RPG group's retail flagship, Spencer and Company, will become the holding company for its profitable retail operations.
In a move towards that direction the group yesterday set up
a separate joint venture, Foodworld Supermarkets Ltd, with Dairy Farm International.
The group will enter into another joint venture for the `cash-and-carry' stores business in three months.
Sanjiv Goenka, vice-chairman, RPG Enterprises, said the plan to gradually make Spencer the retail holding company was in line with the group's vision of having three-four holding companies to spearhead investments in the group's various core
businesses of power, tyres, transmission, telecom services and retail.
"These will all be separate ventures, with Spencer holding investments in each. It will act as a promoter for them," Goenka said.
Cash-and-carry stores will further enhance RPG group's exposure to the retail business. Dairy Farm has recently acquired a Malaysian firm dealing with such large stores.
The new chain of stores will be the second leg of RPG's retail thrust. Investments to the tune of Rs 100 crore each have been lined up for setting up the stores, which would mostly be located on the outskirts of major metros.
These will be over one lakh square feet in area with 90,000 sq ft devoted to shopping complexes and the rest with entertainment and creche facilities. Consultants A T Kearney has already submitted their report on the retail business.
The cash-and-carry stores are a link between wholesale and retail segments and will operate on a much larger scale than the current supermarkets.
Spencer, apart from its 51 per cent stake in the new Foodworld venture, has another 50 per cent in RPG Guardian, which manages eight Health & Glow drugstores across Chennai and Bangalore. Apart from the above businesses it has interests in a travel house and the Musicworld chain of stores.
Over a period of two years RPG has spent about Rs 65 crore from internal accruals for the Foodworld chain.
The 29 stores under this banner will now be transferred to the joint venture signed yesterday.
In 1995, Spencer had entered into an agreement with Dairy Farm, in which the Jardine Matheson group holds a 55 per cent stake, to establish and operate Foodworld supermarkets in India.
The original agreement factored the establishment of a joint venture eventually.
