The Hindu Business Line : Subhiksha plans Rs 300-cr expansion

In an attempt to cash in on the retail boom, the Chennai-based discount retail chain, Subhiksha, has announced its foray into the northern, western and southern markets with an investment of Rs 300 crore.

"We will soon begin operations in Delhi, Maharashtra, Gujarat, Andhra Pradesh and Karnataka by opening over 600 stores by March 2007," Mr R. Subramanian, Managing Director, Subhiksha, said.

The opening of 145 stores in Delhi, with an investment of about Rs 100 crore in the coming two years, will kick off the first phase of the expansion plan.

Mr Subramanian said that out of these 120 stores would be operational in the next eight weeks.

Telecom segment

Apart from geographical expansion, Subhiksha also announced its entry into the telecom segment in which it would retail handsets and phone connections at a discount. The company will not only be selling handsets and phone connections, but will also be looking at providing customers after-sales services.

Mr Atul Joshi, Senior President and in-charge of the northern division, said that the funds for the investments came from debts, promoters and internal accruals.

In addition to that, ICICI is the only venture fund that has invested in the company. Between 2000 and 2005, ICICI had invested Rs 50 crore for a 24 per cent stake.

Mr Subramanian also said that the company was looking at an initial public offering (IPO) when it clocks around 1,000 stores.

The revenue of the company last fiscal was around Rs 330 crore and profits stood at Rs 10 crore. According to Mr Subramanian, every store on an average has a billing of Rs 3.5 crore, the expansion would add around Rs 1,575 crore to the company's topline.