31155346 Reliance Fresh

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Reliance Fresh Stores in Food RetailingVersion 21/10/2008

This case was prepared by Dr. Debasis Pradhan & Dr. B.K. Mangaraj of XLRI Jamshedpur, INDIA, as a basis for classroom discussion rather than to illustrate eithe

r effective or ineffective handling of a management situation.

Copyright 2008 London Business School. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in anyform or by any means, electronic, mechanical, photocopying, recording or otherwise without written permission of London Business School.

London Business School reference CS 08-029


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In April 2007, it was time for celebration at the headquarters of Reliance Industries Limited (RIL). Sales from the recently opened Reliance Fresh outlets hadexceeded all estimates with an average sale per store greater than $12,000 (Rs.

0.5 million), against expectations of $5,000 (Rs 0.2 million). The footfalls were as high as 4,000 per day. Launched as 'your friendly neighbourhood store', the typical Reliance Fresh store was spread over an area of 2000 sq ft. Just before its launch, in June 2006, its chairman, Mukesh Ambani had announced a $5.6 billion multiyear investment in the agriculture and retail sectors. He aimed at making a new company, Reliance Retail the sector's dominant player. Reliance Fresh intended to bring high quality fresh food to the customers at an affordableprice. This was to be achieved through an integrated supply chain process and with efficient delivery of value to the consumers. Ambani, who visited all 11 shops on the eve of opening, said his firm offered "unmatched affordability, qualityand choice of products and services to the customers". Yet his confidence and optimism did not mean that all questions about his business model were fully answ

ered, or that the answers had been validated yet. There certainly appeared to have been an overwhelming response to Reliance Retail in the first year of operations. Looking at the very encouraging response from the public and the buyers, there were plans to commission more city distribution centres and city processingcenters that would further strengthen the supply chain. The stores offered freshproduce, vegetables, pulses, breads and dairy products. "The focus was on freshfruits and veggies, groceries and staple products that consumers buy," President and CEO, RIL Foods Business, Gunender Kapur said. The stores directly procuredvegetables, pulses and spices from the farmers of Andhra Pradesh, Karnataka andTamil Nadu, which contributed to quality and pricing advantage. Most of the products were being retailed under Reliance Select, a premium food brand launchedby Reliance. In April 2007, the Reliance Select brand covered pulses, rice, spices and vegetables. Raghu Pillai, President of operations and strategy at Reli

ance Retail said, About 95% of India

s retail sector is made up of small, family-run stores and the sector has not been tapped by big businesses. Reliance Fresh aims to target and exploit this very segment in which it foresees huge potential for further robust growth. Yet Pillai was realistic about the need for strategies to survive existing and growing competition in this new sector.


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Opportunities for Retailing in Agri-BusinessIndia

s retail sector was undergoing a transformation and with a three year CAGRof 46.64%, retail was the fastest growing sector in the Indian economy. Traditi

onal markets were making way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls had begun appearing in metros and second-rung cities alike, introducing the Indian consumer to anunprecedented variety in shopping experiences. India

s vast middle class and its almost untapped retail industry were key attractions for global retail giantswanting to enter newer markets. While organized retail in India was only 2% of the total US$ 215 billion retail industry, it was expected to grow 25% annually,driven by changing lifestyles, strong income growth and favourable demographic patterns. A retail consulting and research agency had predicted that by 2010, organized retailing in India would cross US$ 21.5 billion mark.1 Unlike in the developed world, food dominated the shopping basket in India. While food accounted for only 9.7% of the total private consumption expenditure for an average America

n, 15% for the Japanese & British, for the Indian, it was the principal component of their consumption expenditure accounting for as much 53%. Since much of this was non-branded (including perishable items like fruits and vegetables), the branded food industry was homing in on converting Indian consumers to branded food. At the same time, a huge population base of 1.08 billion, growing at about 1.6% per annum, provided a large and growing domestic market for food products. Also, the countrys middle class had been expanding due to rapid urbanization, increasing per capita income and credit card ownerships, increased participation ofwomen in the urban work force. The segment aged between 20-45 years was emerging as the fastest growing consumer group and the mean age of Indians was now 27 years, a mean age that reinforced spending across all retailing channels of grocery, non-grocery and non-stores. Unsurprisingly, food & grocery retailers continued to be the staple of retailing in 2005, accounting for of overall retailing

value sales as shown in Fig-1,

1

KSA-Technopak


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Fig-1: Fastest growing retails segments in IndiaFood & Grocery Clothing Furnitures & Fixture Durables Footwear & Leather Watch &Jewellery 0 20 40 60 80 100

