Meal coupon and gift voucher supplier Sodexo India has started tying up aggressively with smaller independent retail shops, local department stores, food and beverage chains to make up for the revenues it lost after big retail chains cut business with them.

?We have added over 1,000 outlets to our service network in the last one month,? says Amitabh Sinha, vice-president, marketing at Sodexo India. ?To ensure that users do not face inconvenience, we have tied up with affiliates in and around the big retail outlets.?

From January 1, India?s larger food chains Big Bazaar, Spencer?s, Hypercity and More have stopped accepting Sodexo meal coupons as credit as commission charges slice their margins. Retail chains pay anywhere between 3% and 5% as ?affiliation fee? to Sodexo. The fee eats into their margins, which are already hit by sinking margins on food and groceries.

Sodexo meal passes, authorised by the Reserve Bank of India, are issued by various companies to their employees to save tax. Employees use these coupons to purchase food, groceries and non-alcoholic beverages from Sodexo affiliate outlets.

At present 18,000 Sodexo affiliated outlets, which include in-house canteens, food courts, restaurants and grocery shops in 1,350 Indian cities, accept coupons.

?We are also venturing into new locations and expanding our geographical presence,? Sinha adds.

Department stores like Apna Bazaar, Sahakari Bhandar and D-Mart, quick service restaurants like McDonalds, Garcias, Subway, Smokin Joes, Bombay Blue and coffee chains like Cafe Coffee Day and Barista accept Sodexo coupons.

?Our business won?t be affected because large retailers ditched us,? says Ashish Talwar, chief executive officer of Sodexo India.

The Indian subsidiary of French company, which does not disclose financial numbers, expects to grow by 10% this financial year.

Retail consultants and analysts, however, believe that the loss of prominent retail chains will pinch Sodexo. ?About 18,000 outlets might be big in absolute terms, but it isn?t a large percentage if both traditional and modern retail is taken into account,? says Saloni Nangia, senior vice-president, retail and FMCG at Technopak Advisors, a retail consultancy. ?Large retailers are more visible and impact consumer buying.?

Some retail chains say high fees hit their low-margin business.

?Sodexo is an expensive proposition and is operationally unviable,? says Santosh Unni, chief executive officer at Costa Coffee. ?While credit card companies charge about 1%, Sodexo demands almost 5% which is difficult to sustain in a low margin business.?

Sodexo, however, is confident of working out a negotiation with big retail chains. ?We have not hiked our affiliation fee in the last two years, and will soon reach a consensus with retailers,? says Sinha of Sodexo.

The company is also looking to tie up with more organisations that issue Sodexo coupons to employees. ?There are 8,000 companies on board and we?re signing up more,? says Sinha.