Reliance Industries giving shape to global ambitions; in talks with Carrefour, Dow Chemicals for strategic alliances

Reliance Industries is reportedly in talks with French retail major Carrefour as well as other global players for acquiring controlling stake in these companies to reach out to international consumers with its basket of Indian food produce.

Reliance has created a war-chest of Rs. 100,000 crores and is looking to create international business arms for accessing global markets by leveraging on its supply chain that was put in place as part of the farm-to-fork project. Besides Carrefour, Reliance is also talking to Tier-2 companies like Salisbury and Marks and Spencer for food business.

Carrefour on its part has denied any sort of discussions with Reliance for either a controlling stake in the former or a joint venture. In a related development, Reliance is also in talks with Dow Chemicals and is expected to form a petrochemical JV.

Carrefour said to be in talks with HDFC Group for Indian retail venture

Carrefour is reportedly partnering with the HDFC Group for it Indian retail operations. The actual entity could be a private equity arm.

In a somewhat complicated yet a highly complicated structure, HDFC could float a separate holding company, most likely a PE fund, which would, in turn, tie up with a third entity for getting Carrefour’s franchising rights for India. Meanwhile, it is understood that Carrefour will completely retain the back-end wholesale operations, as 100% FDI is allowed in cash-and-carry segment. Even though Carrefour cannot invest in the equity of the retailing business, it will get its own people to spearhead the venture. Details of the exact arrangement and modalities that the two companies are looking at could not be found. Both Carrefour and HDFC have declined to comment on the issue.

It is to be noted that Carrefour cannot do business in India in general retail on its own as foreign direct investment is not allowed in the sector. At the same time, RBI regulations prohibit HDFC or HDFC Bank from getting into retailing.

Carrefour has particularly evinced interest in HDFC because of obvious real estate considerations. For retailers like Carrefour, who generate most of their business from large format hypermarkets, getting viable real estate is the prime concern. HDFC, on its part, has a separate realty fund, which has access to a huge land bank in various parts of the country. In addition, this fund has an equity stake in some large scale projects of prominent real estate developers, such as Ansal API, Pune based realtor Vascom Engineers and L&T Urban Infrastructure. The holding company could leverage its relationship with these developers in getting access to prime real estate for the retail business.

Read The Economic Times article.