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Debdatta Das

New Delhi, Feb. 4 Hot Spot, the mobile retail chain promoted by the MCorpglobal Group, owners of the Spice brand of telecom, said that it would consider raising money through an initial public offer, as one of its routes to fund its expansion, by the end of 2008.

Talking to Business Line, Mr Sanjeev Mahajan, Chief Executive Officer, Hot Spot, said: “Currently, we have enough funds for our expansion plans till the end of 2008. However, for future expansion purposes, we are looking at an IPO as a way of raising funds. In fact, we will start evaluations with regards to this by December 2008.”

Currently, Hot Spot has 250 outlets. Mr Mahajan said, “We are currently following the one-store-a-day practice. Going by that, we plan to hit the 300 mark within the next 15 days. But our outlook is to reach the 1,200-1,500 mark by the end of 2008, for which we have earmarked an investment of around Rs 500 crore, all from internal accruals.”

The company is aiming at 6,000 outlets in the next three years, for which it will evaluate possibilities of external funding.

The company currently operates through company-owned stores, but plans to get into the franchisee model by March 2008. “We will follow the ‘learn and earn’ model for the franchisees. In this format, while the location and management will be the franchisers, we will provide them with the branding and the products on sale,” said Mr Mahajan.

The company hopes to have a 1:1 ratio of company-owned outlets to franchisee stores. “We could also have a greater share of franchisee outlets in the future, depending on how this model performs,” added Mr Mahajan.

The total mobile market in India is about Rs 70,000 crore, of which only seven per cent comprises organised retail. Mr Mahajan said that though competition such as Subhiksha Mobile, The Mobile Store, and RPG Cellucom existed on a national basis, there was more than enough space for more such players, considering that the market for organised mobile retail was growing at a CAGR of 60 per cent.

Hot Spot is currently present across 30 cities and plans to expand its footprint to around 100 cities by the end of 2008. It is also looking at developing formats such as shop-in-shop, kiosks (80 sq ft), and flagship stores (10,000 sq ft) mainly at the metros. It has a total of 57 service centres and plans to touch the 100 mark by March 2008.

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