The Hindu Business Line : Retail sector growth fuels speciality malls business

THE Indian retail industry seems poised for explosive growth. According to estimates by retail consultancy KSA Technopak, the organised retail sector is expected to touch Rs 35,000 crore by the end of this year from Rs 25,000 crore at present.

Not only are the existing players expanding, a few large business houses are planning forays into the sector, and some are getting into the niche `speciality mall' segment.

Take, for example, Ishanya, a project conceived by Deepak Fertilisers and Chemicals Corporation near Pune. Being billed as a one-stop shop for all construction-related needs, the promoters have decided to invest Rs 110 crore in the project, which is expected to be operational by March next year.

The President and CEO (Retail Business), Mr I.S. Narula, told Business Line, "We want to keep the crowds out. Ishanya is meant to attract only speciality footfalls — people concerned with designing, architecture, building and development."

He said Deepak Fertilisers got interested in this project after an ICICI Bank feasibility study projected potential for construction activity in the area to generate up to Rs 9,000 crore of business over the next few years.

Recently, real estate developer Aerens Group opened its first speciality mall, Goldsouk, for jewellery in Gurgaon. The company plans to set up 10 such Goldsouks over the next five years, each spread over two lakh sq ft on average. Each mall requires an investment of about Rs 30 crore - Rs 40 crore, excluding the land cost.

Real estate developer Omaxe is slated to set up a Wedding Mall in Gurgaon. The Rs 70-crore mall will be a one-stop shop catering to all wedding-related needs over 1.75 lakh sq ft. In a first of its kind venture, Senior Builders is also building a 10-storey Auto Mall in Gurgaon spread over 4.5 lakh sq ft. Likely to be taken to other cities, the total investment in this project is expected to be close to Rs 200 crore.

But will speciality malls fuel the overall retail boom? KSA's Mr Arvind Singhal, who was answering questions on the sidelines of the 7th KSA Retail Summit, felt otherwise. "I think the Indian market is still not mature enough for speciality malls. Many of these are being built only because the realtor has got hold of land.''

And his scepticism appears to be supported by the time required for such ventures to begin making money. Mr Narula said break-even for Ishanya could take between five or six years on a conservative estimate. Consumers too may take much more time to get used to the speciality concept.

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