Essar Group, the diversified steel-to-telecom company, with revenues of $15 billion, is all geared to merge its retail proposals under one roof to make the most of synergies and discover new prospects for further development. For this, the company is establishing a centralized retail think-tank. This will direct the multinational’s future course of action.
“While business divisions will continue to operate independently, the retail think-tank will set out overall direction and focus. It is likely to report directly to the promoter directors of the Essar Group,” said a group official.
There are reports that Aloke Gupta, Director of Café Coffee Day (CCD), could join the Essar group this month to head the think-tank. Earlier, Gupta had been a key Vijay Mallya lieutenant at United Spirits, Whyte & Mackay and later Kingfisher Airlines. Gupta has, however, declined to comment on this matter and describes this as “speculative news”.
At present, Essar’s retail business is mostly spread across three verticals namely steel, mobile phones and oil marketing. Despite current problems with petroleum retail in India, Essar Oil has over 1,340 branded retail outlets countrywide. However, it is now aspiring to steadily expand both in India and abroad.
Besides this, the company also owns close to 1,400 Mobile Stores nationwide making it the biggest organized retailer in this category. Recently, it raised Rs 100 crore from IL&FS for expansion purposes. Furthermore, in December, it acquired Impact Retail’s chain of X-Cite electronics stores (a franchisee of Kuwait’s Alghanim Industries). X-Cite will have 8 stores, mostly in Indian metros, spanning 95,000 sq ft each.
Essar believes that the time is right for an overall group retail policy. The think-tank program will spot cross synergies at existing and future locations. It will play an important role in the development of its retail stores. Gupta’s experience (if he comes on board) will further strengthen the company’s goal.
Pinakiranjan Mishra, partner & national leader for the retail and consumer products practice at E&Y said, “The front end of each of the verticals should be separate, although there could be common learnings from mobile and consumer durables retailing. You can, theoretically, have a mobile store within a consumer electronics one. At the backend, ideally, the strategy should be common: to exploit logistics, supply chain and real estate, as in a low-margin business. These things are critical,”