Subhiksha plans 3000 stores by 2010

Subhiksha, the country's largest supermarket, pharmacy and telecom chain, aims to treble the number of its stores to 3,000 by first-half of 2010.

It will mark the speediest growth in number of outlets for the Chennai-based no-frills retail company, as it took a decade to open 1,000 stores.

Subhiksha, which opened its 1,000th store last month, is on an expansion spree ahead of its initial public offering (IPO). The IPO will take place before March next year. Initially, it aims to invest Rs 300 crore (Rs 3 billion) for funding 500 more stores which are to be opened by June 2008.

R Subramaniam, managing director, Subhiksha Trading Services, said, "We are growing and will continue to do so. We are planning to double the store-number in two years after we reach the 1,500 mark. For undertaking all current expansion activities, we are adequately funded and can raise money for future purposes also."

Keeping in line with the investments the company has made so far, it would require Rs 900 crore (Rs 9 billion) or more for expanding the number of outlets to 3,000.

As Subhiksha already has the largest reach across the country, most of the stores will come up in the existing segments of the market. "Some outlets may be opened in newer markets but the aim will be to increase presence in all the current markets," added Subramaniam.

The company has also decided to go public in the last quarter of the current financial year to partly raise its capital expenditure.

Although he refused to divulge details of the IPO, he said the company's current valuation is Rs 3,500 crore (Rs 35 billion) and it aims to offer 10 per cent to public issue, which is Rs 350 crore (Rs 3.5 billion).

The promoters will hold 60 per cent in the company after the public offer. Subhiksha, with over one million sq ft of retail space, is spread across five states.

Unlike Big Bazaar, Subhiksha believes in setting up non-airconditioned small neighbourhood stores measuring around 1,500 sq ft.

Subhiksha operates in four segments - fruits and vegetables, pharmaceuticals, FMCG and telecom. The chain also makes the everyday low price (EDLP) offer to its customers, which is sustained through discounts obtained by the chain from direct supply arrangements with manufacturers, along with bulk purchase and cash transactions.