Latest Property News on 'Retail Market in India'

Organised Retail Bound to Grow

Organised retail today accounts for less than 5% of India’s retail business, but is bound to grow, forcing choices on the government, and upon itself. China’s experience and those of other Asian countries that recently modernised their retail sector can provide valuable insight on what choices make sense. Serving local consumer tastes in China with over 1.3 billion people poses a similar challenge in India, with its 1.15 billion people. Chinese regulations, at both the central and local levels, had created confusion and difficulty for retailers trying to open new businesses or acquire established ones.

India’s regulatory patchwork frequently impedes the efficient flow of products and needs to be coordinated across states and local jurisdictions. Finally, the Chinese transportation infrastructure varies across the country’s vast expanse. They are modern and highly efficient , especially in urban and coastal areas, and organised retail is most successful here. India needs better transportation and cold-chain supply-chain infrastructure across the country. Loosening foreign entry into the retail sector should be based on a strategic quid pro quo: the profit potential of India’s large retail market for retail operations know how and investment that are critical to modernising and improving the efficiency of Indian retail. Read More »

30% Rise in NPAs- Banks to be Cautious in Extending Loans to Real Estate, Retail

Banks’ non-performing assets have shot up nearly 30% at the end of calendar 2009 from a year ago due to stress in many sectors and farm loan waiver, indicating sharply lower profits for banks and possibility of curbs on exposure to sectors that have contributed to the bad assets. In a reply to the Rajya Sabha, the government said the overall NPAs have increased to Rs 80,023 crore at the end of December 2009 from Rs 61,647crore at the end of December 2008, an increase of over 30%. “Banks will be more cautious towards lending to sectors such as real estate, exports and even retail loans,” says a senior banker with a private bank. A number of private banks have already curtailed their retail lending, specially personal loans.

A recent report by Fitch ratings on ‘banks’ restructuring loan portfolio’ pointed that restructured bank loans worth Rs 30,675 crore may turn bad in 2010-11 and further push up banks’ gross non-performing assets (NPAs) on an average by one percentage point. State-owned banks, however, feel that the rising NPAs will not impact their profitability and that NPAs are minuscule as compared to the total advances. “If you look at our figures, the gross NPAs are at 1.8% of our total advances. Besides, all banks have been making provisions for these loans, which have been reflected in third quarterly results. There will be some caution but it’s not over-exercised,” said CGM Punjab National Bank, RIS Sidhu. The bank reported a flat 1% increase in the net profit to Rs 1011.31 crore for the third quarter of this financial year. Read More »

France’s Carrefour Negotiating with Indian Cos for its Indian Retail Venture

French retailer Carrefour (CARR.PA) is in talks with Indian companies for a partnership and expects to start its business in India with cash-and-carry activities, the company told Reuters. The world’s second largest retailer, however, declined to give names of the companies it is negotiating with and also did not confirm whether it was in talks with Future Group, which runs Pantaloon Retail (PART.BO), India’s largest listed retailer.

“Carrefour and some Indian companies have been discussing partnerships but we do not want to comment on any of the company we have been talking to,” Carrefour said in a emailed statement to Reuters. Indian media has speculated on a tie-up between Pantaloon and Carrefour to launch franchise stores in India. Earlier this week, Future Group Chief Executive Kishore Biyani told Reuters that his company was in talks with several overseas retailers but declined to specify whether Carrefour was one of them. Read More »

Retail Sector demands Industry Status

Barely recovering from the slump in the economy, organised retailers in the country today said the sector should be given industry status, besides easing foreign investment norms in the forthcoming Budget. “Industry status has been a long standing demand of the retail sector. Besides we also want a relaxation in the foreign direct investment (FDI) norms,” Retailers Association of India chief executive officer Kumar Rajagopalan said. Sharing similar views, Koutons Retail India chairman D P S Kohli said: “Industry status has been a recurring demand of the retail sector for many years since only then will the retailers be able to fully enjoy the benefits of organised financing, insurance and fiscal incentives.”

According to industry figures, only around five per cent of the estimated over USD 450 billion Indian retail sector is currently organised. Calling for easing of FDI norms, Rajagopalan said, “No industry in India has grown without FDI participation and for retail to emerge as a big player, more FDI should be allowed.” Besides, he said even if FDI norms are not relaxed in the Budget, the government must give a clarification on FII and foreign PE funding route as there is a lot of ambiguity. Read More »

Positive of Recovery Banks Plan Big Push for Retail Loan Segment

Betting big on economic recovery, public sector banks in India are planning to give a big push to retail loans. While State Bank of India (SBI), the country’s largest lender, claims to have overtaken Housing Development Finance Corp. Ltd, the largest mortgage firm, and ICICI Bank Ltd (in the case of auto loans), other public sector banks want to take the battle to the backyard of private banks, which have traditionally been chasing retail loan customers. “Look at the number of new people coming into the bankable bracket. They are earning big, fresh after college,” said Punjab National Bank chairman and managing director K. R. Kamath. “There is a vast opportunity there.”

