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Thursday, May 26, 2005

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Discount chain Subhiksha plans to enter Delhi, Mumbai markets — Mulls 180 stores with Rs 150-cr investment

Sindhu J. Bhattacharya

A Subhiksha outlet in Chennai.

New Delhi , May 25

DISCOUNT retail chain Subhiksha is planning a mega expansion. The Chennai-based chain is mulling entry into the Delhi and Mumbai markets next year, by when it plans to invest up to Rs 150 crore in establishing 180 new stores.

It will be expanding in the southern region as well, with new stores in Bangalore and Andhra Pradesh.

Mr R. Subramanian, Managing Director, Subhiksha Trading Services Ltd, told Business Line, "We are planning to become a multi-city operator soon. The next 12-18 months will see Subhiksha setting up shops in Andhra, Bangalore and then the Delhi and Mumbai markets. In all, we plan to open 180 new stores with a total of Rs 150 crore investment."

He said the investment would be in two phases; the first tranche of Rs 75 crore will be used for the Andhra and Karnataka markets. "Funds for the first tranche have already been tied up, after ICICI Ventures hiked stake in Subhiksha some months ago. For the second round of expansion, we are working on several possibilities," he said.

Among the options being considered for raising the remaining Rs 75 crore include funding from an overseas private equity fund, provided the Government opens up retail to Foreign Direct Investment (FDI), Mr Subramanian said but declined to divulge further details.

Asked whether Subhiksha would consider going public to raise money, he said, "Going to the market is also an option. This could happen soon. It is a good time to approach the market since retail stocks are in favour but we will have to tackle several issues such as pricing before we take a final decision."

Subhiksha closed last fiscal with sales of Rs 278 crore, and is targeting the Rs 500-crore mark in 2005-06. Mr Subramanian said that while entering the Delhi and Mumbai markets, special emphasis would be laid on presence in mid-market areas instead of posh markets. "We will not take Subhiksha to South Extension, for example,but to Sarojini Nagar, Janakpuri areas. Similarly, in Mumbai, operations will begin with the suburbs. This is in keeping with our discount chain image," he said.

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