Videocon may reconsider plans for cash & carry

The Videocon group is understood to be reconsidering its plans to set up its cash-and-carry venture — Bolld — which it had announced early this year, it is reliably learnt. Sources said the overall slowdown in retail and the liquidity crunch have forced the consumer electronics major to shelve its plans. The Videocon top brass is believed to be keen to use funds for core operations and refrain from spreading risks in a difficult business environment. The company had announced its plans to set up a separate subsidiary company for the business in April this year, and was looking at raising funds for the project through debt and equity. It was also reportedly in talks with a few private equity players for the venture. The Dhoots were unavailable for comment. When contacted, Bolld’s chief executive officer, Sunil Mehta, said: “The project is on a slow track but it is very much on. We are identifying the right locations for the venture.” However, sources close to the development said funds for the project is a critical issue, especially at a time when the corporate sector is grappling with liquidity crisis and slowdown. The project also faced challenges like a viable real estate in good catchment areas and quality manpower to run the business. The first store was to be operational by September 2008. The group had identified Ahmedabad, Bangalore, Hyderabad, Jaipur and Pune as store locations for the first phase. Industry watchers say losses from grocery formats are mounting for most retailers like Reliance Fresh, More, India Bulls, Spencers and Subhiksha who are quickly shutting down unviable ones or going slow on expansions. Bolld was to leverage on Videocon’s existing logistics and distribution system and cater to wholesalers, somewhat along the same lines as Metro’s Cash and Carry (Germany) and Bharti-Wal-Mart’s ventures in India. Earlier, talks were on to hire the former Asia-Pacific head of Electrolux — Peter Birch — to head the entire retail business, which did not work out. The proposed cash-and-carry business would have retailed food, grocery, apparel, footwear, consumer electronics, furnishings, hardware and general merchandise. Videocon’s original plans were to set up around 40 large stores, each consisting of 75,000 to 1,00,000 sq ft across the country, for its cash-and-carry business by 2012. Videocon Industries had outlined a total investment of Rs 4,000 crore during the next five years in the retail business