RPG in talks to buy retail chains, infrastructure

RPG Enterprises is in discussions with retail chains for acquisitions - brands and infrastructure - as a strategy to establish foothold in locations so far untapped by the company.

Sanjiv Goenka, vice chairman RPG Enterprises said, dialogue was currently on and the company had been approached by one or two retailers. He said, the acquisition could be for brands and infrastructure, if the valuation made sense.

The acquisition plan was part of the company's growth strategy for retail business. RPG plans to achieve a turnover of Rs 3,000 crore by 2008.

As part of this strategy, RPG Enterprises would hive off the retail business into a separate company, possibly Spencer's Retail, which would be headquartered in Kolkata as opposed to Chennai, the current headquarter.

The company had inducted Jitu Mehta, former executive director of Hindustan Lever, as president of Spencer's retail operations. He would be reporting to Sumantra Banerjee, chief executive officer of RPG's retail business.

Goenka said, the company would rechristen its non-music retail brands Spencer's. RPG had many formats for its retail business including FoodWorld, Health & Glow, MusicWorld and Hypermarkets.

FoodWorld and Health & Glow were set up as joint ventures with Dairy Farm International. However, RPG and Dairy Farm International have decided to part ways and move ahead with their growth plans. Post-disbanding RPG would have a total footage of 3.20 lakh square feet with a current annual turnover of Rs 430 crore.

Goenka said, once the separation was complete the company would move on to carve out the retail business out of RPG Enterprises into a new company.

There were also plans to get the Spencer's brand evaluated and raising of equity by the retail company.

Goenka said, the options before the company for equity raising were initial public offering (IPO), private placement or a mix of both the instruments.

However, the company would not offload more than 20 per cent of its holding in the proposed retail company.

RPG had chalked out its roll out plans for 15 hypermarkets and two supermarkets. Finalisation of 10 more sites were in progress.

The food stores were likely to double from the present RPG-controlled 49 stores to 100 stores over the next 18 months. The company planned to invest a shade under Rs 100 crore in the retail business in 2005-06.

Goenka said, the company was also charting growth options beyond the Indian shores for MusicWorld. Over the next 12 months, MusicWorld could have a presence in the neighbouring countries. Singapore and Malaysia were among the options being considered.