Home / Companies / News /  Will stop selling on e-commerce sites if there are high discounts: K. M. Birla

The Aditya Birla Group on Sunday announced the consolidation of its apparel retail business into a new company, Aditya Birla Fashion & Retail Ltd. The move brings the businesses of Madura Garments Lifestyle Retail Co. Ltd—a subsidiary of Aditya Birla Nuvo Ltd—and Pantaloons Fashion & Retail Ltd into the new company.

Aditya Birla Group chairman Kumar Mangalam Birla spoke on the creation of what is now India’s largest pure-play fashion and lifestyle company; the growth of e-commerce in India; expected profitability at the retail business of More, the group’s hyper and super market retail chain and its other businesses; and on making sure that its brands are not sold at discounted prices on e-commerce platforms such as Flipkart. “We will stop selling on these sites, if that is the case," said Birla in an interview. Edited excerpts:

How important is retail as a business for you at the group level?

As of now, retail is relatively small for us, but given the kind of growth we are seeing in the retail business, I wouldn’t be surprised if this would be a significant business for us in the next 3-5 years.

What is the logic of consolidation?

Essentially, we are creating the country’s largest branded apparel company. We will be adding 250 to 300 stores in the branded space and 30 to 35 departmental stores with an investment of 400 to 500 crore every year for the next three years.

Why have you kept supermarket and hypermarket chain More out of this consolidation? When will it turn profitable?

We thought this is a powerful combination for shareholders. More continues to run as an independent super and hypermarket market chain. It will turn profitable in another two years.

E-commerce companies such as Flipkart, Snapdeal, Amazon and Jabong have gained acceptance by selling brands at a discounted rate. How do you plan to deal with that?

There needs to be some discussion between e-commerce firms and high-end manufacturers about discounting. We don’t want our brand to be a discount brand. If there are high discounts, we will stop selling on these sites.

The high growth rate of e-commerce will see consumers buy more online from e-commerce firms giving bricks-and-mortar retail a skip. How will that impact you?

Bricks and mortar will get impacted by e-commerce. The growth rate will slow down because of the emergence of e-commerce. But our brands are leading brands in their segments; they are firmly entrenched. So, the impact on them will be minimal.

There are a lot of rumours about similar restructuring in the cement business of the Aditya Birla Group?

It’s not true. We have no such plans. We are the largest cement manufacturer in the country and we are expanding our capacity to 100 million tonnes per annum.

What is the future of Aditya Birla Nuvo Ltd, taking conglomerate discount into account?

We will keep the business growing. We have fertilisers business and other businesses including non-banking finance, housing finance and insurance. We have also applied for a payment bank licence. We have no plans for restructuring Aditya Birla Nuvo as of now. We have addressed the issue of conglomerate discount by demerger of the apparel business and giving shareholders a direct stake.

It’s been a year since the Narendra Modi government came to power and there has not yet been any significant uptake in industry. When do you expect to see change?

It is unrealistic to expect a change will happen in one year. Modi’s focus is on the right areas, there is a lot of work going on. He is doing the right things. But it will be another year before we actually see impact on the ground. It’s unreasonable to expect fundamental change before that.

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