Reliance Retail Limited that runs around 590 stores across 57 cities in India is planning to expand its business in the country especially in West Bengal. “We are currently working on how best we can come back to the state in a major way. It’s all currently on the drawing board,” Mr. Tarun Jhunjhunwala, President, Reliance Industries told reporters in West Bengal state capital Kolkata this week.

“We have exhausted the space for our Reliance Fresh format and so if we plan to expand this format, we have to buy real estate,” Mr. Jhunjhunwala added. In July this year, Reliance Retail began to sell a number of food and grocery products in a market in Mumbai. Last year, Reliance Retail managed to achieve a near break-even by posting a loss of less than INR 1 crore in its first full year of operations, just 17 months after opening its first store.

According to expert in the field, organized retailers such as Reliance Retail were not expected to show a profit in their first several years of operations, partly because of high capital expenditure involved in setting up a chain of stores, especially with spiraling real estate costs of the past thee years in India that have led to a doubling of lease rentals in some cities.

However, Reliance Retail’s reported revenues are just around 1% of Reliance Industries’ total sales of INR 1.39 trillion for the fiscal 2008. Reliance Retail already has 3.5 million sq. ft of trading space and has outlined a total investment of INR 25,000 crore over the next few years, even though protests from small retailers and wholesalers have slowed some of its expansion plans. So far, Reliance Industries has invested nearly INR 4,400 crore in Reliance Retail in the form of equity and preference shares. The equity investment amounts to INR 3,785 crore, giving Reliance Industries a 98.74% stake in the retail venture, according to the annual report of the company.

Reliance Retail launched its first store in November 2006 through its convenience store format ‘Reliance Fresh’. Since then Reliance Retail has rapidly grown to operate 590 stores across 13 states at the end of FY 2007-08. RRL launched its first ‘Reliance Digital’ store in April 2007 and its first and India’s largest hypermarket ‘Reliance Mart’ in Ahmedabad in August 2007. During the year, Reliance Retail also focused on building strong relationships in the agri-business value chain and has commenced marketing fruits, vegetables and staples that the company sources directly to wholesalers and institutional customers.

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