The Hindu Business Line : RPG Group to rejig retail business — To focus only on brand Spencer's; Retail HQ to move from Chennai to Kolkata

THE Rs 8,460-crore RPG Group is restructuring its retail business and shifting its headquarters from Chennai to Kolkata. The non-music division of the business will drop all other brand names and will concentrate only on the brand Spencer's.

The group is appointing Mr Jitu H. Mehta, currently Hindustan Lever's executive director in charge of the ice-cream business, as president of Spencer's. Mr Sumantra Banerjee, Managing Director of CESC, will continue to operate as CEO of RPG Retail.

All these changes are taking place after RPG Retail and Dairy Farm International, the two former joint venture partners, decided to part ways. According to Mr Sanjiv Goenka, Vice-Chairman of RPG Enterprises, RPG Group will take over 49 out of the 93 Food World stores with the rest being managed by Dairy Farm.

"The total shifting will be over by March 2006. MusicWorld will shift its base to Kolkata during the October-December 2005 quarter. I would like to have better control over the retail business," Mr Goenka told reporters at a press conference.

According to him, the formal separation exercise between RPG and Dairy Farm would be over by the end of this month. At present, the RPG Retail's hypermarket business is operated through an outfit called Great Wholesale Club Ltd. The Chennai-based Spencer & Co holds 100 per cent stake in Great Wholesale Club.

In future, RPG Group would rename Great Wholesale Club as Spencer Retail Co. It might be listed in bourses after an IPO, Mr Goenka said. "We would like to dilute 20 per cent stake in the company and raise capital. It can be either through an IPO, or preferential allotment or private placement," he said.

The stake dilution exercise might take place in steps. Prior to the dilution, the group would like to value the Spencer's brand by a well-known agency. Talking about brands, he said, the group would no longer use the FoodWorld or Giant brand names.

"Instead, everything will be under Spencer's. It will be Spencer's Hypermarkets, Spencer's Supermarkets and Spencer's Food Stores. MusicWorld will remain as it is. Health and Glow has already moved away from the RPG wing to Dairy Farm," he said.

The group also shuffled some of its senior executives. Mr Subrata Chowdhury will continue to head MusicWorld. Mr Satya Srivastava, who was VP (finance) of Food World, will become Chief Financial Officer of the retail group.

Mr K. Radhakrishnan, who was head of merchandising of FoodWorld, will now head the overall merchandising activities of the food business of RPG Retail.

Talking about MusicWorld, Mr Goenka said currently there were 235 outlets, their number being increased to 320 in the next one year. RPG Group is also planning to open an overseas outlet of MusicWorld. In 2004-05, MusicWorld's turnover was Rs 75 crore.

The total turnover of RPG Retail, including the 44 FoodWorld stores that moved over to Dairy Farm, in 2004-05 was Rs 650 crore. After the separation with Dairy Farm, RPG Retail's revenues was worth Rs 430 crore. In the current year it is expected to touch the Rs 700-crore mark.

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