Rpg To Invest Rs 650 Crore In 4 Years

RPG Enterprises has decided to pump in around Rs 650 crore into its retail business over the next four years for expansion of its existing operations and acquisition of retail chains.

"We see a huge opportunity in the retail segment as the industry is expected to grow extremely fast," Sanjiv Goenka, vice-chairman of the RPG group, said.

According to a Confederation of Indian Industry (CII) forecast, the country's retail industry would be worth $300 billion by 2010, if the economy grows at six to seven per cent.

The expansion plan includes more retail outlets of its popular FoodWorld chain, setting up of hyperstores and acquisition of retail chains apart from setting up more MusicWorld outlets.

At present, RPG Enterprises has three retail brands: FoodWorld, MusicWorld and Health & Glow. According to industry estimates, its current monthly turnover from its existing retail business is over Rs 35 crore.

These expansion plans are part of the company's strategy to change the group's business mix from commodity-based business to service-based business.

"We are open to acquisition of a retail chain which can add value to our existing business," Goenka said. He said around 120 FoodWorld outlets will be opened during the next three years. This would require an investment of around Rs 150 crore.

The company also plans to open its fourth retail hyperstores, Giant, in Delhi, Kolkata, Bangalore, and Hyderabad. Hyperstores are huge bulk stores selling products ranging from hardware to garments to food at discounted prices. Goenka said most of the funds for expansion will be through internal resources.

The Kolkata-based group currently has around 60 FoodWorld stores, 13 MusicWorld outlets and 18 Health & Glow shops.

The retail arm of the RPG group -- which has activities in chemicals, finance, tyres, tea, information technology and the entertainment sectors -- accounts for about five per cent of its Rs 7,500 annual turnover.

According to industry estimates, India's retail business is poised to grow at a rapid pace over the next few years. The Confederation of Indian Industry and consulting firm McKinsey & Co, in a joint report, have estimated the current size of the country's retail industry at Rs 18,000 crore with the groceries segment accounting for about 50 per cent.