Source: KMPG in India Retail Survey 2005. Agriculture was the backbone of the Indian economy as Nature had been very favourable to the country. Of the land within its boundaries, 52% was cultivable, as against the global average of 11%. Allthe major 15 climate types existed in India and sunshine hours and day length were ideally suited for good cultivation round the year. Also, India had great bio-diversity and accounted for 17% of animals, 12% of plants and 10% of fish genetic resources of the world. Undoubtedly, this comparative advantage was one of the reasons for the advent of a number of retail majors into food retailing in the past few years. Many were leading players in FMCGs, tobacco business, and agribusiness.


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-5Table1 Area & Production of Agricultural Products

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(Production in million tones) India Arable Land (Million ha.) Irrigated Land (Million ha.) Wheat Rice, Paddy Course grain (including maize) Milk Fruits Vegetables Edible oil seeds Pulses Sugarcane Tea Cattle (Million) 151 55 72 124 29 91 47

82 25 15 245 0.85 186 Indias rank in world production 2 1 2 2 3 1 2 2 3 1 2 12

Source: Marketing Reforms & Enhancing Competitiveness, 2006 However, the supplychain that connected the vast natural resources and the farmers to both organized as well as unorganized retail was highly inefficient with several intermediaries and manual handling. The result was lots of wastage (as much as 30%) and small remunerations for the farmers (Exhibit-1). There was hardly any supply chain integrator or channel master for retail channels in this sector. RIL was aware ofthis and hence was keen on setting up its own supply chain which could be moreefficient than the existing ones.


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-6Exhibit 1: Inefficient supply chain in India

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In effect, the plentiful natural resources were underutilized or not efficientlyutilized for agriculture in India as Indian rural life had not qualitatively changed over the decades. There was little attention to value added agriculture in

the whole country. Research on improving farm productivity, pre-harvest and post-harvest methodologies, processed food product development, packing, distribution, transport, cold chain, store management warehouse and the entire supply chain were much neglected both by the Central and State Governments. At the same time, it was generally recognized that there was tremendous potential for growth ofthe food market in the Indian context (Exhibit-2). Reliance Fresh believed thatit could unleash that potential for profitable foods and vegetables retailing.


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-7Exhibit 2: Growth in Indian food market

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Reliance FreshReliance Fresh was the first foray into retailing by the $25 billion behemoth known as Reliance Industries Limited. There were three basic reasons for Reliance

Industries Limited (RIL) choosing foods and vegetables for entering into retailing. First, it wanted to go after the very core of the great Indian retail opportunity. Food accounted for over two-thirds of the $200 billion Indian retail market and yet, it had seen hardly any penetration by modern retail so far. Second,its aim was to build a high-profitability business and food was perhaps the bestplace to start. Third, the grossly inefficient food supply chain provided a well resourced and well managed organization like RIL with an opportunity to thinkof amending the flaws which would also make business sense. In the traditional supply chain in India, there were several intermediaries, who added their respective profit margin to the cost. Besides, there was huge wastage in transit. Thisoffered potential for savings and profits and Reliance Fresh was a step in thatdirection. Reliance Fresh launched by opening new retail stores in Hyderabad on

3 November 2006 (Exhibits 3-4). Stores remained open from 9am to 9pm. On 24th January 2007, 12 "Fresh" outlets opened in Chennai increasing the total store count to 40. Reliance was testing its retail concepts by controlled entry,


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beginning in the southern states. RIL planned to invest $63.50 billion (Rs. 2,500 billion) over the next five years in the retail business with 4,000 retail outlets in different cities. Retail Format: Small is Sensible The stores size vari

ed from 1,500 sq ft to 3,000 sq ft, and stocked fresh fruits and vegetables, staples, FMCG products and dairy products (Exhibits 5-7). The stores stocked theirown private label in staples and food under the "Reliance Select" label (Exhibit-8). Eventually the label would include other food categories such as dairy products, jams and colas. The Fresh model was engineered to clock a faster turnoverof inventory Reliance expected consumers to visit the store at least twice a week for their top-up groceries. Each store would have an investment of approx $127,000 (Rs. 5 million) to $153,000 (Rs. 6 million). Industry sources expected Reliance Fresh to turn this capital over six times. Each of our stores aim at catchments of only about 2,000 households in a 2-3 sq km radius, shared Jai Bendre, Head of Marketing (foods), Reliance Fresh. This was the concept of a neighbourhood store. Reliance Fresh opened its 100th outlet in the country in the nationa

