Spencer's Retail plans outfit for back-end operations

Our Bureau Updated - March 12, 2018 at 02:18 PM.

To rope in equity partners; open to foreign stake in front-end too

Mr Sanjiv Goenka

The RP-Sanjiv Goenka Group-controlled Spencer's Retail may carve out a separate outfit to take care of back-end operations.

The company will look forward to take advantage of the relaxation in FDI norms and rope in minority equity partners in the proposed outfit. The company is also open to a role for foreign partners in the front-end operations.

“We might (independently) float a back-end company. It will be a mirror image of Spencer's Retail and there could be more than one equity partner,” Group Chairman, Mr Sanjiv Goenka, told media persons here on Friday.

According to him, consolidation of back-end services between Indian retailers and multinationals would reduce operating costs and increase viability. However, consolidation between Indian retailers would take time, he said. “We (Indian multi-brand retailers) have to develop a profitable back-end model so as to make retail a profit centre,” Mr Goenka added.

Majority stake

On the front end operations, he said that Spencer's was open to partnering foreign companies in both back-end and front-end, without sacrificing operational control.

“Spencer's is open to back-end and front-end in FDI. But we won't yield majority stake in the business. We will have the majority say,” he said, adding that the company was in discussion with several foreign players. He, however, did not divulge details or the time of materialisation of these discussions.

The RP-Sanjiv Goenka Group Chairman, did not rule out the possibility of having the same set of back-end and front-end partners. “Everything is a possibility,” he said.

Breakeven

The loss-making retail chain being back in black, according to Mr Goenka, is expected to happen in July 2013.

Asked if FDI in retail could push the turnaround date ahead, he said: “This is shared package and costs are to be apportioned. Unless it happens it is difficult for me to comment.”

20 per cent growth

Spencer's is likely to see a 20 per cent growth in its topline this fiscal followed by another 25 to 30 per cent growth with a capex of Rs 350 crore in 2012-13.

Published on November 25, 2011 15:08