The retail business of DCM Shriram Consolidated Limited (DSCL), which is in the realm of rural retail, will be spun off as a separate company. Approval of the board of directors has already been acquired for the purpose and the company will go for private equity participation for the purpose.
In an exclusive interview to Indiaretailing, Ajay Shriram, chairman and senior managing director, DSCL, said, “In tune with the plans of DSCL to spin off Hariyali Kisaan Bazaar (HKB), the rural retail initiative of DSCL, into a separate company, private placement of equity will be resorted to in the first phase. At a later phase the company intends to go for an initial public offering (IPO) to raise money from the capital market.”
However, as Shriram informed, no time framework has been articulated for the move to have a new company for rural retailing. “The new company for the rural retail venture of Hariyali Kisaan Bazaar will happen in due course of time,” he insisted.
At present, HKB is a business division of the Rs 2,970 crore DSCL, and is one of the verticals of the agri-business of the company. Other verticals of the agri business are sugar, urea, agri-inputs and bio-seeds.
Apart from agri business, DSCL operates in the energy-intensive business segment, where it has interests in chemicals, PVC resins, calcium carbide and cement. Another area of business is the segment that DSCL calls ‘value-added businesses’. Under this, the company has Fenesta building systems, PVC compounds and energy services. Textiles and real estate are other areas of business for DSCL.
HKB has close to a hundred retail outlets at present, and plans to expand to about 250-300 outlets by the end of fiscal 2008-09. “For our expansion plan, there will be requirement of about Rs 300 crore. But this investment will be for the overall rural retail business set-up. Apart from this, there is a cost component of about Rs 1.5 crore for every Hariyali Kisaan Bazaar outlet that we put up. We do not use the franchisee model and all our outlets are either company-owned or taken by the company on rent,” said Shriram.
The concept of HKB is based on providing all-encompassing solutions to farmers under one roof. The large-format HKB outlets range between 10,000 and 15,000 square feet, while the smaller format is in the 3,000-6,000 square feet range. Each HKB centre operates in a catchment of about 20 kilometres. A typical centre caters to agricultural land of about 50,000-70,000 acres and impacts the life of approximately 15,000 farmers. HKB stores also provide 24X7 support through a team of qualified agronomists based at the centre. Extending its scope beyond agri produce, HKB also sells FMCG and other products, which the rural populace is likely to buy as consumers.
– Raja Ghoshal