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basant
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   Topic: Retail - Time for shakeout or not yet?
Posted: 08/Dec/2007 at 11:03pm |
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NDTV reports that ibull has picked up a 69pc stake in piramyd retail at rs 70. While the buy out looks cheap at first shot what is more interesting is that organized retail claimed its first casualty in the the form of a multi generation family.The story had got really tougher for the piramals who were unable to get their formats right they were switching between the hub and spoke model amd seemed really lost out.
While the other big players woud not accept their problems he fact that reliance changed its strategy and formats coupled with their problem of not meeting internel targets indicates that this 4pc net profit margin industry isn't that easy as much as it seems to be.
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vishal.sahay
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Posted: 08/Dec/2007 at 11:42pm |
Originally posted by basant
NDTV reports that ibull has picked up a 69pc stake in piramyd retail at rs 70. While the buy out looks cheap at first shot what is more interesting is that organized retail claimed its first casualty in the the form of a multi generation family.The story had got really tougher for the piramals who were unable to get their formats right they were switching between the hub and spoke model amd seemed really lost out.
While the other big players woud not accept their problems he fact that reliance changed its strategy and formats coupled with their problem of not meeting internel targets indicates that this 4pc net profit margin industry isn't that easy as much as it seems to be.
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Indiabulls buys Piramyd Retail
Ranju Sarkar / Mumbai December 09, 2007
Indiabulls Wholesale Services, the retail arm of Indiabulls Real Estate, has acquired Piramyd Retail, a company owned by the Ashok Piramal Group which runs 35 neighbourhood retail stores and seven lifestyle stores.
Indiabulls Wholesale has acquired 63.92 per cent stake in Piramyd Retail at an enterprise value of around Rs 208 crore, said sources close to the deal. It will be making an open offer over the weekend to acquire an additional 20 per cent of the fully diluted paid-up capital of Piramyd Retail, at Rs 74.73 per share. Thus, it would shell out Rs 174.55 crore for 84 per cent stake in the company.
Piramyd runs a lifestyle retail (Piramyd Megastore) and convenience store chain (Trumart) with 42 stores spread over 10 lakh square foot of retail space in states like Maharashtra, Gujarat, Rajasthan, Delhi, Punjab and Madhya Pradesh.
Indiabulls Wholesale, which is setting up 30 hypermarkets in as many tier-II cities at a cost of Rs 1,500 crore, plans to expand Piramyd’s existing network of 42 stores to over 150 stores by the end of next year. With this acquisition, Indiabulls will have a presence across different formats –hypermarkets, lifestyle and convenience store formats. The acquisition provides Indiabulls 1,300 trained people and 10 lakh square foot of prime retail space.
Pyramid Retail had reported a net loss of Rs 47.81 crore on gross sales of Rs 162.01 crore, taking up its accumulated losses to Rs 55.28 crore. Retailers have been bogged down by high real estate prices and supply chain issues.
Indiabulls Real Estate is developing commercial properties in Lower Parel in Mumbai and recently announced the launch of Indiabulls Centre One, its first building offering 1.4 million square feet for lease. It is also developing over 50,000 residential apartments across India and has over 4000 acres of land bank which it intends to use for commercial and residential development.
Edited by vishal.sahay - 08/Dec/2007 at 11:44pm
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Vishal
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xbox
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Posted: 08/Dec/2007 at 4:48am |
Wow, news flow is not stopping at all...
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Don't bet on pig after all bull & bear in circle.
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kulman
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Posted: 08/Dec/2007 at 7:14am |
It's a super strategic move & win-win situation for IndiaBulls. All said & done, existing stores of Piramyd & TruMart are at good locations (at least in Pune).
xBox needs to be again congratulated for identifying & more importantly holding IndiaBulls ....that too in super-duper concentrated portfolio! 
Edited by kulman - 08/Dec/2007 at 7:17am
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Life can only be understood backwards—but it must be lived forwards
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luke123
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Posted: 08/Dec/2007 at 10:03am |
Originally posted by basant
NDTV reports that ibull has picked up a 69pc stake in piramyd retail at rs 70. While the buy out looks cheap at first shot what is more interesting is that organized retail claimed its first casualty in the the form of a multi generation family.The story had got really tougher for the piramals who were unable to get their formats right they were switching between the hub and spoke model amd seemed really lost out.
While the other big players woud not accept their problems he fact that reliance changed its strategy and formats coupled with their problem of not meeting internel targets indicates that this 4pc net profit margin industry isn't that easy as much as it seems to be.
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Agree completely with you Basantjee. Retail is not an easy business. As a shareholder of IBREL, I hope they have a good team in place. Ikroop Singh (CEO of IBULL retail) from Microsoft doesn't give me too much comfort. Seems like friend of family to me and not a seasoned Retail professional. On the positive side, they are deep pocketed enough to hire good talent. Let us see how this plays out but at least they will know quickly whether the business is for them rather than spending years and crores figuring it out. Was never sure they should enter the business. Now they are in, seems like the right approach. Luke
Edited by luke123 - 08/Dec/2007 at 11:52am
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basant
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Posted: 08/Dec/2007 at 10:52am |
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The Tatas lost it in trent the piramals gave up reliance is strugling to get the formats in place the rahejas are also not in great shape biyani has managed it well till now let us see if he can do to retail what mittal did to telecom.
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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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omshivaya
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Posted: 08/Dec/2007 at 11:12am |
Doesn't it seems strange that so many seasoned businessmen are down in retail?? High probability of Biyani also going that road, dont you think Basant sir. Isn't it alarming?
What is so different that Mukesh Ambani is doing, that Biyani isn't?? It all seems just too alarming!!
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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smartcat
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Posted: 08/Dec/2007 at 11:24am |
Piramals, Shopper's Stop, Rahejas and Tatas might be struggling. But then there is Vishal retail and Subhiksha that seems to be doing well. No idea about the Birlas.
Never write off Reliance or even assume for a moment that they are in trouble.
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