Oct. 12 (Bloomberg) -- Reliance Industries Ltd., India's most valuable company, has opened less than a third of the retail stores it planned for this year, as opposition from vendors and small shopkeepers forced it to shutter outlets.

Reliance has started 300 grocery, electronics and apparel stores in 30 cities, Chairman Mukesh Ambani told investors at its annual general meeting in Mumbai today. The group had planned to open 1,000 Reliance Fresh shops by the end of 2007.

Reliance Retail Ltd. may focus on clothing and electronic retailing after small grocery traders accused it of undercutting prices and trying to drive them out of business, investors such as R.K. Gupta said. Street vendors and family-run shops are trying to halt the advance of chain stores whose sales are forecast to surge more than eightfold to $97 billion by 2012.

``Reliance's expansion spree has been too fast-paced and highly publicized, making it an easy target for protests,'' Gupta, who manages $75 million of stocks at Credit Capital Asset Management said in New Delhi. ``A change in strategy will help make the project less controversial and help it when it ultimately plans to sell shares in the unit.''

Yesterday, Reliance said it will open 100 apparel stores in three years. The retail unit has a total of 6,000 employees.

``We stand committed to what we set out to achieve,'' Ambani, 50, said about the retail business, dismissing concerns that it may slow the pace of expansion.

Shares Fall

Reliance fell as much as 1.1 percent, and traded little changed at 2,639 rupees at 12:15 p.m. on the Bombay Stock Exchange. The stock has doubled this year, valuing the company at $93.8 billion.

At the last two annual meetings Ambani has announced the creation of the $5.5 billion retail chain, construction of the world's biggest refinery complex, and a crude oil find off the east coast of India, Asia's third-largest consumer of the fuel.

Reliance will invest $4 billion to tap oil and gas deposits in India in addition to the $2 billion already committed, Ambani said today. The group will expand its chemicals businesses in Egypt and Russia, and expects to make oil and gas discoveries, he said.

Wholesale Store

Protests against its retail initiative will stop once the benefits to consumers and farmers are understood, Ambani said. The company plans to start wholesale stores on a ``pilot basis'' that will sell wares to small traders and shopkeepers.

Thousands of small shop owners, street vendors and workers protested in Mumbai on Oct. 11 against the expansion of Reliance and the entry of international retailers such as Wal-Mart Stores Inc., the world's largest retailer, and Germany's Metro AG.

Ambani said the company retail plans wouldn't jeopardize the livelihoods of small shop owners.

The Uttar Pradesh state government ordered the temporary closure of Reliance Retail stores after a group of traders ransacked some of the company's outlets on Aug. 22. Stores owned by Reliance and Subhiksha Trading Services Ltd. have also been vandalized in the eastern states of Orissa and Jharkhand. In the southern province of Kerala, the state government plans to restrict the number of stores that big companies can open.

Ransacking Stores

Reliance Retail had planned to open more than 1,000 grocery stores by the end of the year and as many as eight hypermarkets between April and June, Raghu Pillai, Reliance Retail's chief executive officer for operations and strategy, said in January.

In November, Reliance Retail opened stores in the southern city of Hyderabad, the first of a $6 billion plan to set up outlets in 784 cities and 6,000 towns by 2011. The nationwide chain is selling goods ranging from groceries to electronics.

This week's rally was also held to pressure the federal government against allowing Wal-Mart and Metro to open own- branded stores in the world's second-most populous nation.

Overseas investment in India's retail industry is limited to single-brand merchants, preventing international chains from buying stakes in local companies or setting up their own stores.

The Indian government's plans to ease overseas investment limits have been stalled by resistance from communist allies who oppose such moves on the grounds that it will displace small retailers and hurt the livelihoods of those who work there.

Besides the existing retail chains of Reliance, the Tata Group and Pantaloon Retail India Ltd., the Bharti Group and the Aditya Birla Group are set to start nationwide retail chains in the next year. The latest to signal their intention to enter the retail industry is the Mumbai-based Mahindra Group, which owns the country's biggest tractor and sports utility vehicle maker.

India has as many as 12 million retail outlets, with the industry accounting for as much as 6 percent to 7 percent of the workforce, making it the second-biggest employer in the country.

To contact the reporters on this story: Saikat Chatterjee in New Delhi at schatterjee4@bloomberg.net

Last Updated: October 12, 2007 03:24 EDT