Carrefour may partner with Reliance in retail

NEW DELHI: French retail giant Carrefour has been trying to enter the Indian market for a while with little success so far. Numerous attempts to enter into partnerships with Indian companies have gone nowhere. But for two weeks now, industry has been abuzz with talks of a possible deal between two giants — the French retailer and Mukesh Ambani’s Reliance Retail.

The trigger was a recent meeting between Carrefour’s top team and a few executives from Mukesh Ambani’s office. Sources also indicated that a top Reliance team led by Mr Ambani’s close associate Manoj Modi is likely to go to France for further talks. “If it happens, it will be a global alliance. But these things take very long time to materialise,” said sources.

The exact contours of a possible Carrefour-Reliance tie-up is still unclear. But sources said that Reliance could well emerge as a potential partner for Carrefour’s cash-and-carry business in India. The deal might be akin to the Bharti-Wal-Mart arrangement, sources added, but this could not be confirmed.

For the past two years or so, Carrefour has opened up dialogue with a range of partners, including DLF, Parsvnath and the Wadia group. After a considerable soul searching on the tenure of its Indian strategy, Carrefour is said to have figured out that its Indian partner must possess three key strengths: a cache of prime real estate, undeniable clout with the government and a long-term interest in retail. Reliance scores on all counts. It has already tied up 30-35 million sqft area across the country.

And its ability to influence policy in the corridors of power remains unmatched. It is also committed to the retail business unlike real estate companies which are merely looking for lease or sell commercial space.

But there’s clearly one issue where, if a deal with Carrefour finally materialises, will come as a surprise. Reliance does not have a track record of partnerships. So far, India’s biggest private sector company has little experience in managing complex joint ventures.

Source : 4 Jan, 2008, 1530 hrs IST,Mayur Shekhar Jha & Chaitali Chakravarty, TNN
Economic Times.