Company finds hypermarket model more lucrative, easy to manage.

The Rs 1,450-crore Aditya Birla Retail is open to offloading between 10 and 15 per cent stake in its company to private equity players to boost its retail operations.

Currently the retailer, which runs the retail chain More, is funded by debt, but going forward there is a likelihood of raising funds through private equity or even finding a strategic partner who could infuse fresh equity into the still unprofitable venture.

Funding options

Speaking to Business Line, Mr Thomas Varghese, CEO,Aditya Birla Retail, said, “There will always be other options of funding and definitely PE funding is one of them but we would not go beyond offloading 15 per cent.”


Besides there could be strategic partners roped in to form a company, pretty much like what Wal-Mart and Tesco have already done in the country whereby there would be structured deals for back-end operations.

As Mr Varghese says, “We are in discussions to figure out whether structured deals could be forged along the lines of what Wal-Mart and Tesco have already done as FDI regulations still do not permit multi-brand retailing in the country.”

The company is also exploring new formats such as deep discount and home stores as it might look to go beyond its supermarket and hypermarket models.

However, the hypermarket format seems to be more lucrative currently as making money from such big box formats is an easier proposition due to the advantage of scale.

Hypermarket format

On the eve of opening its sixth hypermarket in Thane recently, Mr Varghese said, “The hypermarket model is an easier model to crack due to the supply chain efficiencies and is easy to manage. We intend launching 10 to 12 hypermarkets every year.”

With property prices on a downswing, the retailer has also entered a series of revenue-sharing deals with real estate owners to shore up its bottom line.

“Property deals are now at more realistic prices and we have entered revenue-sharing deals with some of them as all our properties are on lease,” said Mr Varghese.

Private labels

Private labels in almost 30 to 40 categories are also expected to give the retailer better margins as it wants to plug the gaps in SKUs on its shelves.

At the same time, collaborations with vendors is an ongoing process with the purpose of creating special products for its More outlets.

“We are actively working with vendors as long as it makes economic sense to create specific pack sizes for us,” says Mr Varghese, having just concluded a deal with Coca Cola for customised packs for the More outlets.