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Reliance acquires Adani Retail, eyes Subhiksha, Landmark
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Saturday, 09 December, 2006, 08 : 00 AM [IST]
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By A Correspondent, Ahmedabad
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n by buying out Gujarat-based Adani Retail for Rs 100-110 crore. The Mukesh Ambani-controlled company is reported to have pipped retailers like Subhiksha, Trinetra and even the Tatas to clinch the deal. Sources confirming the news said the buy-out would give Reliance access to 54 retail locations (neighbourhood stores, supermarkets and hypermarkets) across 9 cities in Gujarat, besides its infrastructure and sourcing facilities. As commercial real estate prices shoot up across India, the acquisition would help the company control costs substantially because 60% of Adani's outlets are company-owned. The deal also works well for Adani as it will now focus on its core competencies like shipping and exports.
With the Bharti-Wal Mart alliance breathing down its neck, this buy-out will help Reliance roll out its retail plans much faster. Sources said even though Reliance and Adani were in talks for a while, the negotiations were expedited following the Bharti-Wal Mart deal. The Rs 16,000-crore Adani group forayed into retail by acquiring a leading supermarket store V Rajiv in 2000. Now it has presence in 9 cities - Ahmedabad, Vadodara, Jamnagar, Surat, Rajkot, Anand, Nadiad, Mundra, Gandhinagar and Navsari.
Meanwhile, Reliance Retail is poised to acquire smaller rivals, including the Tamil Nadu-based Subhiksha, Landmark, the book and music store in which Tata has a controlling stake, and the Mumbai-based cooperative chain Maratha Stores. Acquiring Subhiksha would give Reliance a large presence across various states. Maratha Stores has a chain of around 20 outlets in various catchment areas of Mumbai. The group has close to 75,000 sq ft of retail space, a large part of it in prime commercial markets. Earlier this year, Reliance Retail took over 18 Sahakari Bhandar stores in Mumbai on a long-term lease.
"With such acquisitions, where the company either gets the ownership of the property, or possession of a long-term lease on base prices of even 2002-03, it will be able to significantly cut costs, buy as much as 40-50%, according to analysts. This is particularly important for a player like Reliance which aims at having one million sq ft of retail space by 2010. The company envisages creation of 1,500 supermarkets and 1,000 hypermarkets in phases in important towns across the country.
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