The Hindu Business Line : Subhiksha to open 600 outlets across 5 States by next year

Even as the Reliance Retail is bracing up for a major foray in Gujarat in the next few weeks, the Chennai-based discount major Subhiksha on Thursday announced its plan to open 80 outlets across Gujarat and 600 in five States by next year.

With an investment of Rs 300 crore nationally, including Rs 40 crore in Gujarat, the retail chain, offering no-frills retail price on the Every Day Low Price (EDLP) model, is eyeing eight to 10 per cent of the Rs 650-crore fruits and vegetable market in Gujarat alone, apart from other FMCG items, the Subhiksha Managing Director, Mr R. Subramanian, told reporters here. In Gujarat, all 80 stores are planned to open by March 2007.

He said the Rs 340-crore retail chain has tied up with farmers to buy their product on current price-levels under a preferred buying arrangement at different places. Quality would be ensured by grading process at the time of placing orders and delivery. The single product discount would be provided to the consumer at 9.5-10 per cent rate, he said.

In Ahmedabad, Subhiksha will operate in all four verticals — telecom, supermarket, fruits and vegetables and pharmacy.

With economy growing at 8 per cent, the consuming class in India is expected to grow from the 280 million in 2002 to 686 million in 2010. Indian retail is pegged to reach $350 billion by 2010 making it the fifth largest retail space in the world.

Indian retail is growing at 26 per cent CAGR over 2002-05, adding close to $5 billion annually, according to a 2005 report of Indian Retail Forum.

Plans IPO

Mr Subramanian said Subhiksha, the first company to use direct tie-ups with manufacturers as a means of cost saving since its inception in 1997, would consider going in for an IPO in the next couple of years. Replying to a question, he said the retail boom had not much affected the traditional kirana stores in India. These stores have, however, taken recourse to selling new items and, moreover, enjoyed receiving customers in the early morning and late evening hours when organised retail stores are closed.

Asked about major corporate houses joining the retail race, he said the model in the West had not been very successful as an industry's culture is very different from that of retail.

Our Hyderabad Bureau reports: Addressing a press conference here on Wednesday to announce the foray into Andhra Pradesh, Mr Subramanian said the company, besides Tamil Nadu and Delhi, was looking at Karnataka, Kerala, Maharashtra, Gujarat and West Bengal for expansion.

In Andhra Pradesh, it would open 80 stores at a cost of Rs 40 crore in the next four months. Of these, 55 would come up this month in six cities. Twenty-nine of the 50 outlets planned for the State capital were already opened.

The company, which registered a turnover of Rs 330 crore from 140 outlets in Tamil Nadu during 2005-06, was hoping to achieve Rs 900 crore this year and Rs 2,000 crore the following year.

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