The Hindu Business Line : Retail majors plan big, line up over Rs 650-cr investments

WITH the organised retail industry poised for exponential growth, the retail majors have lined up mega expansion plans. Companies such as Pantaloon Retail, Shopper's Stop, Trent, Lifestyle and Subhiksha are together expected to invest upwards of Rs 650 crore over the next two years in capacity expansion and modernisation.

Take the case of Trent Ltd, the Tata group's retail arm. The company's rights issue, to mop up Rs 118 crore, is scheduled to open on Wednesday. These funds will be used for setting up 17 new stores and expanding existing ones by March 2008. While a company spokesperson declined to comment on the expansion plans, industry sources said that Trent is set to take both its brands - Westside and the hypermarket Star India Bazaar — to new cities.

Similarly, Shopper's Stop is upbeat on future prospects. The company has successfully closed a public offer meant to raise up to Rs 135 crore from the market. Proceeds from the issue will be used to set up 11 new stores, including two hypermarkets each in Bangalore and Pune, and for further expansion.

Pantaloon Retail Ltd has already received funding from the Bennett, Coleman Group of about Rs 70 crore and plans to finance a further capacity expansion programme worth Rs 120 crore through a combination of internally generated funds and debt, according to rating agency Fitch.

Pantaloon straddles the large-format retail concept through `Big Bazaar' and `Food Bazaar' brands, and seamless malls through mall `Central.' On the anvil are two concept stores in Bangalore, which will sell fashion accessories that require niche marketing.

The Pantaloon Managing Director, Mr Kishore Biyani, had told Business Line earlier that his vision is to control 20-25 per cent of all modern retail space in the country. "We control this right now but to maintain this grip on modern retail, we need to grow 100 per cent year on year. This is what I am working towards," he had said.

Lifestyle and Subhiksha have also lined up similar investment and expansion plans aggregating to an investment of about Rs 210 crore. A retail industry consultant said that retailers' access to finance has improved significantly over the last few years. "While previously they relied primarily on private equity and shareholder funding, they are increasingly accessing the capital markets now."

KSA Technopak's Mr Arvind Singhal said that the estimated Rs 650 crore investment is an understatement. "There are many, many more retailers who have lined up mega expansion plans. Besides, several global funds are searching the Indian retail space for opportunities to invest substantial sums here," he said.

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Retail majors plan big, line up over Rs 650-cr investments