City-based retail player Vah Magna Retail Pvt. Ltd is looking at an expansion plan involving Rs400 crore investment in the next two years, according to its chief executive officer Sriram Kakkera.
Vah Magna promoters had earlier successfully floated the Trinethra chain of supermarkets that was eventually sold to the Aditya Birla Group.
“Within a span of three years after divesting Trinethra and floating Vah Magna, we have set up 53 supermarkets, 11 hypermarkets and one cash-and-carry format store spread over Andhra Pradesh and Maharashtra. We have now reached a revenue size of Rs120 crore,” said Sriram.
The Trinethra chain of supermarkets had 85 stores spread across Andhra Pradesh and revenues of around Rs120 crore when the Vah Magna promoters divested it in August 2004.
About Vah Magna’s expansion plans, he said: “We have drawn up an expansion programme to take the total stores chain to 250-300 supermarkets and 50-60 hypermarkets, eyeing a topline of Rs1,000 crore in the next three years.”
To part-finance the expansion, Vah Magna is currently talking to a few private equity (PE) players who have shown interest in investing more than Rs100 crore to begin with. This exercise will be completed in the next six months, he said.
“We may look at tapping the capital market with an initial public offering (IPO) sometime in the next two years or so once we have revenues of around Rs500 crore. We are expecting to close the next financial year with a topline of over Rs300 crore. The IPO, which would take place sometime 12-18 months from now, will also offer exit route to the PE companies,” Sriram added.
India Value Fund (IVF), the $650 million (Rs2,639 crore) corpus PE fund that had earlier invested $25 million in Trinethra and divested later in favour of the Aditya Birla Group, is also keen to invest in Vah Magna. “We are definitely keen on considering investment in Vah Magna. We are of the view that the retail sector in the country is highly promising,” IVF vice-president Prateek Roongta said.
Vah Magna plans to expand its retail stores network in key cities and towns of Tamil Nadu, Karnataka, Maharashtra, Madhya Pradesh, Orissa and Chhattisgarh. The firm already has large warehouses at Hyderabad, Vijayawada and Visakhapatnam, and is looking to have one in Tirupathi. It now has a total warehouse space of around 200,000 sq. ft.
With 400,000 sq. ft of space in 65 stores in three formats and around 700,000 sq. ft under construction, the company plans to have 2 million sq. ft of store space in all formats in the next three years. “One-fourth of the store space would come up in Andhra Pradesh and the balance would be spread over the other six states,” he said.
Vah Magna, which has a cash-and-carry store spread over two acres on the outskirts of the city on the Vijayawada highway, plans a few more such stores in other parts of the country. “The second cash-and-carry store is coming up at Vizag. We would like to study the experience in these two stores for around six months before firming up plans to spread across the country,” Sriram added.
Apart from supermarkets, hypermarkets and cash-and-carry stores, the firm is in the process of coming out shortly with another format called Super Centre, a showcasing platform for various brands of food, readymade garments, FMCG goods among others.
“We are also in the process of creating another format that would house food courts under the ‘Grub Hub’ brand, specialty restaurants under the ‘Taste Buds’ brand and fine-dine restaurants with the ‘Bohemia’ brand. As an experiment, we have started 11 food courts and restaurants in our existing hypermarkets,” Sriram said.