Subhiksha to open 60 stores in Karantaka

Subhiksha, a Chennai-based discount and supermarket chain, has announced a Rs 55 crore plan to expand its discount store chain in Karantaka.

Addressing a press conference here on Wednesday, R Subramanian, managing director of Subhiksha, said the company initially plans to focus only on two cities - Bangalore and Mysore - by opening 60 stores.

"We will open 55 stores in 12 weeks in Bangalore, and five stores in Mysore within 15 weeks. Karnataka is our second market foray outside of Tamil Nadu," he added.

In Karnataka, the company will operate initially in the supermarket (FMCG goods), fruits-vegetables and pharmacy verticals. After three months, telecom products will be introduced. The average size of each store will be around 2,000 square feet with each store employing about 20 people.

From 1997 when it started, Subhiskha has spread to 32 towns and cities in Tamil Nadu with 145 stores and a turnover of Rs 340 crore in 2005-06. It will now invest Rs 300 crore to be a 600-stores company by 2007 by focussing on Karnataka, Delhi, Maharashtra, Gujarat and Andhra Pradesh.

The capital for expansion has been raised through equity funding from ICICI Venture and borrowings. ICICI Venture has a 24% stake in the company.

Over the years, Subhiksha has honed its discount retailing skills and created a national discount retailing format. Its business model is based on making cost and convenience of buying key motivators in the daily shopping behaviour of middle class households. It has also developed value delivery to consumers driven through an 'every day low price' (EDLP) model practised by global retail majors like Wal-Mart and Tesco.