News: Biyani will take on Reliance, not Wal-Mart

(DNA 11/09/2006) Mumbai - Kishore Biyani says he sleeps well these days. Truth or dare? Hard to tell.

Dare he must, however, as sitting in the front row to hear him at the India Retail Forum on Saturday was Mukesh Ambani’s top team from Reliance Retail — Raghu Pillai, president and chief executive, retail operations and strategy; Bijou Kurien, president and chief executive, lifestyle and luxury’ and, Rajeev Karwal, president and CEO.

Then there is Noel Tata of Trent, standing on the sidelines as he finds all the seats in the over 10,000 square feet hall filled to the brim, till one volunteer finds him a place to sit.

Biyani says he is unfazed by domestic competition — Reliance’s Rs 25,000 crore plan notwithstanding.

He says the country should not allow the the Wal-Marts, Tescos and Carrefours — yet.

“They can come later,” he says. “The government shouldn’t let them in now”.

Why?

“If they are allowed now, they get a cheap entry — they can just buy out Indian companies for about a billion dollars (Rs 4,600 crore). Let them come after a few years, we’ll get at least $5 billion then,” he explains.

The Future Group honcho’s math is illuminating. He may have also thrown light on what’s going on in his mind here: is this a strategy to sell out big later?

Only time will tell.

A self-proclaimed black sheep of his family, Biyani first tasted the rigours of entrepreneurship as a garment manufacturer.

He let in on a little secret on why he entered retail. It’s all thanks to Shoppers’ stop.

“I have never told this before. I was a manufacturer of garments. Shoppers’ Stop declined to stock my products in their malls and that’s when I decided to set up my own retail malls,” Biyani said.

Later the Hindi film buff even produced Bollywood flicks as he embarked on setting up a chain of retail malls across the nation, that was 98% controlled by unorganised frat.
Would he prefer Reliance or Wal-Mart has competition, the Q&A anchor asks. “Reliance anytime.”

While he is furiously building scale to his retail business, Biyani is also diversifying into allied fields.

Into insurance and private equity as he tries to get a bigger share of the customer’s wallet. By next year, he declares Pantaloon’s revenues would double to $2 billion (Rs 9,200 crore). By 2010, Pantaloon they would cross $6 billion (Rs 27,600 crore).

He is not rattled by the Reliance Retail juggernaut moving in, buying out land and driving prices up. “People like us, believe in us and they give us the space. We have enough leased space for the next 3-4 years,” he says. The biggest challenges, Biyani says, come from “managing his business at the speed of change. We are being watched. We Indians are not the perfectionists that managements talk about and we should know which war to fight and which war to avoid.”

Someone in the audience asks him why he’s selling foreign brands when he’s against foreign retailers.

Yet another quizzes him that modern retail as a concept originated in the west. His stock replies do not seem convincing.

Later when DNA Money asks Noel Tata, managing director of Trent whether he agrees with Biyani, Tata shrugs. Those are “his views”.

The Tatas are building a partnership with the UK-based Woolworth’s for a consumer durables retail venture, so Noel Tata may have a different opinion on the topic, but he’s not talking yet.

Raghu Pillai of Reliance Retail is more forthcoming on the topic on whether foreign direct investment is to be allowed. “There is enough capital and talent in India to be able to take organised retailing to greater heights.”

Some, however, beg to demur.

As Arvind Singhal, chairman, Technopak at a panel discussion said that India will need an additional 600 to 700 million sq ft of retail real estate space to meet a likely increase of $127 billion in consumption in the next five years.

The growth in space and consumption will have to come from Tier 2 cities and rural hubs. Contrary to the belief that fashion is the largest segment in organised retail in India, Singhal said food & beverages was the largest segment, worth $195 billion.

Kamal Nath, the commerce minister, would surely agree.