|GFH's Janahi: India on his
might soon also stand for special energy zone, if the plans of
an East Asian investment bank pan out. Gulf Finance House (GFH),
from the Gulf Corporation Countries (GCC), has inked a memorandum
of understanding with the Maharashtra government for setting up
an integrated energy business district. A first of its kind in
India, the proposed project will be called "Energy City India,"
and will entail an investment of $2 billion (Rs 9,200 crore).
To be housed on Mumbai's outskirts over 300 acres, the energy
city will provide business infrastructure for oil and gas producers,
downstream refiners and also for those in shipping and energy
trading. This would be GFH's first project outside the GCC; the
first one was unveiled at an investment of $2.6 billion (Rs 11,700
crore) in 2006.
"This is the result of the readiness
of India as a market," says Esam Janahi, CEO and Board Member
of GFH. As Janahi sees it the Maharashtra Energy City is the just
the beginning. "Over the next five years, we should be present
in 2-3 states," he adds, which translates into "a project
every year." GFH intends to develop two more such hubs in
other Asian markets. Reason for kicking off with Maharashtra?
"The state enjoys a strategic position in India's energy
sector," points out Janahi. For the proposed project, GFH
intends creating a holding company with a paid-up equity capital
of about $300-500 million (Rs 1,380-2,300 crore), Chief Minister
Vilasrao Deshmukh is obviously pleased as punch. "This investment
has merely confirmed that. We promise all possible assistance
to this project," he beams. With acquisition of land too,
one could presume.
Retailers have huge hopes hinging on house
largest selling brand of jeans in the US is not Lee or Levi's
but something called Arizona Jeans. If you haven't heard of it,
that's because Arizona Jeans is one of the private labels of JC
Penney Company, the $18 billion (Rs 82,800 crore) us retail Goliath,
unlike Lee or Levi's which are sold pretty much everywhere.
If the Arizona range of denims can give the
global brands a run for their money, what's stopping our homegrown
retailers from doing something similar with their own private
labels. Well that's exactly what a clutch of domestic retail firms,
like Trent's Westside Stores, Kishore Biyani's Future Group and
Rajan Raheja's Globus is attempting with in-store brands. Biyani's
Pantaloon Retail, for instance, in a relatively short span of
five years, has created a number of significant private labels
such as Bare Jeans, Annabelle, Honey and, Oye. John Miller, a
shirt brand is today valued at close to Rs 500 crore. "In
the fashion category, our private labels contribute close to 65
per cent of sales," says Kishore Biyani, Chairman, Pantaloon
Retail. As a company, 30-40 per cent of Pantaloon's sales come
from private label brands covering categories like fashion, food
and home. "This figure will go up to 50 per cent by 2006-07,"
If you think that's high, at Trent 95-97
per cent of sales come from private labels. "Westside itself
is a big brand. Our whole strategy is to be a mass brand,"
says Neeti Chopra, Head Marketing, Trent. Other in-store labels
that bring in a chunk of sales include SRC, Richmond, Urban Angel
and Street Blues. "We are now working on private labels in
categories like luggage and footwear," reveals Chopra. Globus,
a Rs 100-crore retailer, is currently focussing on two private
labels, Globus and F21.
Cleary, sellers of private labels are attempting
to cash in on rising footfalls, and shift consumer loyalty from
a brand to the store. Once a consumer is addicted to a store,
it becomes easy to sell a private label. And making a compelling
case for in-store labels is the high-margin nature of the business-20
per cent on the lower side, and as much as 50 per cent at the
higher end. Yet, retailers caution against having a portfolio
totally biased in favour of private labels. Shoppers' Stop, for
instance, has just 18-20 per cent of sales coming from private
labels. For Shoppers' the big brands will always be the ones bringing
in most of the bacon. "A private label by itself doesn't
guarantee success. It has to be pitched or treated on a par with
any brand with which it competes," believes Govind Shrikhande,
CEO, Shoppers' Stop. Experts also point out that private labels
may be just a short-term gambit, and may not work in the long
run if quality takes a beating. And that may rub-off on the image
of the entire store.
For the moment, though, few customers-and
retailers-are complaining. "Currently it is retail nirvana.
I foresee a happy co-existence for big brands and store brands,"
observes Chopra of Trent. Biyani is betting big on private-label
growth coming from smaller towns. "We are aiming at a 75
per cent contribution of private labels in the fashion segment.
Private labels in food would be around 40 per cent and the home
segment will make up 20 per cent going forward," says Biyani.
India's answer to Arizona Jeans may be just a few million footfalls