Steel majors eye huge returns in retail, to ramp-up outlets

Steel majors eye huge returns in retail, to ramp-up outlets

Mumbai: With the infrastructure sector gaining momentum on the back of an economic revival, steel majors are looking to cash-in on the opportunity through enhancing their retailing initiatives in the country.

Steel companies such as Essar Steel, Ispat Industries and JSW Steel, plan to ramp-up their outlets and are eyeing an at least 30-35% growth through retail sales in the next two years.

“We are doing well in the retail segment with about 17% revenue coming from the retail segment. We aim to grow this to at least 25-30% going forward (next two years)," JSW Steel’s vice-president (sales and marketing), Sharad Mahendra, told PTI here.

JSW Steel, plans to ramp-up its outlets under the JSW Shoppe brand to 350 from present 218 by March 2011. The company will adopt the franchise route to open these outlets and invest around 9-10 lakh per JSW Shoppe.

The company plans to open 132 more outlets by March 2011.

“We intend to have 600 outlets by March 2012. We will continue to focus on the retail segment to meet rural demand," Mahendra said, adding “our aim is to tap small customers and build a good brand image for the company."

The company plans to up its capacity to 11 million metric tonnes per annum (MTPA) from the present 7.8 MTPA by March 2011.

Another steel major, Essar Steel, also plans to increase its retail outlets (Essar Hypermart) to 750 from the present 600 outlets by 2011.

“We are earning good revenues from our retail business. Our stores are doing good business in the west and south. We plan to open 150 Essar Hypermarts by 2011," Essar Steel’s executive director (Sales and Marketing), Vikram Amin, said.

“Presently, 35% of our revenue comes from Essar Hypermart and we aim to maintain the same momentum going forward," he said.

Essar Steel, which is known as the pioneer of steel retailing in the country, forayed into the segment in 2006 by opening its first Essar Hypermart at Gandhidham in Gujarat.

Besides, Ispat Industries is also in the midst of augmenting the size of its retail outlets and plans to have a 200-strong network by March 2011. The company plans to open at least 80-90 selling points to cater to rural consumers by March 2011.

“We will ramp-up our outlets to 200 from the present 110 by March next year. Our target is to have 350 selling outlets by March 2012," Ispat Industries’ executive director (commercial), Vinod Garg, said.