Financial Daily from THE HINDU group of publications
Friday, Jul 16, 2004
Marketing - Retailing
Indo Rama plans foray into grocery retail
New Delhi , July 15
THE Rs 2,200-crore polyester major, the Indo Rama group, is planning to diversify into the food and agro sector in a big way, with a foray into the processed food and grocery retailing business on the anvil soon.
The company, which is the country's largest dedicated polyester player, is scouting for acquisition of existing retail chains in the food and agro business and has narrowed down on the Rs 110 crore Andhra Pradesh-based grocery chain - Trinethra, as a potential strategic investment target.
"We are evaluating the opportunities in the food and agro sector. There's a lot of potential in the food and agro sector and at the moment we are looking at being part of it," the Chairman of Indo Rama Synthetics India Ltd, Mr O.P. Lohia, told Business Line.
He said the company was in favour of the acquisition route for getting into the `sunrise' sector. He said the company was weighing several options including the move to pick up strategic interest in the Trinethra chain.
According to industry sources, the Trinethra retail chain has issued bids inviting strategic investors and partners for funding its expansion plans in the southern market. "There are major wastages in the food and agro sector due to weak links in the processing and supply chain. The opportunities, thereby, are immense," Mr Lohia said.
Ernst & Young has been involved by Trinethra to scout for a strategic investor or partner to fund the retail chain's expansion plans.
According to industry sources, Indo Rama's successful entry into the retail business would hinge on the company getting access to an existing retail network like Trinethra's. With Trinethra under its fold, Indo Rama could get a foothold in the southern retail markets.
Supermarket chains such as Food World and Nilgiri's have a major presence in the southern markets.
Trinethra, which is part-funded by the ICICI Venture fund, has a network of 72 food and grocery chains in Andhra Pradesh.
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