The Hindu Business Line : Piramyd Retail plans major expansion

PIRAMYD Retail listed on the stock exchanges on Tuesday. It opened at Rs 146 on BSE and at Rs 140 on NSE. The stock was issued at Rs 120.The Chairperson, Ms Urvi Piramal, says the company is looking at tripling its area under retail to 8.56 lakh sq ft over the next two-and-a-half yearsThe company will continue to focus on the West and North for expansion. Excerpts from an interview to CNBC TV 18:

How are you seeing this year pan out? Do you have some sort of EPS target in mind?

We are looking at better numbers. But I can't really comment on the EPS and future guidance.

Any expansion plans and acquisition plans that are similar to Dawn Mills?

Dawn Mills is not really connected with this. In Piramyd, what we do is lease the space and then have our stores there. We are looking at tripling our area under retail to 8.56 lakh sq ft in the next two-and-a-half years.

Your private label business has grown from one per cent in 2002 to seven per cent in 2005. Is there a deliberate thrust towards this kind of business, or do you see better margins?

Private label is one area through which we can enhance our margins and this will be one of the margin drivers. As long as we keep having the right product on our shelves and meet customer demand, the private label strategy will go forward.

Are you looking to enter areas other than supermarkets and lifestyle?

At present, we are focusing on two different markets. It is important to saturate the market and therefore we focus on the western and northern regions for our expansions. Once we saturate those markets, we will look at others. Do you have plans to enter tier-II towns and smaller towns?

We are already present in Nagpur, Ahmedabad and in Ludhiana; we have three stores that are in tier-I and tier-II towns. So that is part of the strategy.

Would you welcome FDI in retail?

Yes, that will really add and grow the pie. The way we see organised retail, it is expected to become Rs 1.10 lakh crore by 2010. If we take a 1:5 capital turnover ratio, the requirement for investment in organised retail will be about Rs 20,000 crore - Rs 25,000 crore. Right now, what the Indian players have committed is only about Rs 5,000 crore - Rs 6,000 crore.

Therefore, FDI should be allowed. There are two ways in which FDI can be allowed. One is through investment into companies and investment into IPOs.

Today one can invest up to 24 per cent in the secondary market; I feel that should be allowed directly into IPOs. The second way is by allowing retail players to come in. If the Government does this prudently it will be a big help, because it will trickle all the way down, to the farmers and such. It will be a big help and will boost the retail sector. I look at FDI very positively.

How much are you investing in expansion? I think we will invest about Rs 120 crore. Part of the issue will be invested in IT because we are getting an ERP applications system in place.

Do you see any roadblocks in terms of implementation of plans?

We have already tied up with many of our real estate partners, in terms of setting up Piramyd Stores. I think a lot of the focus will be on implementing plans that we have. We have signed up for most of the properties, so that it becomes much easier.

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