l capital, New Delhi. In addition to this, Bangalore was said to have 40 storesin all by the end of the year. The push in the retailing of perishables was partof an overall planned $5 billion project which was aimed to cater to more than780 cities and 6,000 rural towns in India over the next five years. Reliance Fresh aimed at opening stores in the top 70 cities within the next two years and attaining sales of $25 billion by 2011. Reliance Fresh had consciously adopted a business model of operating through small and medium size stores. These stores would be of 2,000-5,000 sq ft in comparison to a supermarket which needed 8,000-10,000 sq ft. In the current business model it had positioned itself as a food andgrocery convenience store. It aimed to be a channel for not only consumer salesbut also positioned itself as a distribution channel for other small outlets invarious parts of the city by building an integrated supply chain to deliver andoperate its Farm to Fork model. The company had been racing to set up deals w

ith state governments to establish rural hubs to buy fruit, vegetables, pulses and dairy goods from farmers as it moved to build a

state-of-the-art supply chain spanning the entire country

. Reliance Freshs shelves provided an indicationthat the group was looking for higher margins. Most of the staples were under its own private label brand Reliance Select. Except a few packets of NestlsMaggi, or MTRs Masalas


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or Pepsis Lays chips, there was very little shelf space given to the big brandowners in the country. The traditional model of vegetable retailing in India involved vegetables being sold in small stores on the roadside, and there were no

formal rules regarding weighing, bargaining and quality issues, let alone coldstorage and sophisticated supply chains. Produce travelled slowly and inefficiently through a series of intermediaries before reaching the hands of customers, suffering mark-ups, wastages and quality losses along the way. Reliance Fresh marketing model operates on affordability and a hygienic ambience along with a good shopping experience, said Mukesh Ambani, the Chairman of RIL. Reliance Freshintended to bring high quality fresh food to the customers at an affordable price. Reliance Fresh also wanted to establish a benchmark of hygiene and quality in their sales. It thus sought to provide the consumer affordable and quality produce in a congenial and pleasing environment and enforced stringent quality andhygiene guidelines which would help it bring high value to the consumer Supply Chain We will always buy from the farmer, almost never from the mandi (wholesale

rs), said a group official. For example, the leafy vegetables, aubergines, tomatoes and green chillies in the one of the outlets in Mumbai were sourced directly from farmers in nearby districts. This in effect got translated into lower prices by at least 15% to 20%. We

ll be very affordable and competitive in the market, but we arent playing a price game here. The full effort is to deliver value to the customer, said Chief Executive, Customer Operations, KS Venugopal. Produce from the farmers came to Reliance

s city distribution centre, which connected two very different sides of India, the poverty-ridden countryside, steeped intradition, and the wealthy city centers. Already, a few hundred farmers have been hooked on to the Reliance Retail supply chain. In the next five years, thatnumber will grow to millions. Even contract farming by assisting farmers in procuring high-quality seeds, fertilisers and other essential raw materials is onthe cards. By going to the farmer directly, Reliance Retail hoped to disintermed

iate the supply chain and eliminate waste. This meant fresher products at lowercost, reasoned the same group official. Still, there was a general concern in the industry about the possibility of steady and high quality supply of vegetables and other perishable food items to the huge number of proposed retail outlets.How far backwards would Reliance have to integrate to assure such supply?


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- 10 Current Supply Chain Diagram of Reliance Fresh

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LOCAL FARMERS

(Here grading and standardization takes place)

COLLECTION CENTRES LINKED WITH CONSORTIUMS

RELIANCE FRESH OUTLETSScale behind the scenes: Rural Business Hubs Globally, supply chains were fairlymature and efficient. This gave the retailer little opportunity to improve profit margins. But in India, any retailer who built an efficient supply chain stoodto gain. With efficient sourcing, we can release margins into the system. Thiscan be shared by customers and shareholders, said Gunender Kapur, president and CEO (Foods), Reliance Retail. The company planned to own and operate a complete value chain by identifying potential geographical clusters to implement farm initiatives and create an infrastructure to collect, pack, store, process and dis

tribute fresh and value-added products at the district level. The company was planning to set up Rural Business Hubs (RBHs) which would be the strategic business platform for providing comprehensive range of products and services to the rural communities. The first such hub would start by October 2007. RBHs would provide agricultural inputs, financial services,


