The RPG Group, which owns Spencer's Retail chain, is keen to enter into tie-ups for its back-end and front-end operations but will not cede majority control, RP-SG (RP-Sanjiv Goenka) Group Chairman Sanjiv Goenka said. Dialogues were already on, he said. He also felt that FDI (foreign direct investment) in retail would help control inflation.
Break-even
Talking to reporters a day after the major policy announcement on FDI in retail, Mr. Goenka said that he expected Spencer's to break-even earlier than July 2013 as projected following Thursday's Cabinet decision. “Should things consolidate at the back-end we will break-even earlier,” he said. Spencer's is currently a wholly-owned subsidiary of group flagship CESC.
He said that a Rs.350-crore capital expenditure was proposed for Spencer's for 2012-13 against Rs.150 crore this year. Revenues have grown from Rs.750 crore per sq. ft.
He also indicated that potentially back-end and front-end operations could become separate companies with multiple equity partners. Mr. Goenka said that he would not rule out foreign partners, so that these operations become profit centres.
Spencer's Retail is a Rs.1,000-crore food-first multi-format retailer which has 200 stores spread over one million sq. ft.
The company has presence in four verticals — Spencer's, Music World, Au Bon Pain and Fashion. It is targeting selective growth in big box format and through new tie-ups.
Mr. Goenka said that he expected 50 per cent of the retail to flow into back-end operations. He felt that these measures would help reduce wastage and help control inflation by facilitating back-end consolidation through which front-end costs could be reduced.
On fears that there would be a surge in imports, he said amid the current rupee volatility this seemed unlikely.
