RPG group to tap market to fund Spencer's retail chain

Kolkata, Mar 30 | Updated: Mar 31 2007, 07:26am hrs
The RPG group will tap the market for funds within the next 12 months to fund the growth of its retail business, but it could opt for a public issue, private equity or private placement, vice-chairman Sanjeev Goenka said Friday.

RPG Retail, which is the umbrella for food, music and the recently launched books and cellphones units, plans to invest Rs 1,200 crore to expand its Spencer's retail chain over the next two years. The company is in talks with merchant bankers.

Spencer's, with 125 stores across 25 cities, is aiming for 2,000 stores by 2009 with a total shopping space of over 10 lakh sqft in five formats.

The largest format, the hypermart, will account for 35% of this space. The other formats are Super, Daily, Express and Fresh.

Goenka said he is not worried about competition, but isn't going to base Spencer's on the price plank either. "Price will not be my format," he said.

He expects the retail turnover to account for 25-35% of total RPG group turnover by March 2009. At present, group turnover is around Rs 11,000 crore, coming from companies in power, carbon black and transmission towers, among others, while retail fetches it Rs 600-700 crore or 5-6%.

"In 2009, retail's turnover should be Rs 450-500 crore in the March exit month," Goenka said, "or around Rs 5200 crore."

With eight hypermarkets across the country, including the recently opened one at

Gurgaon, Spencer's plans to open three more next month.

Spencer's opened two Daily stores in Kolkata on Friday, deciding not to wait for the Hypermart to come up first, as it usually does. The three proposed Hypermarts have been delayed slightly as the developers have missed deadlines, but two are expected to come up by June-July. In fact, the first Spencer's Hyper in the state will come up in Durgapur.

"The hypermart at South City in Kolkata would be the largest in India, with 70,000sqft, larger than the one we opened in Gurgaon recently," he said.