Sahara to Spend 30 Billion Rupees on Retail

(Corrects investment figure in headline, first paragraph of story originally published Aug. 13.)

Sahara India Pariwar, an Indian group that owns Grosvenor House hotel in London, will spend 30 billion rupees ($540 million) on retail operations to sell food and household products direct to homes.

The group, based in Lucknow, India, will directly sell products such as flour and detergent through a network of 60,000 distribution centers, Chairman Subrata Roy Sahara said at a press conference in New Delhi today. The centers, to be owned by Sahara and franchisees, will be supplied by 305 warehouses and start operations Aug. 15, he said without elaborating.

Sahara is starting its retail business amid discussions within the government to ease ownership rules for overseas retailers such as Wal-Mart Stores Inc. (WMT) and Carrefour SA (CA) to sell multiple brands. The company’s foray pits it against the local units of Unilever Plc (ULVR), Procter & Gamble Co., Nestle SA and ITC Ltd. (ITC) as they compete to win customers in the world’s second-most populous nation.

“This is a growing business in India,” Roy said. “That’s why all these foreign companies want to come” to India, he said.

Roy didn’t provide a timeframe for the investment.

Sahara will partner with local manufacturers to source the products and sell them under its Q Shop brand, Roy said. The company, which expects its initial 60,000 distribution centers to be operational within 18 months, is targeting annual revenue of as much as 500 billion rupees after the network is in place, he said.

Global direct-sales retailers such as Amway Corp., Avon Products Inc. and Tupperware Brands Corp. compete for customers in India.

Sahara owns businesses that include television broadcasting, film production and distribution, hotels and mortgage lending. The company purchased Grosvenor House in 2010 and last month bought a stake in New York’s Plaza Hotel.

To contact the reporter on this story: Malavika Sharma in New Delhi at msharma52@bloomberg.net.

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net;

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