“Club of Knowledge Hunters”

Triveni to sell off its rural superstore chain

Posted by superstar23 on November 4, 2008

MUMBAI: Triveni Retail Ventures, a 100% subsidiary of Triveni Engineering and Industries, is understood to have sounded out leading retailers for selling off its rural superstore chain Triveni Khushali Bazaar. Industry sources said the group may either divest the venture or offer controlling stake to prospective buyers. The company is planning to focus on its core operations. Grappling with a tough business environment, most corporates have been unable to infuse sizeable investments to scale up their non-core ventures.

Also, corporates have been unable to take on the challenges of managing a retail venture, the supply-chain dynamics and scaling it up. As a result, the ventures have been largely confined to certain states and, therefore, unable to achieve economies of scale. Very recently, the Godrej Group sold off a 70% stake in Aadhaar, its rural retailing initiative, to the Kishore Biyani-led Future Group.

Sources said investment bankers have sent feelers to players like Future Group, Aditya Birla, ADAG and Reliance Retail for the Triveni entity. When contacted, an official spokesperson declined to comment on the move. “If there are some discussions at the board level, we would be unaware of it,” he said.

At an analysts presentation on April 29, 2008, a company official had said in response to a query that “partnerships are the mantra for retail going forward at least in the near term, where people are looking at consolidation of supply chain, both in terms of sourcing of farm produce and bringing produce for sale right down to the rural areas.” “So, we are certainly open to relationships,” the official had said.

Triveni is in the business of sugar, steam turbines and engineering activities. Triveni Khushali Bazaar has over 40 stores, primarily in the northern rural markets, with verticals like agri products and services, non-agri products and financial services. These are essentially one-stop shops for farmers and rural customers to buy agri-inputs, cattle feed, cycle, plastic furniture, FMCGs, automobiles, etc.

Retail majors like Future Group and Reliance Retail are keen on stepping up their presence in rural markets, which constitute a significant portion of the Indian consumer base. Aadhaar now serves as a procurement hub for the Future Group’s retail formats like Food Bazaar and KB’s Fair Price, and will also be a supplier to other retailers. In 2007, ADAG’s Reliance Money had tied up with Triveni Retail Ventures to retail financial products and services.

Reliance Retail had announced plans to set up town centres with low-cost malls and rural hubs in towns with a population of less than 50,000. India’s rural retail market is expected to grow by 29% to Rs 1.8 trillion by 2010, helped by rising incomes and changing consumption patterns, an industry body report said. Issues like poor infrastructure, supply chain inefficiencies and competitive pricing in the rural markets are the main challenges in tapping an otherwise large consumer base.

ITC’s e-choupal and Choupal Sagar, Triveni Khushali Bazar, DCM Shriram’s Hariyali Kisaan Bazaar, IOC’s Kisan Seva Kendras are some of the main players in the rural retailing sector.


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