Kolkata: The RP-Sanjiv Goenka group has expressed interest in joining hands with a foreign retail major once FDI in multi-brand is in place, but said it would retain a controlling stake in the retail venture.
“We are not going to give up control,” group chairman Sanjiv Goenka said when asked how much the company can divest in favour of foreign brands or companies.
Photo: Abhijit Bhatlekar/Mint
Currently, Goenka’s flagship company holds 94.72% in Spencer’s retail.
The Union government on Thursday cleared 51% FDI in multi-brand retail and also hiked FDI in single-brand retail from 51% to 100%.
Goenka said back-end operation was crucial for front-end retail stores’ profitability.
Spencer’s currently operates in both front-end and back-end operations. He said there was a distinct possibility that hiving off the back-end operations in a separate entity to invite investors.
“There is need for sharing of back-end operations due to under-utilisation of capacity of each players in the market operating now. Multiple companies can join in this venture both Indian and foreign. Moreover, back-end services can also become separate profit centre,” he said.
Goenka declined to speak on company-specific negotiations it was into with international retail majors. Tesco, Wal-Mart and Carrefour are known major names waiting to enter the $400 billion retail market in India.
However, he said it would take at least 18 months for any foreign retail store to get operational.
Spencer’s runs about 220 stores, including 30 large format stores across 45 cities.
Spencer’s will invest Rs 300 crore in the next financial year on store expansion and expects to break-even by FY13 end.
The group said their cafe venture ‘Au Bon Pain´ in India was also open for FDI.