IKEA India plans to raise Rs 5K crore to expand presence

The move is aimed towards launching more outlets in the country where it has a single store so far.
IKEA

IKEA is planning to raise Rs 5,000 crore in India through debentures. The move is aimed towards launching more outlets in the country where it has a single store so far.

In India, this will be IKEA's biggest investment since its venture two years ago. This investment covers nearly half of the Rs 10,500 crore FDI it was allowed in 2013.

As the first tranche, the world's largest furniture retailer will be issuing debentures to IKEA Asia Treasury Centre Limited for Rs 550 crore. However, the funds should be used only for construction of the outlets and other general corporate matters and not for purchasing any land parcel.

Preet Dhupar, CFO, IKEA India, said, “In line with IKEA retail direction and India expansion plans, along with online operations, IKEA continues to invest in building new customer meeting points in the different cities in India. In Mumbai, where we are accessible online today, we will have the Navi Mumbai store and two city centre stores soon to be accessible to many more people. IKEA will also enter Bangalore and Delhi with an omni channel approach and our plans are underway.”

So far, the Foreign Investment Promotion Board (FIPB) has cleared IKEA's Rs 10,500-crore investment proposal to launch outlets in India. IKEA has received about Rs 2,515 crore from its global parent till now.

Mohit Yadav, Founder at Altinfo, a data insights firm, told a leading media organization, “Usually, expansions are done using a combination of cash and equity, but in this case, NCDs have also been issued to a group company. It shows IKEA is confident that the new projects would generate sufficient cash flow to repay the debt and maximise value to the shareholders.”

Primary Category
 
 
 
 
TRENDING ARTICLE
RECOMMENDED FOR YOU