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vivekkumar_in
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   Posted: 14/Aug/2007 at 10:18pm |
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Basantji,
What is your take on developments from reliance..
At this pace, the look like they will gobble up PRIL ..
Do you think PRIL can retain leadership ?
These guys prove that can pump in money so much.. But where is the money coming from ? Is it from RIL or Ambani's personal investments ?
Can they sustain to pump in so much money in such a low return business like retail and get a low RoE? Won't it drain cash flow from their other businesses ?
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Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.
P Lynch
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basant
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Posted: 14/Aug/2007 at 10:26pm |
It is always better to give a great idea some more chance rather then sell it in apprehension. Though reliance has opened up big outlets but let us see the location, customer response etc. initially things would be very very cheap because they have a advertising angle to it but after a while normal pricing would come about.
About that reliance Fresh hullaballoo PRIL has tied up with ITC's eChaupal so logistics etc are matched very well.
I would give Pantaloon more time and take a 20%-25% quotational loss because what I can get is a 4-5 bagger so we need to look at it from that angle.
Has Reliance revealed its rentals. An industry source told me that it is 50% more then PRIL in places where they have not bought the land.
Now the person who should be afraid is the small shop keeper but had we owed a small shop in Ahmedabad would we have sold it?
A similar things happened in Telecom 4 years back.
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ndzapak
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Joined: 13/May/2007
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Posted: 14/Aug/2007 at 10:42pm |
One point i would like to highlight here both Reliance and Pantaloon are having different approach to the retail business.
Reliance coming as it does from its manufacturing background, has approached retail business with a view to giving consumer a better
deal by cutting the inefficiencies in the supply chain. They have talked
about wastages, removing middleman, scale etc. etc.
on the other side
Kishore Biyani is always found to be looking at ways to delight his
customer by
1) trying to understand his pysche and trying to know what is his
likes and dislikes.
2) giving customer a better experience- what additional can he provide
in his store, what changes are required
3) how much share of the wallet can he capture ?
While both approaches will work, one can easily see that KB has begin with the customer first.
That is the reason why if you see KB has moved beyond retail into the consumer space.
Edited by ndzapak - 14/Aug/2007 at 10:45pm
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the Equitydesk is the best
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vivekkumar_in
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Joined: 19/Sep/2006
Location: United States
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Posts: 606
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Posted: 14/Aug/2007 at 10:50pm |
Originally posted by basant
It is always better to give a great idea some more chance rather then sell it in apprehension. Though reliance has opened up big outlets but let us see the location, customer response etc. initially things would be very very cheap because they have a advertising angle to it but after a while normal pricing would come about.
About that reliance Fresh hullaballoo PRIL has tied up with ITC's eChaupal so logistics etc are matched very well.
I would give Pantaloon more time and take a 20%-25% quotational loss because what I can get is a 4-5 bagger so we need to look at it from that angle.
Has Reliance revealed its rentals. An industry source told me that it is 50% more then PRIL in places where they have not bought the land.
Now the person who should be afraid is the small shop keeper but had we owed a small shop in Ahmedabad would we have sold it?
A similar things happened in Telecom 4 years back.
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Exactly.. Things like higher rentals, high initial investment in this big bang approach etc are issues with Reliance... I am not concerned about PRIL.. I am sure PRIL will do its best and gain market share.. It is only weaklings like Shoppers stop, Vishal retail etc should be worried.. I am just wondering how Reliance manage the money.. - They have not gone for IPO for Rel Retail - Are they throwing the cash from RIL on this ? - Why so throw it at a business with a low RoE.. why not on RIL itself which is higher RoE ? - I think it is bad for RIL share holders..
Edited by vivekkumar_in - 14/Aug/2007 at 10:50pm
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Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.
P Lynch
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basant
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Posted: 14/Aug/2007 at 10:52pm |
With reliance you never know where they will get the money from and where they will put it into. Also they have these big concepts of psyching the competitor but now everyone understands.
Retail is a low margin business but RoE's are not that bad but KB is going about it the right way - he is milking the corwd through capital, media,brands etc.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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vivekkumar_in
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Joined: 19/Sep/2006
Location: United States
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Posts: 606
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Posted: 14/Aug/2007 at 10:55pm |
Originally posted by ndzapak
One point i would like to highlight here both Reliance and Pantaloon are having different approach to the retail business.
Reliance coming as it does from its manufacturing background, has approached retail business with a view to giving consumer a better
deal by cutting the inefficiencies in the supply chain. They have talked
about wastages, removing middleman, scale etc. etc.
on the other side
Kishore Biyani is always found to be looking at ways to delight his
customer by
1) trying to understand his pysche and trying to know what is his
likes and dislikes.
2) giving customer a better experience- what additional can he provide
in his store, what changes are required
3) how much share of the wallet can he capture ?
While both approaches will work, one can easily see that KB has begin with the customer first.
That is the reason why if you see KB has moved beyond retail into the consumer space. |
You do bring a valid point.. As with any business this is how it goes.. Phase 1: When business is good & flourishing ...business focuses on customer satisfaction as means to increase sales.. it need not focus on trimming expenses, b'cause needless to say profits anyway come due to increase in sales... Phase 1.5 : Transition between Phase 1 & Phase 2
Phase 2: When business is tempered and growth tapers.. business focuses on trimming the expenses (like leaner SCM, improving op.eff etc) If given an opp..it is good for a business to start off with a lean SCM & op. eff etc... It is in this Phase 1.5 that many businesses wither... I am sure PRIL will reach Phase 2 if it already is not there....but many other small players cannot with stand the heat of Phase 1.5. This happened with IT.. This will happen in retail too..
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Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.
P Lynch
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vivekkumar_in
Senior Member
Joined: 19/Sep/2006
Location: United States
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Posts: 606
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Posted: 14/Aug/2007 at 10:57pm |
Originally posted by basant
With reliance you never know where they will get the money from and where they will put it into. Also they have these big concepts of psyching the competitor but now everyone understands.
Retail is a low margin business but RoE's are not that bad but KB is going about it the right way - he is milking the corwd through capital, media,brands etc. |
That is one thing I adore about KB.. I hope he will be Sunil Mittal of retail inspire of strong arm of reliance..
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Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.
P Lynch
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deveshkayal
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Joined: 04/Sep/2006
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Posted: 14/Aug/2007 at 11:38pm |
Originally posted by basant
Has Reliance revealed its rentals. An industry source told me that it is 50% more then PRIL in places where they have not bought the land.
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Click here on Reliance Retail plans...
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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