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Reliance Retail wants a foot in Bata stores

Reliance Retail wants a foot in Bata stores

Author | Source: The Economic Times | Wednesday, May 23,2007 9:20 AM

Reliance Retail wants a foot in Bata stores

MUMBAI: It could be one of the biggest tie-ups in Indian retail if it were to go through. According to sources, talks are on between India's oldest retailer, Bata and the most ambitious entrant into the retail space, Reliance Retail.

As part of its retail strategy, Reliance plans to get into footwear retailing. The foray into the footwear segment is being overseen by G Sankar who was formerly MD, Lifestyle India, and is targeting a turnover of Rs 3,000 crore in three years.

If the rumoured tie-up turns out to be a reality then here is how it would work. Bata showrooms across India would retail the footwear brands planned by Reliance and in turn Bata brands will find space on Reliance Retail shelves.

Reliance is believed to be aggressively pushing for the deal because it would give them immediate access to a 1,000 plus Bata stores, across the country located more often than not in the prime shopping districts.

Say sources close to the negotiations, “Bata has the width and depth which Reliance is extremely keen to tap into. An agreement such as this one could significantly accelerate Reliance's footwear retailing plans.”

While a tie-up with Reliance might add to its distribution network, Bata's strong performances of late might mean that it can afford to do the deal on its own terms. The two companies have been parleying for over a year now but no agreement is believed to be in sight. Sources say that the sticking point has been Reliance's insistence on equity participation which Bata is unwilling to accept.

ET sent a questionnaire to both the companies asking for an official response. There was no comment forthcoming from the officials at Reliance Retail's footwear vertical based out of Bangalore while officials at Bata categorically denied that any such talks had taken place.

Shaibal Sinha, CFO, Bata India, told ET: “Reliance Retail has given a letter of intent (LOI) to Riverbank Holdings, our joint venture which is developing the real estate township in Batanagar, Kolkata for setting up a hypermarket and non-footwear speciality store in the township.

Other than that there have been no other talks,” said Sinha. Riverbank Holdings is a 50:50 joint venture between Bata India and Calcutta Metropolitan group for the makeover of the 257 acre Batanagar project in Kolkata.

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