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veterinary health care, educational and entertainment facilities. Reliance Retail was planning to set up 1,600 business hubs to cater to rural areas across thecountry, reported Daily News Analysis (DNA), a prominent daily. These business

hubs will act as shop-stops for villagers and will act as procurement centres, besides facilitating retail, technical and health assistance to farmers. Reliance Fresh across India The State of Punjab would lease out 150 acres of land to RILs RBH at $406.39 (Rs 16,000) per acre per annum for 30 years. RIL planned to build direct linkages with farmers in procuring a major share of marketable surplus from farmers at their farm gate and to use it for flour and pulse milling andprocessing units catering to domestic and export markets as well. In the next four years, the number of RBHs would increase to 50 and would cover around 12,400villages out of 12,700 villages in the state of Punjab. The firm also planned to establish farms with world class technology to suit local conditions. RelianceRetail also hoped to bring "prosperity of scale" to the State of Tamil Nadu

s farmers through the sourcing and supply chain for its Reliance Fresh outlets. 95%

of fresh fruits and vegetables sold at the stores were sourced from farmers. Under its Ranger Farms concept, the company had set up 10 collection centers across the State, with 10 more to come up soon. The produce will be cleaned, graded and distributed at a centre at Puzhal. This will eliminate middlemen and pay farmers cash, fair price for quality produce, said Gunender Kapoor, President, Agribusiness. Farmers would not only get market access but also advice on marketdemand what vegetables to grow, how much and when. Ultimately, these collection centers would graduate into 40 rural business hubs across the State, which would help to improve farm productivity through technology and mechanization and offer services such as credit, insurance, health and veterinary care. The speedy,refrigerated transport and logistics infrastructure being developed by the company will soon be available to the retail industry at large through a cash and carry wholesale format. This means even your local pushcart vendor could be sellin

g vegetables sourced by Reliance," emphatically added Mr. Kapoor quelling the apprehension that the presence of organized retailing could doom the fate of smallneighborhood retail stores. Reliance Industries (RIL) was planning to acquireover 2,000 acres for its contract farming venture in the State of Karnataka, which could emerge as one of its hubs for farm produce exports. The company was also ready to enter into contract farming operations in the states of Haryana and Maharashtra. Its plan entailed acquiring 10-acres each of the nearly 200 administrative sub-divisions in the state. It was learnt that RIL had recruited a vast number of agriculture graduates for this project. Also in the pipeline were the companys plans to set up warehouses across the states. It had already unveiled ambitious contract


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farming plans nationwide, which would see it operating a massive fleet of cargoflights within India and overseas. Win-Win Situation? According to early news reports published in the Hindu Business Line (December 16, 2006 Exhibit-9), farm

producers selling to Reliance Fresh were getting better returns on vegetables produced by them. For example, Rangers Farm, the farm produce procuring arm of Reliance Retail was buying Bhindi (okra) at more than $0.25 (Rs.10) per kg against $0.18 per kg (Rs.7.50) (less 10% commission) being offered by traditional vegetable wholesalers. Most farmers were also able to save on time, effort and money as they were not required to transport their produce to the wholesale markets, which in some cases were located 40-50km away from their villages. Reliance, on the other hand, had set up its procurement centres nearby. There was one catch, however. Vegetables before being accepted by the Reliance arm were required tobe graded based on their quality and freshness. Although wholesalers refused toadmit any impact of Reliance and other chains on arrivals of farm products in the wholesale markets, there was no denying the fact that a quiet revolution was

taking place in the countryside as more and more farmers had started to see thebenefits of selling their produce directly to the retail chains. Efficient supply chains, backed by superior logistics management, had the potential of saving 30-35% in costs, particularly for perishable items like flowers and vegetables. And at the same time, government was getting improved tax revenue as vegetables and groceries were now taxed through these outlets. Major Players in Food and Vegetable Retailing in India Godrej Aadhar, a venture of Godrej Agrovet was a complete solution provider for the Indian farmer. It provided professional guidance with an objective to improve productivity, higher returns and improved cost-benefit ratio. The services offered were crop advisory services, soil & water testingservices, crop finance, supply of agricultural inputs and animal feeds, transfer of information (weather, price & demandsupply), door delivery of products etc. It already had 33 stores across the country, which it planned to increase to 4

5 very soon. The company started its fruits, vegetables, dairy and poultry retail business through their Natures Basket stores in the urban areas. While sevenNatures Basket stores were already functioning in Mumbai, the group planned toadd another eight in Mumbai itself, before it set base in Delhi, Gurgaon, Hyderabad, Chennai, Chandigarh, Amritsar and Ludhiana. The target was for setting up 1000 outlets by 2010. It had adopted a Hub and Spokes Model for its distribution network.


