DCM Shriram Consolidated Ltd (DSCL) is plannnig to hive off its rural retail arm Haryali Kisaan Bazaar (HKB) in a year?s time so that it can pick up funds from the market.

The retail arm HKB is currently worth Rs 420 crore and expected to grow to 500 stores from the current 302 stores in the next two to three years. The revenue is projected to touch Rs 700 crore in FY10. ?In the next couple of years we are planning to invest Rs 200 crore to Rs 300 crore in the retail business,? DSCL chairman and senior managing director Ajay S Shriram said. Currently the profit from this business is in negative and expected to break even in the next couple of years.

?We are currently looking at consolidating the business after doubling our store count in the last three years,? added DSCL vice-chairman and managing director Vikram S Shriram. In FY09, it has 302 stores while in FY08 there were 160 stores and prior to that in FY07 it had 70 stores.

DSCL, which entered into rural retail in FY03 with five stores is currently present in eight states with a complex business model. It not only offers goods but also services in three verticals retail, agri business and financial services.

Haryali Kisaan Bazaar follows the correspondent model while offering products from ICICI and HDFC to local villagers. ?We are in talks with other PSU banks which have suitable products for the rural customer so that we can put them on offer as well,? said Vikram S Shriram. Hariyali operates in two formats, centre which is spread across 2 to 4 acre land with facilities such as petrol pump, warehousing, collection of farm produce and milk produce. Located in market places of small towns, the store format is spread on area of 4,000 sq ft to 5,000 sq ft and retails agri inputs and FMCG products. HKB has 82 centres and 220 stores at the moment.

HKB provides facilities such as commodity trading, warehousing, collection of milk and more. The commodity trading platform that HKB offers is just like any other standard one. Farmers keep their stocks in HKB warehouses and avail of loan facilities from banks and other financial institutions. Milk is collected from farmers and kept in coolers until it is sold off to private businesses to be processed and sold later. Foundation seeds which are used for agricultural purposes are also prepared in centres and sold to farmers.

The centres and stores are spread across eight states which includes Punjab, Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh, Uttaranchal, Maharashtra and Andhra Pradesh. The footfall in both the formats is expected to go up to 35% from the current 25%.

The sale of agri inputs and merchandise in the centres and stores is in the ratio of 70:30. The centres keep up to 2,100 stock keeping units (SKUs). Hariyali has supplied fruits and vegetables to a number of urban modern retails before the downturn.

Stronger foothold

• Haryali Kisaan Bazaar is currently worth Rs 420 crore and expected to grow to 500 stores from the current 302 stores in the next two to three years

• The revenue is projected to touch Rs 700 crore in FY10

• DCM Shriram Consolidated Ltd which entered into rural retail in FY03 with five stores is currently present in eight states with a complex business model

• Haryali Kisaan Bazaar follows the correspondent model while offering products from ICICI and HDFC to local

• The outlets are spread across eight states which includes Punjab, Haryana, UP, Rajasthan, Madhya Pradesh, Uttaranchal, Maharashtra and Andhra Pradesh