Retail News Update

NEW DELHI/BANGALORE: Bharti Enterprises, slated to start its retail business in the first quarter next year, may acquire Big Apple — the Delhi-based supermarket chain with 65 stores. Bharti’s acquisition blueprint in the retail sector may be a replay of its telecom business, where the group built up a pan-India mobile presence by acquiring telcos such as JT Mobile in Karnataka and Andhra Pradesh, Skycell in Chennai and Hexacom in Rajasthan.

A senior source said the Bharti Group and Big Apple are at fairly advanced stages of negotiations and if price expectations match, the deal could be sealed as early as next month. He also said Big Apple has quoted its price and Bharti has given a revised offer. “Talks will resume after Christmas vacations,” he said.

Asked if Bharti was in talks with Big Apple for a takeover, a Bharti spokesperson said, “As a matter of policy, we don’t comment on market speculation.” However, Big Apple CEO Munish Hemrajani said, “There’s no plan to sell right now.

As a matter of fact, we have huge expansion plans — we want to have 100 stores by the end of the fiscal.” An industry source said the expansion is largely for a better valuation as the last 30 stores of the company have come up in a very short span. Besides Bharti Retail, there are other retailers in the fray for Big Apple.

Bharti plans to start retail operations in March by opening its first small format retail store in North India while the cash and carry business in partnership with Wal-Mart will start in the third quarter of next year. Acquisition of regional retail chains is likely to give Bharti a headstart in terms of locations, a readymade supply chain and operations.

Bharti plans to invest $2-2.5 billion in retail by 2015. It is planning pan-India operations and is looking at approximately 10 million square feet of retail experience across all cities in India with a population of over one million.

Big Apple is jointly promoted by Lalwani Holdings and the Chaurasia Group, which have interests in real estate and FMCG. Big Apple stores started operations in 2005 and the chain is now 65-store strong with an area exceeding 100,000 sq ft. It clocked a turnover of Rs 155 crore last year. The company works on minimum overhead costs and has a customised product mix that suits the area where it is located.

As western-style supermarkets take off in India and large companies enter the business, a consolidation is likely. Small regional chains, unless backed by a large group, have limited funds to expand and scale up, and will look for joint venture partners and buyers.

The process has already started. Wadhawan Retail, which runs Spinach retail chains in the west, took over Delhi’s Sabka Bazaar and Home Store as well as the management contract of Maratha Stores in Mumbai. Similarly, AV Birla group’s retail arm took over Trinethra stores in the south. Reliance Retail took over Adani Retail in Gujarat but steep valuations in other states kept it away from acquiring more.