Spencer's Retail, part of the Rs 11,000 crore (Rs 110 billion) RPG group, is looking for foreign retail partners for foraying into luxury retail as well as strengthening its presence in consumer electronics.
"Consumer electronics is a rapidly growing market and our presence in this category is almost negligible. We are talking to global retailers for licensing their brands in India," a source close to the development said.
"With global players keen on entering the nascent Indian market, RPG's strategy is to not appear too eager. But yes, talks are on for consumer electronics as well as luxury brands," another source added.
Currently, Indian norms permit only 51 per cent foreign direct investment in single-brand retail. However, the ministry of commerce has already circulated a draft Cabinet note to increase foreign direct investment up to 51 per cent in specific product categories like consumer electrical and electronic goods.
"If this were to become a reality, Spencer's would benefit from it," sources said.
RPG group is on major retail expansion. It plans to increase the number of stores five-fold from 400 stores to 2,000 by 2009 and 4,000 by 2011. For this purpose, the company is planning to invest Rs 1,000 crore (Rs 10 billion) till 2009 and Rs 1,500 crore (Rs 15 billion) thereafter.
The money for the first phase will be raised primarily through internal accruals. To raise money for the second phase, the company is contemplating a public issue or a private equity placement, either of which have to be executed by 2009, RPG Enterprises Vice-Chairman Sanjeev Goenka said.
Meanwhile, Spencer's will be opening outlets in Chandigarh, Jaipur, Lucknow and Kolkata in 5-6 months. After parting ways with Dairy Farm International in September 2005, Spencer's store count has nearly doubled from 52 to 125.
It opened a 62,000 square foot hypermarket in Gurgaon on Thursday. This is the company's eighth hypermarket in the country and it is averaging in the range of Rs 3 to Rs 6 crore (Rs 30 to Rs 60 million) per month in sales from its hypermarkets.
