The Hindu Business Line : RPG retail arm may tap capital market next year

"We are galloping at a rapid pace. The size of our locked up properties, which is now 20 lakh square feet would jump to 40 lakh sq. ft. by the end of the next fiscal."

Kolkata , March 17

Great Wholesale Club Ltd, a little known RPG outfit that owns the Spencer's brand and runs the retail business, is likely to go in for a public issue next year after a rechristening exercise.

According to Mr Sumantra Banerjee, President & Chief Executive of RPG Enterprises, the retail business of the group is all set to witness major activities in the next 12 months.

From the existing level of 2 lakh sq.ft. of retailing space the group is adding another 8 lakh sq.ft. and it would be spread all across India. The corporate headquarters of RPG Retail is also being shifted from Chennai to Kolkata. The process would start from April 1.

"We are galloping at a rapid pace. The size of our locked up properties, which is now 20 lakh square feet would jump to 40 lakh square feet by the end of the next fiscal," Mr Banerjee told Business Line.

Regarding investments, he said, all properties are on rent. According to him, the group would be spending approximately Rs 200 crore on the retail business. He said it would be funded through internal accruals, debt and a public issue. However, he was not sure of the size of the equity offering, as it would solely depend on the need of the liquidity.

The name of the holding company, Great Wholesale Club Ltd, would be changed too. "That name does not mean anything. Whenever we go public we would have to make that necessary change," he said.

For the year ended March 31, 2006, RPG Retail would be registering a turnover of Rs 450 crore. However, it would not breakeven. According to Mr Banerjee, this is not a deterrent for an IPO.

"The total business might not be recording profits but all our stores are making money. Our earnings will increase with the opening of the new shops but the overhead expenses remain constant. So, profits would start coming in," he said.

He went on to clarify that at present RPG Retail is recording a turnover of Rs 30-35 crore a month.

It is expected to increase to Rs 80-90 crore a month by December 2007.