Author Topic: Foreign Investment in Retail - A dream come true  (Read 7193 times)

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Foreign Investment in Retail - A dream come true
« on: November 25, 2011, 09:22:38 AM »
The Government has given green signal for foreign partners holding up to 51% in multi-brand retail and 100% in single-brand retail (from current 51%). We perceive this move, if well executed, to benefit retail companies, consumer companies and consumers. This is expected to stimulate investment, especially in logistics and cold chain, thereby reducing wastage and food prices.

We perceive this as a huge positive for the Indian retail sector as it will stimulate investments, especially in logistics and cold chain development (help food companies and reduce food inflation), besides reducing the overhang of debt. Although Shoppers Stop is currently not looking to enter into a tie up, it is worthwhile to note that in China, even after years of FDI many local players are doing well and are amongst the top 10 retail chains. Inadequate storage facilities lead to significant wastages (wastage is ~35% for tomatoes, ~30% for mangoes and ~25% for potatoes).

We believe discretionary consumer goods will benefit as it will help increase consumption and prop volume growth by ~2%. Modern retail accounts for 20-30% share in top cities for consumer companies. Key beneficiaries will be HUL (has higher market share in modern retail) and food companies like Nestle, GSK, Marico.


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Re: Foreign Investment in Retail - A dream come true
« Reply #1 on: November 28, 2011, 04:01:33 PM »
The move is set to catalyse growth in the economy over the medium-to-long-run. It is expected to stimulate investment activities in the back-end infrastructure as frontend players fight for space in the organized retail sector. Government expects 10 mn new jobs to be created. New and
existing players will redefine the cold storage and supply chain logistics as world’s best practices gets adopted. Direct sourcing from farmers would result in savings and overall price improvement in the economy by cutting waste which is around 30-40% of farm produce.