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Subhiksha: The Chennai-based discount retail chain Subhiksha announced a $0.7 billion (Rs.30 billion) expansion plan to venture beyond its home base of Tamil Nadu by setting up nearly 450 stores in the National Capital Region and four other

states. As part of expansion, the company planned to increase the number of stores to 600 from 150 now by end of 2007 to create a national footprint. Besides Delhi, the company proposed to open stores in the states of Maharashtra, Gujarat,Andhra Pradesh and Karnataka. For the Delhi market, the company had earmarked an investment of $0.2 billion (Rs.10 billion) over two years. The company had been making profit for the last eight years, and its revenues had grown 25% in thelast two years. The company earned revenue of $0.81 billion (Rs.33 billion) witha profit of $2.5 million (Rs.100 million) last year. Every store on an averagehad a billing of $0.86 million (Rs.35 million). The expansion was expected to add around $391 million (Rs. 15,750 million). ITC Choupal Fresh stores were started in the cities of Chandigarh, Hyderabad and Pune, with their own cold chain supply to wholesale and retail clients. It was the first of 140 stores that ITC pla

nned to open in 54 Indian cities over three years at an investment of $1.9 billion (Rs. 80 billion). ITC had designed the supply chain in collaboration with Ingersoll Rand and Mitsubish

s Snowman. Ingersoll Rand had designed the climate-control shelves, the freezer trucks in which farmers send produce, the pre-coolers,and Snowman managed the logistics of the produce. The store stocked only freshfruit and vegetables, sourced directly from farmers from all over the country. And it expected the organised retail market for fresh produce would touch $12.4 billion (Rs. 500 billion) in the three years. The e-choupal project was empowering farmers and in turn, helping create new businesses for the company. These projects essentially worked on digital infrastructure (IT, Internet access), physical infrastructure (rural Internet enabled offices) human infrastructure (managersand IT professionals) and network orchestration by ITC. As an intermediary, ITChad brought a network of insurance companies, banks, micro-finance entities, se

ed and fertiliser companies, FMCG, e-learning and training organisations to rural India. Launched in June 2000, in 7 years the 6,500 strong e-choupal kiosk

s services reached millions of farmers growing a wide range of crops and seafood, soyabean, coffee, wheat, rice, pulses, shrimp, in over 38,000 villages across ninestates of the country. Hariyali Kisaan Bazaar: The Hariyali Kisaan Bazaar was apioneering micro level effort, which created a far-reaching positive impact inbringing a qualitative change and revolutionising the farming sector in India. The chain successfully ran its business through 33 stores in five rural locationsin North India. Each Hariyali Kisaan Bazaar centre operated in a catchment of about 20 km. A typical centre catered to agricultural land of about 50,000-70,000acres


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and made an impact in the life of nearly 15,000 farmers across India. Each centre provided support through a team of qualified agronomists; provided a completerange of good quality, multi-brand agri-inputs like fertilizers, seeds, pesticid

es, farm implements and tools, veterinary products, animal feed, irrigation items and other key inputs like diesel and petrol at fair prices. The centres also provided access to modern retail banking and farm credit, farm produce buyback opportunities, access to new markets and output related services. Bharti Retail planned to invest $2-2.5 billion by 2015 in its pan-India operations. It was looking at approximately 10 million square feet of retail space across all cities inIndia that had a population of over 1 million. It planned to employ 60,000 people. The company planned to launch its retail outlets in multiple consumer friendly formats, including hypermarkets and supermarkets. They had plans to serve allregular shopping requirements of an Indian householdfruits, vegetables, meat and poultry, dairy products, staples, processed foods besides other FMCG and consumer durables. Trinethra was a 98 outlet strong chain, operating in 9 cities of A

