Reliance Redux

Now that four of Reliance8217;s key businesses, including telecom, are with Anil Ambani, Mukesh is seeking new challenges. SEZs huge tax breaks for a cash-rich Reliance and retail sector foray a growing prosperous middle class are the right growth drivers, say company insiders.

The SEZ Story

While Modi8212;Mukesh8217;s classmate8212;has a target of September 2006 to open Reliance8217;s first store, construction of its first SEZ near Mumbai is in full swing with Parekh leading the initiative.

8216;8216;Reliance entry will ensure that our 15-year plan to develop Maha Mumbai and Navi Mumbai SEZ will now shrink into a 4-year development programme,8217;8217; says the original promoter of the project, Nikhil Gandhi.

As per the agreement signed between SKIL, Reliance will eventually have 74 per cent stake in the 5 billion project and take complete control over the management. 8216;8216;With the advent of Reliance Group, the trans-harbour link project, Navi Mumbai international airport project and such other developments will fast become a reality,8217;8217; hopes Gandhi.

While the construction at Navi Mumbai is in full swing, Reliance has sought 25,000 acres of land in Hyderabad and Haryana each for SEZs. West Bengal is the next target for Reliance to set up a SEZ near Kolkata, if company insiders are to be believed. The Jamnagar petrochemical and refinery SEZ project will cost Reliance another 6 billion. A IPO by Reliance Petroleum will part-finance the refinery.

Then, Reliance Haryana SEZ Pvt Ltd is looking at an investment of Rs 40,000 crore, and a site would be selected soon. Mukesh will set up some industries in the SEZ which includes his 8216;baby8217; bio-technology.

In Hyderabad too, Reliance has asked the state government to allot 25,000 acres of land near Shamshabad airport for developing an SEZ exclusively for petrochemicals.

The retail foray

Modi, instrumental in setting up Reliance8217;s Infocomm8217;s network across the country, is hard at work.

Last week, the company announced that it has cleared investment of Rs 3,200 crore for its retail foray. Though Reliance is not giving details, company insiders say more than 6,000 people are being hired across the country to roll out 150 supermarkets in the first phase.

To start with, Reliance is targeting Ahmedabad and Surat followed by Delhi, Mumbai, Thane and Bangalore. Stores are also planned in second-rung cities like Jamnagar, Rajkot, Bhavnagar, Chandigarh and Ludhiana.

Reliance is also planning to use its petrol stations to set up its retail network which includes hypermarkets and cash-and-carry shops. As of December 2005, Reliance has over 1,000 outlets and by 2006 end, it has government8217;s permission to open 5,000 retail outlets.

Reliance8217;s imminent entry into the retail industry, however, is not making its competitors nervous. 8216;8216;The Indian market is too large8230; one Reliance will not eat it up,8217;8217; says B S Nagesh, CEO and MD of Shopper8217;s Stop. 8216;8216;The biggest challenge will be to open up its first store and find proper management,8217;8217; he adds.

With Infocomm8217;s poor launch very much on its radar, Reliance wants to make doubly sure it gets it right first time.