Gaining access

Calcutta, June 8: Subhiksha, the Chennai-based supermarket chain, will hit the Indian bourses to raise $120 million by December or early next year.

The supermarket chain, known for bargain offerings, is set to reach $1-billion turnover this fiscal from $600 million in 2007-08.

“It is more a question of when we will do the IPO (initial public offering) rather than if at all. We are looking at raising $120 million. Our investors are also awaiting the listing plans. We will grow at a rate of 1,000 or more stores each year,” said R. Subramaniam, managing director of Subhiksha, on the sidelines of a conference in Mumbai. ICICI Venture Capital has a 24 per cent stake in the retail chain.

Subhiksha currently has 1,081 stores across 90 cities, including Delhi, UP, Punjab, Haryana, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu, which will go up to 2,200 stores during the course of this financial year.

A typical Subhiksha store is around 1,000 to 1,500 square feet and located in populous areas. It usually buys products in bulk and sells them at a discount to customers.

Bengal plans

Subhiksha, which delayed its entry into Bengal by four to six months, was awaiting a price correction in spaces leased for commercial purpose.

“We do not own property, all our premises are leased and the location is of paramount importance. In Calcutta, we are awaiting the availability of the right kind of space for lease and for prices to soften. According to our estimates, prices in Calcutta (commercial lease) have softened between 15 and 20 per cent in the last four to six months,” Subramaniam said.

The company plans to have seven mobile stores in Calcutta followed by 75 stores all around the city, which is slated to reach 120 by the end of March 2009.

Subhiksha is also looking at an entry into Orissa by the end of the year and Assam by early next year. Around 20 per cent of its outlets in the future would be in the east.

“We will be investing Rs 95 crore in the east of which, Rs 60 crore would be invested in Bengal and Rs 23 crore in Calcutta,” said Subramaniam. The company is looking at regions such as north Bengal and the Calcutta suburbs.

On asked about the retail chain’s sourcing plans, Subramaniam said there were national tie-ups with co-operatives, and the company did not follow a model of sourcing directly from farmers.