ndhra Pradesh, covering retail space of more than 15,000,000 sq ft. The companyhad grown exponentially with the number of stores, more than tripled in 5 years.In 2003-04, the company acquired another chain Fab Mall which operated 12 outlets and achieved sales worth $12.4 million (Rs.500 million). Trinethra and Fab Mall had drawn up an ambitious plan to breakthrough the $2.5 billion (Rs. 100 billion) barrier sales by 2008 and for this plans were afoot to cover six new statesby 2008. This expansion would see the number of outlets increase from present 92 to 175. Adani Agri Fresh launched operations in Himachal Pradesh last year, when it procured a major chunk of apples from the hill state. The orchardist in the largest apple growing state in the country got a much better price from the agrimajor and they were also spared the hassle of packaging their produce and transporting it to big markets in Delhi, Mumbai, Ahmedabad and Kolkata. Adani had already made an investment of over $280 million (Rs. 11 billion) in the hill state

for setting up controlled atmosphere packaging and storage units. This year, the company planned to invest over $408 million (Rs.16 billion) to set up its owncold chain of refrigerated vehicles for transporting apples, kiwi, almonds and peaches. Future Plans and Challenges Senior officers in the company were known tohave set a conservative sales target of $25 billion for the next five years.The firm expected to employ 500,000 staff as well as create at least one millionjobs indirectly. Reliance planned to invest $7-8 billion in setting up its stores arm that would cover


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1,500 Indian cities and towns in the country, said a senior Reliance official. The company had hired 6,000 managers for the new business. Reliance was selectinglocations for the stores, setting up agreements with farmers to buy their produ

ce and tying up with manufacturers for merchandise ranging from consumer electronics to apparel. The company had aimed at setting up as many as 60 distributioncentres across the nation to feed its retail chain and planed to initially contract trucks and warehouses with cold storage facilities and then build its own. It was recognized that different retail formats other than the city based storesmight be necessary in different markets. In towns and villages, it would have so-called hypermarkets warehouse style stores spread over 150,000 square feet, or about 14,000 square meters, selling groceries, fresh food, consumer electronics and clothes. The company would also open smaller, 75,000 square feet, supermarkets. Larger metropolises like New Delhi and Mumbai would have smaller stores depending on the availability of real estate. Yet, despite these dramatic expansion plans, several questions remained: How would competitors, including the formid

ably resourced ITC and Godrej groups respond to these expansion plans? Were theyperhaps ignoring the most obvious source of competition- the traditional smallneighbourhood grocery store, where the shopkeeper knew every customer (and his needs) by face, and was willing to extend credit till the next pay check? How necessary and realistic were Reliance Freshs plans to backward integrate all the way to farming? And what would be the social consequences of this expanding corporate presence into the largely unorganized, but politically mobilized farming sector? How would intermediaries and small grocers react, and where would the peoples (and Governments) sympathies lie?


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ReferencesIndia Retail Report, 2007 India Retail Report, An Images KSA Technopak Study, 2005 Retailing in India : The Emerging Revolution. Mckinsey & Company, Inc. 2000.


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Exhibit 1

Reliance Industries Ltd. (RIL) Chairman Ambani in discussion with his lieutenant

s.


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- 18 Exhibit-2

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Vertical glow sign outside the store -- as typically seen in petrol pumps. Not seen till now in grocery stores. Increases visibility of stores in by-lanes -where visibility is limited to just 2-3 stores from the main road. Products availabl

e listed on the glow sign


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- 19 Exhibit-3

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Store Faade Bright, Striking, Primary Colours


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- 20 Exhibit-4

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Visible Store Promotions and Co-branded Promotions

Highly visible store promotions, re-iterating value for money proposition


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- 21 Exhibit-5

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Vegetables in Baskets


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- 22 Exhibit-6

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Layout and Ambience Well-lit, Neat, Bright, Easy To Read Signage


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- 23 Exhibit-7

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Private Label Competing With Branded In Some Categories The consumer has three options in cereals & pulses branded, store brand Reliance Select or packagedunbranded


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- 24 Exhibit-8

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BusinessDailyfromTHEHINDUgroupofpublications Saturday,Dec16,2006

