New Delhi: Hong Kong’s Dairy Farm International Holdings Ltd and its partners, including DSP Merrill Lynch, plan to spend about $55 million to open 350 stores across India over the next three years. The company declined to give details on the locations of the proposed stores.
At present, the company runs around 55 Foodworld stores and 44 Health & Glow stores in Mumbai, Chennai, Hyderabad and Bangalore.
Dairy Farm, a unit of Hong Kong conglomerate Jardine Matheson Group, owns 49% of Foodworld Supermarkets Ltd and Health & Glow personal-care stores. The rest is owned by DSP Merrill Lynch’s India chairman Hemendra Kothari, who holds about a quarter of the stake, and local businessman Rajan Raheja, who owns ‘Globus’ stores.
Dairy Farm is one of the few foreign retailers to have entered India before the government amended the regulation on foreign investment in retail in the late 1990s. At present, a 100% overseas ownership is allowed in wholesale ventures and 51% in single-brand business. Overseas investments in stores that sell several brands under the same roof are banned, unless they are selling the goods to other retailers and wholesalers.
Still, the restrictions haven’t prevented companies from trying to penetrate a market where one in every six person in the world lives. India’s 1.1-billion population is witnessing a boom it hasn’t seen in almost 18 years, with the economy growing at 9% per annum.
Recently, the world’s largest retailer, Wal-Mart Stores Inc., entered into a deal with the country’s biggest private mobile phone services firm Bharti Enterprises Ltd to manage the supply chain for a retail venture. The country’s biggest conglomerate Reliance Industries Ltd is going solo in its 5,000-store venture to sell everything from food to furniture.
Dairy Farm had its own share of ups and down in India after rolling out Foodworld stores in August 1999 in a 49:51 joint venture with local firm RPG Enterprises. Relations soured between the Hong Kong company and the majority stakeholder Indian firm which finally led to a split in the partnership in 2005.
Kothari and Raheja bought RPG’s 51% stake, according to a Dairy Farm spokeswoman.