Pantaloon and Reliance Retail negotiations an eyewash

Mukesh Amabni’s Reliance Retail officials met, Kishore Biyani, founder and CEO of Pantaloon(Biz Bazaar) retail chain.
No, they weren’t discussing a joint venture or an acquisition. Rather, the agenda was how Pantaloon and Reliance could carve out their own huge spaces in the retail sector, avoid head-on competition, and thereby jointly take on the multinational retail giants once they get the green signal to set up shop in India. Biyani was the sole Pantaloon representative in the discussions, while Ambani was represented by criminally charged pointman, Manoj Modi, who is heading the retail venture.

Business Plan:
By March 2008, Ambani would have invested Rs 15,000 crore into his retail business, 30 times the Rs 500 crore Biyani has earmarked for 2006-07. Big investments equal big sales ? (Not necessarily, you have live example of FAILURE – Reliance Infocom, Mukesh Ambani’s pet project. Mukesh Ambani’s Petroleum Retailing was a big failure, but petrol pricing is something beyond the Ambani lobbies). By 2007, Ambani hopes to have 1,575 stores all over the country as against Biyani’s current total of 99 Big Bazaars, Food Bazaars, malls, Fashion Stations and sundry outlets. Recall, how Bharti-Airtel grew organically ? Airtel invested just in one circle and from the profits out of it he went to conquer India. Today Airtel is the largest and Best telecom company of India. Reliance Retail is taking credit of turning around some government owned stores – Sahakari Bhandar. Sure, anybody can turnaround a government run business, as we all know how efficiently they are managed.

Outcome: Sources reveal the dialogue broke down abruptly, and the proposed non-compete clauses never saw the light of day. It is obvious that Ambanis are facing an uphill task to setup retail shops with mere Rs2,500 crores quarterly cash profit and having put their hands in mega ventures – SEZ as well as Petroleum, its a task easier said than done. I am glad Kishore Biyani, didn’t fall in the evil clutches of Manoj Modi. But please be assured, Manoj Modi would have started planning something treacherous even before Kishore Biyani went down the elevator(Nusli Wadia quotes this to Ramnath Goenka, when Dhirubhai Ambani had come to negotiate with Wadias – Courtesy The Polyester Prince.)