Farmers take a

Fresh

look at retailing

ATTRACTIVE RATES for produce, and no commission

Twenty-five-year-old Mr Rami Reddy, whose joint family owns 20 acres in Lakshmareddy Gudem, a small village in Rangareddy district near Hyderabad, has been growing brinjals in one or two acres for the last eight years. But he never saw a price for his produce that he got this season from Reliance. Not only that. He could save money, time and effort in taking the produce to the Bowenpally market, 40 km away. "All we need is to take the produce there. We need not pay any commission not to speak of the hamali charges," he said. "Two months ago, Reliance representatives came to me and told me about their plans to procure quality brinjals for their upcoming outlets in Hyderabad," he told Business Line. Mr Reddy is n

ot alone. "It has become a hot topic for discussion among the villagers. Everybody talks about the attractive rates," he said. Collection centre He is not exaggerating. About 200 farmers from villages in the area have started selling theirproduce at the Collection Centre set up by Reliance at Shankarpally. The centrecollects 7-8 tonnes of vegetables a day and send the lot to the central processing centre at Medchal. Vegetables from 2-3 such


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centres get graded again and processed there before getting into the 17

Fresh

outlets the company opened in the twin cities. "We used to sell a 20-kg bhindi(okra) bag for just Rs 150. But now we are getting Rs 10-11 a kg," Mr Jangaiah o

f Alamkhangudem said. "It is not just the higher price. We also save on the 10 per cent commission we pay at the market yards," he said. But they understood quite well that the maal (produce) should be fresh. "It should be plucked too ina certain way. All my life I grew bhindi (okra) the way my father did and sold as he did in the market. They (Reliance) do not take the second grade vegetables.But it seems I have to change," said. Mr Venkatrami Reddy of Chinnareddy Gudemsaw another advantage. "They would tell me what quantity of vegetables they needfrom me. I

ll go there and get my consignment graded at their collection centre," he said. The centre would get the price-band and quantity of vegetables it needed to collect that particular day. Mr Vithal, Secretary of the Agriculture Market Committee at Shankarpally, felt that the procurement by Ranger Farms (through which Reliance procures vegetables) has no impact on the arrivals at the com

mittee. The committee accepts vegetable consignments two days in a week. "Some days we receive more and some days we see less arrivals. We haven

t yet seen anydecrease on account of their (Reliance

s) entry," he said. Asked about farmers

claim that they paid 10 per cent as commission, Mr Vithal said the committee charged four per cent. The farmers also needed to pay for weighing and hamalis, heexplained.


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- 26 Exhibit-9 The Economic Times 24 July 2007 1023 hrs IST, AGENCIES We don

want Reliance to colonise us, say farmers t

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MUNDHA KHERA, INDIA: It

s a hot, humid Sunday morning in northern India, but theoppressive heat does not deter a group of about 15 farmers from trudging door-t

o-door, offering advice and sometimes warnings. "Do not sell your precious land.Even if you are offered millions of dollars, do not sell. It is your only source of livelihood," Mahavir Gulia, the leader of the group, tells a villager in Mundha Khera, 100 kilometres (60 miles) from New Delhi. "Sell your land and you will lose your identity," he warns another as the group winds its way through thecluster of austere mud, brick and cement homes. Gulia is trying to spell out thedangers to locals whose land has been earmarked for a Chinese-style business enclave - a joint venture between the Haryana state government and Reliance Industries, India

s largest private conglomerate. "We want to be sure our fertile landthat gives us three crops a year does not end up as part of the Reliance empire," he said. "We don

t want Reliance to colonise us. Land is what sustains us farmers with food, respect and dignity." In Neemana village, 10 kilometres away, Pr

atap Singh, 75, understands the message -- but a little too late. Eight months ago, he was the owner of a 20-acre (eight-hectare) fertile field that yielded three harvests a year. "My sons were lured by the promise of good and quick money.They persuaded me to sell most of my land to the big company," says Singh, squatting on the sandy floor of the one-room house that he and his wife share with abuffalo. He did get some cash, but it did not last him long in the world outsidehis usual farming routine. "We have a saying here that our land is our mother,"Singh added sadly. "How can you get any respect when you have sold your mother?" India

"Great Land Grab" s Singh

s land is now part of the 25,000-acre Reliance-Haryana government Special Economic Zone (SEZ) -- a project encouraged by theIndian government to spur industrialisation, infrastructure development and pusheconomic growth into double digits. For foreign and domestic corporate giants,the SEZs are a tempting option -promising a way around the country

s notoriously

slow, corrupt and spiritcrushing bureaucracy.


