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Aditya Birla Retail to invest up to Rs 200 cr in FY11

admin — Thu, 13 May 2010 18:11:22 +0000

Aditya Birla Retail on Thursday said it will invest up to Rs 200 crore this fiscal to expand its ‘More’ brand as it aims to capitalise on the revival of organised retail market and falling rentals. The company, which is the retail arm of Aditya Birla Group, said it will open around 100 supermarkets and 8-10 hypermarkets by March 2011 as part of plans to grow by over 25 per cent this year.

“In the last three years, we went through phases of nationwide roll-out of our ‘More’ brand and then consolidation. We will now embark on the third phase which will entail renewed growth to take advantage of the reviving market and falling rentals,” Aditya Birla Retail Ltd (ABRL) Chief Executive Officer Thomas Varghese told PTI.

Elaborating further, he said, “We will invest up to Rs 200 crore this fiscal to expand our chain. While we will open 100 odd new supermarkets of ‘More’, we have also lined up 8-10 new hypermarkets under our More Megastore brand.” Varghese said the company will fund its expansion from internal accrual and debt.

ABRL currently operates 540 More supermarkets and six large format More Hypermarts in 167 cities and towns across India. “Besides, we are also aiming to make all our existing stores fully profitable by this fiscal. Currently, 60 per cent of our outlets are showing profit and we want the rest to be in the same league,” Varghese said. ABRL is looking for an over 25 per cent growth in turnover in 2010-11.

“Our target is to clock a turnover of around Rs 1,850 crore this fiscal, up from Rs 1,460 in 2009-10. We believe that the new outlets which are lined up for opening this fiscal will also turn profitable within 15 months of start of their operations,” he added.

Less is ‘More’ for Aditya Birla Retail – Downsizing yet again!

admin — Sun, 04 Apr 2010 09:49:52 +0000

Aditya Birla Retail, which runs More supermarkets and hypermarkets, has closed 39 stores, including two-thirds of its outlets in Gujarat, company CEO Thomas Varghese said. The retail venture of the $29-billion Aditya Birla Group has closed these stores over the last nine months as part of a strategy to discontinue unprofitable stores.

“Any store that is not making money by next fiscal will be shut down,” Mr Varghese said. That could mean a gradual end to its Gujarat operations. “The firm is reviewing its remaining six stores in the state where high rentals and a culture of heavy discounting have made profitability unlikely”, Mr Varghese said.

“The Gujarati consumer is extremely discerning. This has resulted in a culture of heavy discounting and it has reached a level where it didn’t make sense for us anymore. Also, landlords in the state were unwilling to renegotiate rent even after real estate rates dropped across the country”, he said.

The cement-to-cell phone conglomerate,which ventured into retail in early 2007 by acquiring Trinethra Super Retail with more than 170 stores across four South Indian states, today operates more than 600 “More” supermarkets and a handful of “More Megastore” hypermarkets.

When it entered the business, the company had set a target of opening 1,000 stores in three years. But an economic slowdown in 2008 hit the organized retail business forced the company to go slow on expansion, just like other big-ticket retailers such as Mukesh Ambani’s Reliance Retail and Kishore Biyani’s Future Group.

Expansion is back in the agenda. But the new buzzword is profitability. Aditya Birla Retail has decided that every store in the network has to be profitable, no matter how profitable the chain is. “We want every store in the network to be profitable,” said Mr Varghese. “So, after we open a store, we will give it some time and a lot of support. But, despite our best efforts, if it is not showing promise, we will not hesitate to take a hard decision.” He said the company will achieve profitability by 2012.

For expansion, the retail chain is now focusing on hypermarkets, or mega stores, which are much bigger than supermarkets. “We plan to open 10-12 hypermarkets every year,” Mr Varghese said. He said the company has been ignoring the hypermarket format compared with its supermarket business and now it will undertake a course correction.

It opened a hypermarket in Mumbai’s Thane suburb this month and will open one in Delhi’s Rohini suburb in May.

Most retailers in India are caught in an expansion dilemma. If a company is too slow to expand its network, rivals will take positions in key areas in important cities and towns. If it expands too soon, it could affect the company’s financial stability if sales slow. ‘More’ clearly wants less risk.

Aditya Birla Retail to rope in investor, looking for funding

admin — Thu, 11 Mar 2010 13:07:15 +0000

Kumar Mangalam Birla’s retail venture, Aditya Birla Retail, is reportedly open to roping in a financial investor to fund its expansion plans. Even though the company declined comment, it is learnt from sources that the firm is not
averse to diluting its equity by about 10% to a sleeping partner. However, it would rather wait for more clarity on the regulatory front with respect to such investments.

Given the rate at which Aditya Birla Retail is expanding , funding will be an important factor especially with the rising rentals in the realty market, industry sources said. Aditya Birla Retail operates supermarkets under the “more” brand and hypermarkets under the “more.megastore” brand across the country.

It has opened its sixth megastore in Thane (the first in Mumbai/Thane). With 632 supermarkets and 6 hypermarkets under its wings, Aditya Birla Retail is gradually moving ahead with its expansion plans, even as it continues to identify and shut down unviable stores.

“We may close down 40-50 stores which we feel are not viable. However, this year we would also be adding around 48 more stores as part of our expansion drive,” Thomas Varghese, CEO, Aditya Birla Retail told TOI. According to Varghese, this year is critical for all the company’s stores from the profitability point of view.

Aditya Birla Retail to become $ 2.5-bn entity by FY18, IPO on the Radar

admin — Mon, 08 Mar 2010 05:17:09 +0000

Aditya Birla Retail Limited (ABRL), the retail arm of the Aditya Birla Group, aims to be an USD 2.5-billion entity by 2017-18, a top company official said. “We aim to become an USD 2.5-billion entity by 2017-18. The growth will be driven by opening new stores, launching private labels and closing unviable stores, among other initiatives,” Aditya Birla Retail’s CEO, Thomas Varghese, told PTI here.

“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.

Aditya Birla Retail speeds up, to open one hypermarket a month

admin — Thu, 04 Mar 2010 03:06:11 +0000

Aditya Birla Retail plans to invest Rs 1,800 crore over the next eight years to scale up its ‘More’ hypermarkets across the country. It looks to open one store per month at an investment of around Rs 20 crore per store, said Thomas Verghese, CEO of the company, on Wednesday at the launch of a hypermarket at Thane.

Aditya Birla Retail, which has 632 supermarkets and six hypermarkets, plans to increase the number of `More Megastore’ stores to 100, while shutting down some loss-making super markets. “We are focusing on our hypermarket format where we can introduce more stock keeping units (SKUs) to churn out more profits from large shop formats,” Mr Verghese added.

Currently, ‘More’ has 13 in-house (private labels) power brands in various categories with 320 SKUs in the FMCG segment. Hypermarkets have a minimum size of 50,000 sq ft compared to super market’s 2,500 sqft. “As a part of our cleaning up process, we are planning to wind up quite a few number of supermarket stores which are not profitable,” Mr Varghese said.

According to a report published by PricewaterhouseCoopers (PWC) on retail and consumer industry in association with Retail Association of India (RAI), the country’s retail sector is worth $350 billion and growing at around 15% annually.