Our expansion is going faster than what we had earlier planned and well be looking to maintain this pace, a key company official said on condition of anonymity.
At present the company has seven stores running, in Ahmedabad, Bangalore, Anand, Faridabad, Guntur, Chennai and Mumbai. The existing stores are spread over between 50,000 and 1,20,000 sq ft. We are scouting for locations and have committed resources for them, said official.
According to Pinaki Ranjan Mishra, partner and national leader, retail, EY, gross margins for cash-and-carry businesses in India are typically around 11-12%.
This is close to twice the level of margins seen globally, Mishra said Addressing shareholders in June, RIL chairman Mukesh Ambani spoke about seeing the companys retail business becoming a significant growth engine over the next few years with an ambitious revenue target of Rs 40,000 crore to Rs 50,000 crore. The companys retail business clocked revenues of over Rs 10,000 crore in 2012-13, and a cash break-even with earnings before depreciation, finance cost and tax expense (EBDIT) of Rs 78 crore.
Foreign retailers operating in the cash-and-carry space include Germanys Metro, Carrefour of France and the worlds largest retailer, the Arkansas-based Wal-Mart in partnership with Bharti. There are no restrictions on sourcing for this business unlike for multi-brand retail. Reliance Market is positioned as a cash-and-carry wholesale format, catering to the trading and business community to provide them with an alternative channel for products that they need for their businesses.