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But opponents say the government is merely sidelining the still-crucial farm sector -- stealing labour and prime land from a sector which employs more than 60 percent of the workforce and generates more than a fifth of India

s gross domesti

c product. Journalist-turned-activist Praful Bidwai says the years 2006 and 2007"will be noted in history for the launch of the Great Land Grab". "It

s happening across India," added social activist Vandana Shiva, pointing to farmers

protests in the Communist-ruled eastern West Bengal state in March. Fourteen farmerswere killed when police entered their village to evict them from land designated for a SEZ - causing a furore and polarising public opinion. Not that land grabbing is a new concept in India - tribal peoples have long seen their forest landshrink with the march of urbanisation. But SEZs are different, says Shiva. "These are enclaves of privilege, insulated from the laws of the land - whether it is labour laws or environment laws." Democratic-corporate "schizophrenia" So far,India has approved 303 SEZs and set aside 1,400 square kilometres (540 square miles) of land on which they are to be built. According to India

s trade ministry

, the 126 enclaves already operating have generated 32,578 jobs, and this will swell to 1.5 million by December 2009. It also hopes SEZs will generate 25 billion dollars worth of exports in 2008-2009. While the figures look impressive, critics argue that Indian democracy is suffering. "When there is large scale displacement of people involved, you need their consent. In a democracy, people have the right to decide their own future," said prominent community activist Aruna Roy. "All the villagers should decide -- not just the village headman." She also points to what she sees as the irony of Prime Minister Manmohan Singh

s government-- elected on a pro-poor platform in May 2004, but aggressively pushing throughthe SEZs. "It

s a case of schizophrenia," Roy said. Those who may end up profiting from the affair are India

s Maoists, who have seized on the land grabbing issue and already hold sway in much of the impoverished east. "Agitations like theMaoists

insurgency are triggered by the repeated failure of governance to deli

ver basic rights," says Roy. Economist Paranajoy Guha Thakurta says India

s ambition to emulate the Chinese SEZ model is basically flawed - "because India is ademocracy".


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"The Chinese SEZs are like giant urban agglomerations, independent nation stateswith their own rules for labour and environment," he said. India following thesame model will only create "huge islands of industrial affluence in a sea of de

privation and poverty. "This will be unacceptable in a democracy."


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WAL-MART IN JOINT VENTURE FOR INDIABy Amy Yee in New Delhi, FT.com site Published: Aug 06, 2007

Wal-Mart has succeeded in getting its toe in the door of the Indian market, viaa long-planned joint venture with local partner Bharti Enterprises. The world

slargest retailer stressed it would work with and develop local supplies and create local beneficiaries along the supply chain, in an apparent effort to play down controversy over the potential disruptive effects of corporate retail in India. The 50-50 joint venture, called Bharti Wal-Mart, is a wholesale cash-andcarry business that will use Wal-Mart

s back-end logistics technology, inventory systems, cold chain infrastructure, truck tracking and fuel management. Bharti, one of India

s largest companies and owner of Airtel, the country

s leading mobile phone operator, recently announced investments of up to $2.5bn in Bharti Retail, its own 100 per cent-owned supermarket chain that will be supported by Wal-Mart

s logistics and supply chain technology through a franchise agreement. The pl

ans come amid controversy over Wal-Mart

s entry into India. Activists and smalltrade associations insist corporate retailers will disrupt millions of Indians whose livelihoods depend on farming and retail dominated by small

mom-and-pop

shops. Manmohan Singh, Indian prime minister, this spring called for an independent study on corporate retail advances into the country. The report is yet to befinalised. Dharmendra Kumar, head of India FDI Watch, which opposes big retail,said: The government is still to know the likely impact of corporate retail. Inthe meantime, they are allowing corporations to expand their retail plans at analarming India FDI Watch and other activist groups plan demonstrations acrossIndia this week. Hakim Singh Rawat, president of the Hawkers Association, said street traders would be hit hard by Bharti Wal-Mart and warned the Indian government about favouring only a few huge corporations. Opponents insist the joint venture is a back door into India

s $300bn retail industry. Under current law

multi-brand retailers that sell more than one


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brand of products are barred from India. Single-brand retailers such as Benettonand Nike are allowed 51 per cent foreign direct investment. In the next seven years, Bharti Wal-Mart plans to open 10 to 15 wholesale centres in smaller cities

, starting late next year. A typical facility will sell groceries, stationery, clothing and consumer durables. The companies did not disclose details of their investment in the joint venture. Formal shops, or organised retail, comprise just 2-3 per cent of India

s $300bn retail industry. The majority of shopping takes place in small

momand-pop

shops, roadside vendors and open air market. About35-45 per cent of farm products never make it to market because of lack of coldstorage and poor transport and roads.


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