Can Bengal get a realty boom ever?

Whatever may be the debacles in the industrial climate of the Indian state of West Bengal, known as a region with immense potential but devoid of any direction, it is fortunate that one leading Indian business group is attracted to it. It is Reliance Retail Limited, celebrated for operating around 590 stores across 57 cities in India, that is planning to expand its business in the country especially in West Bengal.

“We are currently working on how best we can come back to the state in a major way. It’s all currently on the drawing board,” Mr. Tarun Jhunjhunwala, President, Reliance Industries told reporters in West Bengal state capital Kolkata this week. “We have exhausted the space for our Reliance Fresh format and so if we plan to expand this format, we have to buy real estate,” he added. It must be remembered that in the month of July this year, Reliance Retail began to sell a number of food and grocery products in a market in Mumbai.

Only on the last year, Reliance Retail managed to achieve a near break-even by means of posting a loss of less than INR 1 crore in its first full year of operations, just 17 months after opening its first store. In accordance with analysts, organized retailers such as Reliance Retail were not likely to exhibit a profit in their first several years of operations, partly on account of high capital expenditure involved in setting up a chain of stores, in particular with spiraling real estate costs of the past thee years in India that have led to a doubling of lease rentals in some cities.

Reliance Retail did enter the pertinent industry through launching its first store in November 2006 through its convenience store format ‘Reliance Fresh’. Since then Reliance Retail has rapidly grown to operate 590 stores across 13 states at the end of FY 2007-08.