Japanese retailer Aeon looks for partners for India entry

Written by Roudra Bhattacharya | Debabrata Das | New Delhi | Updated: Nov 11 2013, 14:35pm hrs
RetailRetail giant Aeon Corporation is planning to enter the multi-brand retail sector in India.
Japanese retail giant and Asia's largest player, Aeon Corporation, is planning to enter the multi-brand retail sector in India. The company is scouting for potential partners, and a small team working out of Mumbai is finalising the strategy in terms of investments and store formats, people in the know told FE.

"Aeon is interested to enter India. It is a big chain. They are studying the market and are yet to apply to FIPB, said Mikio Aoki, director for the southwest Asia office, trade policy bureau at Japan's ministry of economy, trade and industry.

A second Tokyo-based Japanese government official confirmed the same development. Asia-focussed Aeon is diversified into various retail formats like supermarkets, convenience stores, department stores, discount stores and drug stores. It also has a consumer finance arm.

A third source close to the development added that the company has a small team working out of Mumbai, which is evaluating the entry strategy, the right products for India and the store formats. Aeon has set up a small 'unofficial' office in Mumbai to study the market. They are likely waiting for clarifications on multi-brand retail FDI rules, and could wait till the new government takes charge next year, the source said.

Though Aeon is yet to formally apply under the recently notified multi-brand FDI rules, company officials have already had meetings with the government agencies.

Officials from Aeon had met with us a few months ago, but we have had similar meetings with a lot of foreign retailers ever since 51% FDI was allowed in multi-brand retail. At this point of time it would be unfair to comment on whether or not they will make an application for investment, a senior official of the department of industrial policy and promotion said.

At present, Aeon operates only a consumer finance company in India in partnership with Edelweiss. Started in 2011, the Mumbai-based Aeon Credit Service India offers loans for household appliances like TVs and refrigerators, similar to rival Bajaj Finserv.

"India is there in every retailer's strategy, after all it has a billion people and it's a consuming and growing economy. But companies are looking for stable political situation and strong corporate governance. There is a lot of lobbying happening and I feel any major investments will only happen after the new government comes next year, said Kavish Sarawgi, director of boutique investment banking firm Resurgent India.

Aeon, the 13thlargest retailer globally with revenues of $60 billion, has embarked on an expansion spree in recent years. In 2012, it bought Carrefour's operations in Malaysia for $324 million. In all, Aeon is present in nine countries with 598 stores and 157 malls. While India's overall retail market is estimated to be $490 billion, organized retail makes up for only around 10% of the market or $37 billion, according to data from retail consultancy firm Technopak Advisors.