Essar Hypermart, the steel retail chain of Essar Steel, has commenced its overseas operations by launching retail shops in Dubai and Indonesia.
The company is planning to set up a service centre in Dubai, which would cater to Oman, Qatar and Saudi Arabia. “We are looking at around Rs 350 crore from GCC (Gulf Cooperation Council) countries,” said Girish Rao, chief executive officer, Essar Hypermart. It is now planning to expand its presence in Saarc countries.
Rao said the company had launched its first retail shop three years ago and adopted the FMCG model to reach out its customers. It now has 520 outlets across the country and plans to take the number to 776 by March 2011. These outlet will be a combination of both company-owned and franchise.
“Our only investment is in the inventory, which is Rs 300-400 crore for 70,000 tonne.” The company has around 105 own outlets, where the inventory will be 6,000-7,000 tonne.
Essar Hypermart sales account for 25 per cent of Essar Steel’s annual revenue. The retail-chain last year registered a turnover of Rs 3,600 crore and is targeting Rs 9,000 crore in the next two years. Ten per cent of the business comes through SMS and soon the company would launch online shopping.
The company sell around 1.1 million tonnes through the Hypermart, which caters to customers in the SME segment ranging from small manufacturers, local fabricators and general engineering firms to large corporations and construction companies.
“This is more a just-in-time model or giving shampoo in a small packet instead of bottles. This will help the SMEs who are not able to invest in inventories,” said Rao, who was in a leading FMCG company earlier before joining Essar Hypermart.
On country’s steel sales through retail outlets, Rao said, around 25 million tonne of steel was sold in the country, of which 8-10 million tonnes was sold through retail outlets. Other steel majors who are in the retail space include JSW and Tata Steel.