Financial Daily from THE HINDU group of publications
Thursday, Dec 23, 2004
Corporate - Mergers & Acquisitions
Trinethra acquires grocery retail chain Fabmall
Mr K. Anjaneyulu (right), Managing Director, Trinethra Super Retail, along with Mr V.S. Sudhakar, Managing Director, Fabmall Pvt Ltd, at a Trinethra outlet in Hyderabad on Wednesday. A. Roy Chowdhury
Hyderabad , Dec. 22
THE Hyderabad-based Trinethra Super Retail Ltd has acquired Fabmall India Pvt Ltd, a grocery retail chain of Bangalore.
However, the India Value Fund (IVF), managed by GW Capital Pvt Ltd (GWC), has secured the controlling stake by investing Rs 27 crore in the equity of the consolidated entity that is targeting a turnover of Rs 1,000 crore by 2008.
The GWC Business Manager, Mr George Thomas, clarified that despite IVF having a controlling stake; Mr. K. Anjaneyulu, Managing Director of Trinethra, would manage the new entity.
"GW Capital has acquired the stake purely from an investment perspective," he said.
Announcing the merger of Trinethra and Fabmall operations here on Wednesday, Mr Thomas told newspersons that entire transaction, made in concert with GWC, involved an amount of Rs 45 crore.
This included investment of Rs 27 crore in the equity and buying out the stake of ICICI Ventures in Trinethra for Rs 17.5 crore.
The Rs 150-crore Trinethra retail chain, which started its operations in 1986, currently has about 80 stores spread across Andhra Pradesh. On the other hand, Fabmall, which commenced its operations in 1999 as an online retailer, has 12 stores with a turnover of Rs 50 crore. The new entity with a combined turnover of Rs 200 crore would emerge amongst the top three players in the grocery retail industry in the country, Mr George said.
Explaining the reasons for the merger, Mr Anjaneyulu said that his grocery retail chain had been unable to repay ICICI Ventures, which had invested about Rs 8 crore in the company three years ago.
It had come to a stage where Trinethra had to look towards other avenues to raise funds or to be sold to repay ICICI. Besides, Trinethra wanted to expand its operations beyond Andhra Pradesh. Consequently, the current transaction had become essential.
"Our goal is to become the number one grocery retail chain in the country," Mr Anjaneyulu said adding that the branding of the consolidated company would be done in a period of 4 to 5 months.
The Fabmall Managing Director, Mr V.S. Sudhakar, said that coming together of the two retail brands would help in expanding their presence in India. The future plans of the new entity included opening of 175 new stores and establishment of a hypermarket in Andhra Pradesh in the next three months.
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