The RP Goenka group is reducing workforce by around 12,000 people till next year at a total outlay of about Rs 250 crore (Rs 2.50 billion).
"While about 10,000 jobs would be cut by the end of this year spread across various companies in the group, another 2,000 will be reduced next year," RPG group vice-chairman Sanjiv Goenka said.
He was speaking at the sidelines of the two-day retail summit organised by the Confederation of Indian Industry.
Company sources said savings on account of the downsizing is likely to be Rs 100 crore (Rs 1 billion) every year.
Goenka said the workforce will be brought down to about 42,000 after this restructuring.
He, however, added that the workforce will be expanded substantially in the retail sector where the group is planning a rapid expansion.
The group plans to become a national player by middle of 2005. Currently, the group has major presence in south India.
Speaking on the proposed expansion plans of its retail company -- RPG Enterprises, Goenka said the company wants to increase its turnover from Rs 470 crore (Rs 4.70 billion) in 2002-2003 to Rs 1,200 crore (Rs 12 billion) by 2004-05.
This would be made possible by major expansion of all our retail store brands including Giant (hypermarket), FoodWorld (supermarkets), Music World and Health & Glow.
The group plans to set up 14 hypermarkets under the Giant brand name across the country in the next 18 months. "Each Giant store alone would, directly or indirectly, employ about 1000 people," Goenka said.
Currently, the company owns just one Giant store in Hyderabad.
To begin with, the company is planning to target Delhi, Mumbai, Bangalore, Kolkata, Chennai, Vishakhapatnam and Cochin. While the company has already signed for space in Gurgaon and Noida, it is in talks to set-up three such hypermarkets in Delhi also. Its biggest Giant store spread across 1,20,000 square feet would come up in Kolkata.
These hypermarkets will be spread over an area of 45,000-1,20,000 square feet and the investment will vary between Rs 15 crore (Rs 150 million) and Rs 35 crore (Rs 350 million), he added. The company is targeting a turnover of about Rs 90-100 crore (Rs 900 million-Rs 1 billion) from each hypermarket, Goenka said.
In order to give a further thrust to its retailing initiative, the company is planning to outsource various items in personal care as well as food category from China and Malaysia.
"We plan to treble the number of our private labels from the current 200 within the next 12 months," he said. The private labels are expected to contribute 15 per cent of the company's total revenue in the next two years, he said.