Date:19/06/2006 URL: http://www.thehindubusinessline.com/2006/06/19/stories/2006061902980300.htm

Back DCM Shriram may hive off Hariyali

Ambarish Mukherjee

Post-demerger, the new retail entity may enter capital market

MR VIKRAM S. SHRIRAM

New Delhi , June 18

DCM Shriram Consolidated Ltd (DSCL), which had entered rural retailing in 2004 through its Hariyali Kisan Bazar (HKB) shops, is looking to hive off the retailing division into a separate company and tap the capital market to fund further expansion.

The DSCL Vice-Chairman & Managing Director, Mr Vikram S. Shriram, speaking to Business Line said, "Hariyali Kisan Bazar chain could be hived off into a separate company."

May tap capital market

He also stated that post-hiving off, the new retail company would be entering the capital market. "For raising capital the company would then have to go to the market," he said.

The HKB chain operates 30 stores in five States and plans to raise the figure to 35-40 by Diwali. Each store involves an investment of around Rs 1.5 crore to Rs 2 crore.

The average annual sales per shop last year were in the range of Rs 4-6 crore. If the sales of the adjacent petrol pumps are included, the total sales per store stands at Rs 10-15 crore, he said.

Two categories

DSCL is also banking on the retail chain's prospect as a separate entity based on the high conversion rate of footfalls into purchases.

"As of now, based on seasonal patterns of agricultural requirements, the average footfall per store per day ranges between 500 and 1,000. Out of this anywhere between 55-60 per cent gets converted into purchases," Mr Shriram said.

The stores currently offer goods under two broad categories - agricultural inputs and FMCG. "We would be introducing household goods, construction goods, children's goods, apparels, footwear within the next four months," he said. Of these, some are being sourced from China.

The company has also started buying back the produce of the farmers, for which inputs from these shops are used. "This is a win-win situation because the farmer is getting the ready customer. We are also planning to build warehouses for storing facilities," he said.