Real estate hampers Aditya Birla Retail’s plans

Aditya Birla Retail has failed to achieve its retails expansion

target due to delays by real-estate developers in delivering malls and stores. The company had announced plans of launching 10 large stores in the current fiscal year through March, but it is now sceptical about achieving a target of six. It now hopes to open eight stores by the next fiscal year, two short of its earlier target.

The privately owned retail unit of the diversified Aditya Birla group has been trying to scale up operations to tap India’s estimated $500 billion a year retail market. However, retail space has been in short supply as some real-estate developers have not been able to complete projects on time due to a liquidity crunch, amid a period of rising interest rates as the Indian central bank maintained a tight monetary stance to control inflation.

The company is finding it difficult to plan its big store launches covering an area of a million sq. ft. since real estate uncertainty is hampering the process. It is currently in the process of opening a 60,000-sq. ft. store in Bangalore -- its biggest in India. It has 12 hypermarkets and 589 supermarkets, or small-format stores. The company has set a target of launching 30-40 large stores by the financial year ending March 2014 to achieve the necessary scale for its hypermarket store format to become profitable.