Aditya Birla Retail plans mega expansion

Aditya Birla Retail, the retail arm of diversified Aditya Birla Group will be opening 12 more hypermarkets so as to take its overall tally to 22.

Aditya Birla Retail, the retail arm of diversified Aditya Birla Group will be opening 12 more hypermarkets so as to take its overall tally to 22. Also, it plans to add 150 more supermarkets this year which will take its overall tally of supermarkets to 700. The company operates its hypermarket and the supermarket formats under the brand name of “More”. Through this expansion, ABRL expects a growth of 16% in revenues this year so as to reach R2,400 crore by the end of the current fiscal. ABRL closed last fiscal with a turnover of R1,650 crore.

Speaking to FE, the company CEO Thomas Varghese said that adding 12 hypermarkets and 150 more supermarkets this year will be ?a herculean task?. “This will require an investment of over Rs 300 crore for the company,? he said.

Apart from this, the company also has plans to enter the speciality retail segment, however the idea currently is on the drawing board. “The speciality retail stores will not be under the ‘More’ brand. We are currently exploring some other speciality formats, like speciality but the plan is at a preliminary stage,” Varghese said.

Though he did not elaborate on the categories that the company may consider but Verghese ruled out entering the food and grocery, apparel and electronics segments for its new formats. “The company already has a lot of exposure to food and grocery format, we won’t look at the format. Also, in apparel retailing, there are group companies which are already operating. Even electronics retailing is not lucrative as it offers very thin margins,” he said.

ABRL currently operates in 12 states across the country at the moment and might enter Orissa with its hypermarket format. The company on Tuesday opened a new hypermarket in Delhi and will take atleast a decade to be present in all 29 states in India.

On being asked whether the company is looking at an acquisition, Varghese said that the company is constantly looking for deals but as of now the company is not looking go grow through acquisitions. “There is a due diligence going on at the moment for a possible acquisition of an existing retail chain, but I don’t think we will do it,” Varghese added.

Interestingly, ABRL had acquired the retail business of a South India based retail chain ‘Trinethra’ in 2007 for R680 crore. Calling the deal as ?high priced? however, Varghese added that the company does not regret its decision as it has provided the expertise and an operating base of 167 small stores in South India, which charted its foray in the retail segment.

Currently, sitting at a debt equity ratio of 1:1, on being asked Varghese refused to share the debt figures. However, he added that the company “expects to be profitable by 2014 and would look at making an IPO only once the company comes close to profitability.”According to the company currently the market size of retail is $400 billion out of which organised retail accounts to only 6%.

On the FDI in multi-brand retail, Varghese said that ABRL is keenly waiting for the policy tweaking.

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First published on: 01-06-2011 at 22:09 IST