IndiaRetailBiz

Subhiksha, the Chennai-based pan-India, small format, no frills, discount, food, grocery and pharmacy chain, which also operates a discount telecom chain, faced with the adverse impact of ecomic turbulance, has decided to go slow on its diversification and expansion plans.

The retailer had earlier announced diversification in the area of consumer durables. According to R Subramanian, its promoter and Managing Director, the retail chain was planning to set up 150 consumer durables retail stores at an investment of Rs 600 crore. The new durables chain was to focus on Tier-II and III towns across the country. It was planning to occupy an estimated 2 million sq ft of space.

The rollout of the new vertical was to begin from early 2009. This, according to a BS report has been postponed to the middle of 2009.

“White goods and consumer durables vertical was what we were looking at. Earlier, the plan was to start somewhere around January-February, but now we have postponed it to a slightly later date,” informed a Subhiksha official. “This is mainly because of the economic problems. Slowdown is affecting us also. We are looking at re-scheduling our plans to May-June next year,” he added.

Apart from diversification, Subhiksha had also been looking at expanding its flagship food & grocery retail chain from over 1,500 stores to 2,200 stores by injecting Rs 800 crore as investment this fiscal. The major thrust for expansion was expected to come from West Bengal, Kerala and Madhya Pradesh.

This may also get delayed as the exercise to raise new capital for the purpose from capital markets has also been delayed due to volatile market conditions. The plan to list the company’s equity shares on the bourses by the end of this calender has also been postponed by a few months. For this purpose, Subhiksha had acquired majority interst in Blue Green Construction & Investments– a Chennai-based listed NBFC– a few months ago. The process of reverse merger for indirect listing of its shares was expected to be completed by December, 2008. The relisting of the newly structured company is now expected to happen in early 2009.

Currently, 10 percent of Subhiksha’s equity is held by private investment company of IT moghul Azim Premji, while 14 percent of the same is held by ICICI Venture Capital. Azim Premji had incidentally bought 10 percent equity a few months ago from I-Venture for Rs 230 crore.