The Chennai-based low price food, grocery and pharmacy retail chain is finally getting its act together for expanding its retail footprint in the country.
MUMBAI: It seems to be a better late than never chant for Subhiksha.
The Chennai-based low price food, grocery and pharmacy retail chain is finally getting its act together for expanding its retail footprint in the country.
Having consolidated with close to 150 Subhiksha supermarket and pharmacy stores in Tamil Nadu, the promoters of Subhiksha Trading Services are gearing for a presence in five Indian states by the end of this year.
The company is looking at launching over 250 outlets at various locations in Karnataka, Andhra Pradesh, Gujarat, Maharashtra and North India. The expansion tag would range between Rs 100 crore to Rs 150 crore. Funding will be through internal accruals and debt financing. In fact, ICICI Ventures already has a 26% stake in the company.
It is understood to have closed the last fiscal with a Rs 330 crore turnover, up from Rs 280 crore in March 2005.
While Bangalore and Hyderabad are expected to have 35 stores each, Vizag and Vijaywada will see 12-15 stores each.
In north India, the expansion will primarily be in the national capital region (NCR) with close to 60 stores. In the western region, 50 stores will be launched in Gujarat and over 100 outlets in Maharashtra, particularly Mumbai, Thane, Navi Mumbai and Pune to begin with.
Abhijit Sanyal, senior president of Subhiksha in Mumbai, said, “The stores in the state will be stand-alone outlets with an average size of around 1,500 sq ft. These will be set-up in locations with high residential population.”
Not taking the franchising route, the company will adopt the lease-rental model to establish and manage these stores. The company expects to launch these stores 6-8 months post monsoon. The company will also invest heavily towards establishing a strong supply chain to back its retail expansion.
“Each region will have its own distribution centre to ensure effective inventory management,” informed Sanyal.
Adopting a unique business model, the no frill, no glamour Subhiksha retail chain offers 8%-10% discount on maximum retail price (MRP) on products sold in its supermarket and pharmacy stores.
While it still operates with the same business model in Tamil Nadu, it is not sure if the model will be replicated in the other Indian states. “It’s yet to be decided,” said Sanyal.
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