R.S. Reddy, chairman and managing director of Andhra Bank, said it is not that public sector banks are doing bad in retail space, but that they are rediscovering the space after the crisis. “Everybody was looking at corporate loans. Yields have (been) squeezed there, but retail loans ensure a good return,” he said. India’s public sector banks, which account for about 70% of the industry, normally depend on corporate clients, but the economic slowdown in the wake of the collapse of US investment bank Lehman Brothers Holdings Inc. has forced them to change their business strategy. After a severe liquidity crunch, they were flush with money, but corporations were not willing to borrow. Read More »

ABN Amro India to Downsize Staff from its Retail Loan Business

ABN Amro India, owned by the troubled UK’s Royal Bank of Scotland, may lay off about 70 employees in its retail loans business, as the British bank continues to sell off assets to focus in its home market after getting a government bail out during the credit crisis, people familiar with the matter said. The bank has decided to freeze fresh retail loans, including credit cards and personal loans, to prevent deterioration in its bad loans, as it inches closer to sale of its trimmed down retail banking to Asia-focused UK bank, HSBC.

ABN Amro in India has been slipping in the last year or so after scores of executives quit the company as RBS struggled for survival during the credit crisis and regulatory issues prevented it from selling Indian business as part of its deal to sell the Asian unit to Australia’s ANZ Bank. ABN’s former country head Romesh Sobti left in 2008 with some executives to run IndusInd Bank. Its investment banking division withered away with Frank Hancock joining Barclays and another team an Australian investment bank. About 50 from its prestigious Van Gogh Preferred Banking team joined the fledgling Religare Macquarie Private Wealth. Read More »

Bharti Retail Expands Operation in North India

In its first phase of operations, Bharti Retail has strengthened its position in north India by opening 59 stores in Punjab, Haryana, Rajasthan, Uttar Pradesh and New Delhi, called Easy Day stores. In addition, it also has launched three compact hyper stores called Easy Day Market in Punjab. Bharti Retail had earlier planned to take its tally to 70 stores by the end of 2009. However, the spokesman said that the company’s plans were ‘well on track’. He added that the company has deliberately focussed on north India in its first phase of operations. According a spokesman of the company, “Bharti Retail’s strategy is to consolidate presence in one market, before expanding to another region. At present, the focus of our roll out will be North India, but we have plans to expand operations into other parts of India,” he said.

The spokesman added that in the next five years, Bharti Retail would see a US investment of 2 to 2.5 billion dollars in its stores across the country, and would employ about 60,000 people. The company plans to offer approximately 10 million square feet of retail experience across all cities in India. The spokesman said that Bharti Retail would generate employment for the unskilled and previously untapped workforce like cart vendors, housewives and retired personnel, by offering flexi-hour work schedules. Such groups of persons will also be enrolled for structured training modules at the Bharti Retail Academy. There is no minimum educational qualification to work with Bharti Retail. Read More »

Luxury Retail has Bright Prospect in India

Luxury retail in India has been a fascinating journey from a socio-economic perspective. Projected as the next China for luxury goods consumption, the Indian economy has evoked a lot of interest globally given its statistics of some of the highest disposable incomes and increase in the number of millionaires. Incidentally, luxury is not new to our country. India was fabled for its riches in pre-British times and even the post- British era saw its pockets of richness of erstwhile royal families and the newly-developed industrial classes who were the users of European luxury brands. Indian princes had a penchant for luxury goods from the west. Brands such as Cartier and Louis Vuitton were patronized by the Patiala royal family among others, and many princely families in Rajasthan had their own private collection of luxury cars.

The last couple of years have seen a profusion of luxury brands into the Indian market: from stand-alone stores in five star hotels to luxury Malls, these labels which were previously only seen in international fashion magazines and high streets abroad, were now household names in India. With one of the highest levels of disposable incomes, the well-traveled Indian luxury consumer is being wooed by all. Rightfully, as an economic growth story we will be compared to our eastern cousin China. Read More »

LS Retail Chooses DVS to be its Retail Centre of Excellence

LS Retail has chosen Gurgaon based Dynamic Vertical Solutions (DVS) to be its ‘Retail Centre of Excellence’ in India. The proposed retail centre is an initiative to provide retailers of all sizes insights into usage and application of cutting edge technologies in the retail industry and would showcase end to end solution roadmap for the retail industry.

Speaking on the partnership, Gunnar Gunnarsson, CEO of LS Retail sounded confident about the growth of retail in the country. “LS Retail is very proud to announce DVS as our chosen Retail Centre of Excellence in India. Their domain expertise and retail industry experience of the Indian & the Indian sub continent markets have made them the best fit organization to drive an initiative of this nature forward,” Gunnar said.

France’s Retail Giant Carrefour Set for Indian Venture in Partnership with Future Value Retail

French supermarket group Carrefour, the world’s second largest retailer, is close to a deal that will finally see it set up franchise stores in India, a report said Wednesday. The French group has been looking for a partnership in India for years and was first reported to be in talks with Indian group Future Value Retail, a unit of Pantaloon Retail, in January last year.

The two companies were now “close to deal” that would soon be formally announced. A tie-up would follow similar alliances between India’s Bharti telecoms group and US Wal-Mart and the Indian tea-to-steel Tata Group and Britain’s Tesco. Future Value Retail owns supermarket chains Big Bazaar and Food Bazaar. The Carrefour franchises would be aimed at affluent customers in cities, the newspaper said. Read More »