ABRL targets FDI and specialty retail segment

As a part of major brand expansion plans,

the Aditya Birla Retail Ltd (ABRL) - the retail arm of the USD 29.2 billion diversified Aditya Birla Group - is now looking at bringing in foreign direct investment (FDI) in retail while entering the specialty retail segment, as the organized retail business burgeons in India. As a relatively new entrant in the retail sector which began in December 2006 with acquiring Trinethra, the chain of stores based in south India, followed by launching their own brand of stores called 'More' in May 2007 , the ABRL group is galloping ahead with their retail expansion plans. With the domestic market ready for more and more quality hypermarkets, ABRL feels that FDI in retail will bring in healthy competition and planning to invest Rs 300 crores in setting up hypermarkets, supermarkets and neighborhood stores under the More brand name. Currently operating around 560 super markets spread over 2,500-4,000 sq ft and 10 hypermarkets of around 60,000 sq ft each, the company’s retail expansions will be funded partly through debt and equity. With a present 1:1 debt equity ratio, it plans to add another 150 new supermarkets and 12 hypermarkets by the end of this fiscal year.

“While the new formats is expected to add about 16 per cent to its top-line revenues, ABRL is also concentrating on increasing its private label business. Last fiscal year, the company closed the year at Rs 1,650 crores. We are looking at Rs 2,400 crores revenue by the end of this fiscal by consolidating our retail presence. Our private label business is growing at a good pace. At present, 19-20 per cent of sales come from private labels. Our private labels cover 54 categories and has over 300 products,” says Thomas Varghese, CEO, ABRL.

ABRL is also at the early stages of entering specialty retailing, with plans to add over 160 new stores under ‘its more’ brand this fiscal at an investment of Rs 300 crores. “We already have a lot of exposure to food and grocery format, we won’t look at the format. Also, in apparel retailing, there are group companies which are already operating,” adds Varghese. While expecting 16 per cent growth to come from same store sales and the rest from new store additions, ABRL is currently focusing on building scale rather than making acquisitions, which is expected to help in go a long way in the domestic retailing business.