Reliance Retail wants a foot in Bata stores

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.