Chennai-based discount retail chain Subhiksha Trading Services, which owns the popular retail chain brand Subhiksha, is planning to invest up to Rs 1,000 crore to fuel its expansion plans, including its foray into new verticals. The company is mulling various options including diluting part of the promoters stake in favour of financial investors to raise funds.
The retail chain is likely to get listed on the two national trading platforms?the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE)?through a reverse merger with its newly acquired publicly traded entity Blue Green Construction and Investments Ltd (BGCIL) soon.
Subhiksha is eyeing a revenue target of Rs 15,000 crore by 2012. The company?s plans recently got a fillip when Wipro founder Azim Premji picked up close to 10% stake in the venture.
Subhiksha, after getting initial funding from leading investors including ICICI Ventures, is planning to raise Rs 600 crore from the market. It has an option to raise funds from new financial investors or through a rights issue, said R Subramanian, managing director, Subhiksha Trading Services.
?We will be raising Rs 400 crore internally to meet the overall expansion cost of the company,? he told FE, adding, ?We are not looking at strategic investors but financial ones.?
?Our objective is to become a leading organised retailer in India. We want to have at least 2,200 stores by March 2009 and 3,000 stores by March 2010 from the current level of 1,650 stores as of September 2008,? he said.
?Our ambition is to achieve a turnover of Rs 4,500 crore by end of March 2009 and Rs 15,000 crore by 2012 as against Rs 2,350 crore as of March 2008. The company has presence in 13 states and two union territories, except the eastern region. We will soon be moving there too?, he added.
Subramanian said that it took the company 10 years to understand and learn the art of organised retail and that it was moving ahead fast in the segment. ?Despite challenges and threats, we have no plans to sell our company,? he said. The recent indictment and cancellation of warehousing licence by Maharashtra FDA against its functioning at Bhiwandi are acts of vested forces, he noted adding that competitors could not tolerate Subhiksha?s growth and unique `discount selling? services.
?We are not copycats of western format stores. Our objective is to provide quality products at the most competitive prices with good service and we have succeeded in this attempt. We want to do `Indian format of retailing? for Indian customers?, said Subramanian.
By doing so the company hopes to wean away a sizeable chunk of the customers of normal kirana stores towards it, he said.
On the potential of organised retailing in India, he said, ?Organised retailing has a huge opportunity. It holds only 3% of the total market as yet.? It is expected to grow from the current Rs 15,000 crore level to Rs 50,000 crore level in the next five years. Subramanian said that if the players get their cost right and focus on value generating initiatives; they could cater to a huge potential market. ?All players stand to benefit immensely over a period of time,? he noted.
To a question on the reported stoppage of goods supply by leading FMCG companies to Subhiksha due to late payment of dues, he said, ?There were some problems. All companies wrote to us and we responded positively. There is no payment problem for us and we are in comfortable position.?
?Retailing is not an easy job; managing thousands of stores is a difficult task. There is always a difference of opinion among partners and we have to get along with them,? he noted.