years to come up with a host
of specialty malls, including residential supermarkets
and a specialised automobiles mall and an exclusive
wedding mall. In addition, the AS Watson Group,
a member of the famous Hong Kong-based conglomerate
Hutchison Whampoa- operating 6,200 stores across
the globe and running a gamut of health and beauty
chains. and food, electronics, and airport retail
outlets- is exploring the possibility of starting
operations in the country by ’06.
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Our Say |
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| The
burgeoning retail sector in India is
attracting more global retailers. As
many as 20 big companies are believed
to be working on their plans to board
the retail bandwagon. Global retailers
like Wal-Mart, Target and GAP already
have sourcing offices in India. German
retailer Metro and South African chain
Shoprite have also made an entry into
this lucrative business. With so much
potential up for grabs, it is no wonder
that Indian corporates are making a
bee line for investing in retail sector
opportunities.
Most
large Indian corporates who till last
year were gung-ho on making a solo entry
into the retail sector are now rethinking
their strategy. With the opening of
the sector to overseas investment on
the anvil, they are now keen to make
a foray into the retail sector in partnership
with foreign chains. Large corporates,
which nurse retail dreams have mandated
their consultants and merchant bankers
to scout for partners from among the
global retail chains.
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| SEBI
working on norms to bring FDI into corporatised
bourses |
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| With the real
estate sector being opened up for foreign investment,
The Securities and Exchange Board of India (SEBI)
is framing new regulations on the divestment of
broker stake in corporatised stock exchanges in
the light of increasing foreign investor interest.
The market regulator, along with the government,
will also be framing a policy on FDI in exchanges.
The SEBI move comes at a time when a number of domestic
exchanges have started the process of corporatisation.
Under the norms, these exchanges are required to
bring down broker-holding to 49% in a year. The
regulators are likely to maintain foreign equity
investment in domestic bourses at a level similar
to that of insurance companies, which is currently
pegged at 26%.
The Bombay
Stock Exchange (BSE), the second-largest bourse
in the country, is said to have already initiated
the process of divesting its stake. It is looking
at various options, including roping in a strategic
partner or getting listed on Indian or foreign exchanges.
It is learnt that players, including the New York
Stock Exchange (NYSE), private equity investors
like Temasek, the Bank of New York and UBS, have
shown interest in taking a minority stake in the
exchange, which controls 35% of the turnover of
stock market trading in the country. The BSE is
now looking at various options to comply with this
requirement of divestment of broker stake. However,
it has not been decided whether to offer shares
to strategic investors or offload shares through
public issues, both in the domestic and overseas
markets.
Some foreign
players are also said to be interested in taking
stakes in the Delhi Stock Exchange, where trading
has virtually come to a standstill. |
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