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Monday, April 02, 2007

RPG weighs IPO option to fund retail expansion

RPG Enterprises is planning to set up 20 Spencer's stores, one of the largest supermarket chain, in different formats in Kolkata.

It recently opened the first two Spencer's Dailies in Kolkata that stock about 5000 products including fresh fruits and vegetables, personal and home care products, food and grocery.

The company has earmarked an investment of close to Rs 1,000 crore for expansion throughout the country.

Although majority of the funds would be raised through internal accruals, RPG Enterprises also proposes to raise funds through an IPO for its retail expansion plans, but it could opt for a public issue, private equity or private placement.

"This would be announced in the next 12 months," informed Sanjiv Goenka, vice-chairman, RPG Enterprises.

The company expects 25-30% of its total revenues to come from its retail business, from the present 5%, with the Rs 11,000 crore RPG group's retail business expected to touch close to Rs 700 crore in 2006-07. The company recently inaugurated 2 of its Daily formats in Kolkata and plans to open four Hypers this year.

The city would soon have RPG's biggest hypermarket of India covering 74,000 sq ft, larger than the one it opened in Gurgaon that covers close to 65,000 sq ft, Goenka said. These would offer more than 25,000 products - groceries, fresh fruits and vegetables, home appliances, white goods and luggage, at competitive pricing.

Kolkata would also have two more hypermarkets, functional by July this year, of close to 40,000 sq ft and 55,000 sq ft, with the state's first Hypermarket scheduled to be inaugurated before April 15 in Durgapur.

"We are looking at setting up stores in lucrative tier II towns and cities also including Aurangabad, Trichy, Madurai, Mangalore and Durgapur ," Goenka said.

RPG, at present, has a total of 400 retail outlets which is expected to grow to 2000 stores by 2009 and 4000 by 2011.

At present, there are 125 Spencer's stores across 25 cities in India, comprising 8 Hypermarkets, 5 Spencer's Super Stores, 104 Spencer's Daily, 3 Spencer's Fresh stores, and 5 Spencer's Express stores, reports Business Standard.

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