Subhiksha, a Chennai based no-frills, small format retailer is going to acquire stake in a listed non-banking financial company Blue Green Constructions
In a bid to continue their expansion spree, Subhiksha, a Chennai based no-frills, small format retailer is going to acquire stake in a listed non-banking financial company Blue Green Constructions and Investments Limited. Initially, the company will acquire 40% stake for Rs.2 crore. Subhiksha, apart from F&G products, also retails mobile phones and pharmaceuticals. Currently, it has 1480 stores across India. The company sources have revealed that there is a plan afoot to merge both the companies. The mereged company will be named Subhiksha Limited and listed in NSE/BSE besides MSE (Madras Stock Exchange) where the shares are already listed. The merge will give Subhiksha an access to capital fund required for the expansion. By 2010 it will invest Rs. 1,200 crore to take the number of stores to 3,000 stores across 250 cities. Subhiksha will invest Rs. 800 crore during 2008-09 on expansion. R Subramanian, the promoter of Subhiksha claims, "This transaction will ensure that Subhiksha has access to capital and will continue to be on the fast track of growth. It will also enhance value for our stakeholders and help us achieve our objective of becoming a US$ 5 bn company". The company is planning to raise fund through equity and debt. The PE firm ICICI Ventures Ltd. is already holding 24% of the company’s equity. The company sources also reveal that it is planning to retail consumer durables to further enhance its value proposition to the Indian consumer. The company plans to have 2 million square feet of retail space in this segment in the next 1 year.