The company that currently operates 560 super markets (size ranging from 2,500 sq ft to 4,000 sq ft) and 10 hypermarkets (55,000 to 60,000 sq ft) under the ‘more’ brand, said it is still at a very early stage on its plans to enter speciality retailing.

“We are currently exploring some other speciality formats, like speciality but the plan is at a preliminary stage,” Aditya Birla Retail Ltd CEO Thomas Varghese told PTI. While he did not elaborate what could be the categories that the company may consider, Varghese ruled out the food and grocery, apparel and electronics segments.

“The company already has 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. Even electronics retailing is not lucrative as it offers very thin margins,” he said.

Varghese said as and when the company decides to enter speciality retail, it will be under a different brand and not under its existing ‘more’. Commenting on the expansion plan this fiscal, he said: “In the current fiscal, ABRL will expand very aggressively, we have plans to open 150 new supermarkets and 12 new hypermarkets this fiscal with a planned investment of Rs 300 crore”. The company today opened a new hypermarket in Delhi.

ABRL currently operates in 12 states across the country at the moment and might enter Orissa with its hypermarket format. The company closed last fiscal with a turnover of Rs 1,650 crore and expects sales of Rs 2,400 crore by the end of the current fiscal.

“We expect 16 per cent growth to come from same store sales and the rest will come from new store additions,” he added. The company that had acquired South India based retail chain ‘Trinethra‘ in 2007, is focusing on building scale rather than making acquisitions.

“We are not wanting go grow through acquisitions. There is a due diligence going on at the moment for a possible acquisition of an existing retail chain, but I don’t think we will do it,” Verghese said. The company expects to break-even by 2014, post which it might consider making an initial public offer.

“We expect to be profitable by 2014 and would look at making an IPO only once the company comes close to profitability,” he added.

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“We are hoping to be PAT positive by FY 15 at the company level. We see EBIDTA break even by 2013. However most of our stores are already profitable and the new stores will be profitable in 15-20 months,” ABRL’s CEO, Thomas Varghese told PTI here.

On investments for store expansion, Varghese said it will invest Rs 18-20 crore in its hypermarket and around Rs 40-lakh in supermarket every year. This company plans to have 12 hypermarkets and add around 100 supermarkets by end this fiscal, he added.

The hypermarkets will come up in existing metros like Delhi, Bangalore, Hyderabad and Mumbai, while the supermarkets will come up in Tier II cities such as Surat, Nagpur, Kolkata and Bhubaneswar among others.

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The investment per hypermarket would be around Rs 16 crore, while it would be Rs 40 lakh per supermarket, Varghese said. At present, Aditya Birla Retail has 540 supermarkets and six hypermarkets. With the 10 new hypermarkets, ABRL will attain the number two position in the hypermarket segment, he said.

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“In the next one-two years, our focus will be on consolidation and getting us to profitability. Our focus will be on profitability of the existing network rather than to grow the network,” he said. “We will be opening 12 hypermarket stores every year at an investment of nearly Rs 18-crore per store, spread across 55,000-75,000 sq ft. This year, our stores will come up in places like Delhi (May), Hyderabad (June), Surat, Pune and Nashik, among others,” Varghese said.

“Besides, we plan to open 70-100 supermarket stores every year at an investment of nearly Rs 50-60-lakh per store, spread across 2,500-2,800 sq ft pan-India,” he said. The company currently has 632 supermarkets and six hypermarkets under the brand ‘MORE’ and ‘MORE Megastore’, respectively.

The company also plans to close down unviable supermarket stores this fiscal, Varghese said, adding, “in FY 10, the company closed down about 55-60 odd stores across Mumbai, Pune, Delhi, Punjab, Haryana, Gujarat and in the south. The closures in the south are less as compared to the north.”

“If the business is not profitable then it does not make any sense to continue with it. Stores are closed due to several reasons including high rentals, poor locations, poor catchments, infrastructure issues like roads dug up, etc. In Mumbai and Pune, the predominant reason for closure is high rentals,” Varghese said.

On the company’s IPO plans, Varghese said, “it is on our radar but not at this juncture. We are definitely open to an IPO but it will happen when we are closer to profitability. We are not thinking about it now.” The company expects revenues of Rs 1,450-1,500-crore this fiscal (FY 10). The company closed FY 09 at Rs 1,130-crore. “We are targeting a growth of 25-30 per cent in FY 11,” Varghese said.

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